Losing customers has never been a good thing, but in today’s tough economic climate, it can be more devastating to businesses than ever. The reason lies in the simple fact that there is less spending money to go around. Consumers are no longer willing and able to waste their hard-earned money on goods and services that may or may not serve their needs, and once they walk away—they are not likely to come back.
This translates into greater competition among businesses for the fewer, smarter consumers out there. Margins are slimmer, and every sale counts. So what is the true cost of losing a customer these days? Some costs are less obvious than others. The loss of a single customer certainly results in a drop in income, but what about other, less tangible consequences?
Replacement costs
This refers to the costs involved in replacing lost customers with new ones. You and your sales department know how many new and existing customers you need to stay in the black each month. How much time, effort and money you need to put into recruiting qualified leads is directly related to how many previous customers you have lost.
It’s been estimated that it costs up to 5 times more to obtain new customers than to retain existing ones. Converting visitors into customers involves the often lengthy process of qualifying leads, nurturing through the sales cycle, and following up—steps that consume plenty of time and money.
Bad press
Word-of-mouth works the same way online as it does on the streets. One negative customer experience can cause a ripple effect, sabotaging your online reputation management efforts—and potentially impacting your future sales. In addition, this lost customer represents multiple missed opportunities for that person to recommend you to friends, family and colleagues.
Keeping customers engaged in your business is a smart way to keep them in your corner. In many cases, customers will leave without alerting you to a problem, giving you no chance to resolve the matter first. Staying in touch and engaged gives you a pipeline to information that could save a customer—and all the potential business that comes with him.
These costs may not be easy to measure, but that doesn’t mean that they aren’t very real and potentially devastating to your business. Losing a customer these days means losing opportunities that may not come again. So be proactive, and stay engaged with your audience! Maintaining an active online presence, creating shareable social media content, and staying responsive to customer needs will help keep people buying from your business, even when times are tough.
