Some Statistics (mostly USA-sourced)

A 5% increase in customer loyalty can increase profits from 25% to 85%

Firms that achieve both customer and staff engagement outpace their competitors by 26% in gross margins and 85 % in sales growth.

80% of your sales (profit) come from 20% of your clients in traditional organisations.

(NB The Internet is challenging this as it works on the 98% rule, as it makes almost everything available to everyone at any time. This is sometimes called the economics of abundance)

The Internet is changing the traditional relationship between supply and customer, putting the customer in the driving seat. Instead of organisations marketing to customers, customers invite suppliers to make offers for service

In some organisations the top 20% of staff not only provide most of the profit but also cover losses incurred in dealing with other clients

The top 10% of your customers are worth 5 to 10 times as much in potential lifetime profits as the bottom 10% of your customers

It is 6 times more expensive not to train staff because untrained staff:

- take longer to complete tasks;

- create dissatisfied customers;

- interrupt other staff for help;

- create repeat work, ie re-work.

Training should be used to provide staff with the necessary skills to help satisfy customers' needs.

It is up to 6 times harder to get a new customer than to keep one. Yet we make heroes out of staff who capture a new client and become addicted to chasing market share at all costs. Too often we concentrate on capturing new clients and take for granted loyal customers

Take care of your customers and they will come back, ie

- over 65% of sales come from repeat customers

- around 70% of customers who are satisfied with products and/or services purchased, purchase the same produce and/or service again

- a totally satisfied customer is 6 times more likely to repurchase over the next 18 months than a satisfied customer

- extending customer life cycles by 3 years can treble profits per customer

Direct mail vs. e-mail campaign - a typical direct mailing campaign achieves a 1 percent response rate in orders; while a permission-based e-mail can get 20 to 30 times the response rate of direct mail plus savings on stamps. In other words a valid e-mail relationship can be worth 2,000 times what a mailing list is worth.

Why do customers leave?

REASONS

PERCENTAGE

Business moved

9

Didn't like product

12

Price increase

11

Poor treatment of customers*i

68

Notes :

i) This is the most important one and refers to 2 situations, ie.;

a) customers being treated with apathy, ignorance, indifference and/or rudeness,

b) the rules and regulations make it hard to do business..

The vast majority of organisations that excel in satisfying customers rank the ability to handle something that goes wrong as the most important factor in satisfying customers

A friend's comments are considered more powerful than any promotional statement

Effective complaint handling results in a positive comment, ie. a free word of mouth advertisement

Bad news travels faster than good news

A customer whose complaint is resolved satisfactorily tells 5 other people; a customer who initially received good treatment tells 3 others

Complaints are the fastest and least expensive ways of getting feedback from customers

Complaining customers are showing loyalty. Most dissatisfied customers don't complain, they just leave.

Treat customers who have complained as gifts as they are informing you what is wrong and needs improving. Furthermore, the customer you lose, or are about to lose, holds the key to your success. You need to find out why the customer is leaving.

The statement

"...you only get what you pay for..."

should be changed to

"...if you get what you want, when you want it, you are prepared to pay much more for it..."

For every 1 customer who complains, there are 26 more who are unhappy. The majority will never again buy from your organisation. Furthermore, they will share their bad experiences with up to 15 other people

90% of dissatisfied customers will never return. On the other hand, a happy customer will tell, on average, 6 other people

Disappointed customers are the hardest to handle as they do not complain; furthermore, they do not want to engage and are motivated to leave. Disappointment is a low-arousal emotion. Anger is a sense of being violated; disappointment is having your expectation dashed

21% of customers have a "negative experience"; while 26% have a "positive experience"

The advantages of being the perceived service leader

- can charge around 10% more for the same products and/or services (as a general rule, a 1% change in margins is equivalent to a 10% change in sales)

- grow twice as fast as competitors

- improve market share by up to 6% per year while those poorly perceived lose as much as 2% per year

- have a return on sales 12% higher than other providers

Price

- price is only important when you fail to differentiate on other aspects such as service, quality, convenience, etc. It is more important to provide value for money

- price wars encourage the customer to focus only on price of products and/or services and not on value

- remember: the joy of low price disappears once the poor quality of product and/or service is known

- price is a reference point

- put payment (including price) in the terms that the buyer wants

- referrals and repeat customers are less sensitive to price

(NB Rather than lower prices, it is better to use vouchers, reward points, membership to clubs, etc. The latter are often referred to as soft dollars)

Some comments on focusing on price only, ie discounting and its consequences.

If you cut your price by Need to increase sales by this if your present gross profit is..
 
10%
15%
20%
25%
30%
35%
40%
5%
100.0
50.0
33.3
25.0
20.0
16.7
14.3
6%
150.0
66.7
42.9
31.6
29.0
20.7
17.6
7%
233.3
87.5
53.8
38.9
30.4
25.0
21.2
8%
400.0
144.3
66.7
47.1
36.4
29.6
25.0
10%
-
200.0
100.0
66.7
50.0
40.0
33.3
11%
-
275.0
122.2
78.6
57.9
45.8
37.9
12%
-
400.0
150.0
92.3
66.7
52.2
42.9
15%
-
-
300.0
150.0
100.0
75.0
60.0
16%
-
-
400.0
117.8
144.3
84.2
66.7
18%
-
-
900.0
275.1
150.0
105.9
81.1
20%
-
-
-
400.0
200.0
133.3
100.0

(source: Geoff Perry, 1991)

The above chart shows how many more units in percentage terms you must sell to earn the same gross profit as with the previous selling price

Around 90% of businesses never precisely determine the needs or requirements of their customers

Satisfied customers are repeat customers who tell others (this is a free form of advertising)

Remember the 3 R's, ie customer relations, repeat sales and referrals

Don't be an organisation whose face is to senior management but whose "bottom" is to the customer!!!!!!

Training should provide staff with the necessary skills to help satisfy needs and meet customers' service quality expectations

 

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