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Risky Business - How repeat customers may jeopardize your future

Written by: Jeff Mowatt

Article Overview: When I speak at conferences and corporate meetings about customer service I often hear managers reminding their team members about the importance of repeat business. The assumption is that if customers keep spending their money with you, they must like you. But is that really true? Many business owners and managers are unaware of the harsh reality that some folks who spend their money with your organization may not enjoy doing business with you at all. The consequences of this can be staggering. Consider the example of my local video store...

Risky Business - How repeat customers may jeopardize your future

When I speak at conferences and corporate meetings about customer service I often hear managers reminding their team members about the importance of repeat business. The assumption is that if customers keep spending their money with you, they must like you. But is that really true? Many business owners and managers are unaware of the harsh reality that some folks who spend their money with your organization may not enjoy doing business with you at all. The consequences of this can be staggering. Consider the example of my local video store.

For three years, my wife and I lived in a neighborhood where most weekends we’d rent one or two movies at the local video store. That meant that every year we visited that business literally dozens of times. We recognized the handful of the store’s employees. And I’m sure they recognized us (at least after our first hundred visits)! Yet, the service that we received went something like this. They’d ignore us completely as we’d enter the store. When we’d approach the cashier, place our video selection on the counter, a gum-chewing employee would avoid making eye contact with us, stair at our video, shift his or her gaze to the cash register while simultaneously muttering, “Phone number…” We’d obediently supply the information, and our hard earned money, not just for one visit – but repeatedly for three years!

Of course, it’s crazy to support a business where the service – isn’t. But since it was the only video store in the neighborhood we didn’t think it was worth driving an extra 20 minutes out of our way just to pick up the same ‘new release.” So, we kept going back. In other words, we were repeat customers – but we certainly weren’t loyal. Businesses that are run like that accept a huge risk. The moment a new competitor starts-up within the same vicinity, the existing store doesn’t lose some of its customers – it loses most of them. And the loss has nothing to do with selection, décor, or pricing. It happens when management assumes that since they have repeat customers – that means they have loyal customers. Big mistake. Incidentally, when a competitor did eventually open a store in the neighborhood, the first store did indeed close down and laid-off all the employees. Not a happy ending.

As a manager, how do you know that your customers are in fact loyal? Ask. In a round-about way, that is. As a part of your day to day customer service operations ask your regulars, “We want to make sure you’re happy doing business with us… so how are our products and services working for you?” Most often the customer will not want to offend and reply that you’re doing fine. The key then is to follow-up with, “Is there anything you think we could do to improve our service?” That’s when customers tell you what they really think, and what you really need to hear as a manager.

Repeat customers do business with organizations because they feel that they have to; since there’s no convenient alternative. Loyal customers do business with you because they want to. Proactively checking-in with your customers to ensure you’re still meeting their needs is easy. And it’s essential if you want to prevent your employees from becoming complacent and your business from becoming obsolete.

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Article Tags: business owners, corporate meetings, customer service, local video store, repeat business, risky business, team members



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War Time clothing niche - Dan, interesting niche. Can you share some of your lessons learned in the following areas: 1. Marketing (Target market? and how you reach them) 2. Do you dropship or stock the products yourself? 3. How do you encourage repeat sales by your current customers? We don't get too many people in the Internet Business share these experiences. Your timing with the niche seems appropriate with war on everyones mind in the States. Do you find that during the last few years you've been getting more hits?
Re: Marketing to Wealthy Consumers - Hi Russell - lots of great ideas so far! I haven't seen talk about referrals yet though. It's the most powerful way to reach more wealthy consumers if you already have an established base. I'm assuming that your customers may be repeat clients but there is a long time period between purchases (they don't come every month for a new item). Have you tried any referral programs for existing customers or thought of a way to stay in touch with your customers on a regular basis so at least they keep your company top of mind?
Re: VALUE = ROI / Price (Cost) or Opportunty Spent - [quote="Takuya":ra8u6vda]OK, but what many people do not realize is.... just because the "free offer" is relevant, or we didn't pay money for the message, it still costs our opportunity to be just paying attention to it. Here is a scenario, I get a phone call from a stranger who knows nothing about me. Without asking me for a permission, just because their FREE message is relevant to what I do, they assume they're doing me a favor by approaching me with their promotion.[/quote:ra8u6vda] Hi Takuya, While I understand your position, I think you're straying off topic from what Andy and I interpret as "giving value first" and asking for nothing in return. If you try to help a potential client by simply offering your related service or products for free, then that's self-serving because you're trying to make the sale. And no one likes cold callers. A good example of offering value first would be: -I want to connect with Business Author ABC. -The next step would be to find out how I could help (and NOT by trying to sell my product or service). -Let's say I learn that this author wants publicity for his/her new book, so I introduce Business Author ABC to an influential person in the book/publishing industry like Oprah and ask for nothing in return. -Then Business Author ABC would want to connect with me and want to learn what I do for a living. -And in the future, Business Author ABC would want to help me in the future if need be. It's as easy as that.
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Re: Do Your Prospects / Customers Trust You? - It's funny, I've just been reading a very similar thread over on another forum. And though I'm a relative newcomer to the whole world of the Internet, I must admit that when I first came online a couple of years ago, I never saw mention of things like trust, honesty, relationship building.... I think it's much easier to build these up in the 'real' world, where you are dealing with people face to face. Unfortunately, it's much harder online. That's not to say it can't be done and as long as you abide by the same principles and are actually trustworthy and an honest person, then your customers and potential customers will realise that and spread the word. I fully agree that you need to have confidence and you need to portray that confidence to your customers. If you aren't confident in your own abilities, then you cant really expect anyone else to have confidence in them. However, once again, if you're looking to start up an online business, then it's easy to come across as being the greatest thing since sliced bread. All you need is a flashy looking website and lots of people will think you are legit and buy from you. Of course, you won't get much repeat custom so it's not really a good 'business' model as such. Hopefully, most folks will realise that trust has to be earned. No matter what sort of business you're starting up, you can't just expect someone to trust you simply because you're asking them to.


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