Six factors in customer retention

Advice Sep 21, 2012

In this sixth article in the series, Paul Fileman focuses on Operations and Service Delivery.

Here are some of the customer retention factors that you need to consider when transitioning from a traditional break fix model to a successful managed service provider.

Here are some facts that should get your attention:

  •     The average unhappy customer will tell eight to 16 people about it. Hundreds (even thousands) more if they publish their experience on a social networking site
  •     Unhappy customers will not convert from ad hoc services to recurring revenue contracts
  •     It costs five times more to attract a new customer than to keep a current one
  •     If you do not ask your customers how you are doing, they will keep problems to themselves – the first you may know about an unhappy customer is when you receive a notice to terminate the contract
  •     If you make a real and sincere effort to remedy customer’s complaints, more than 80 percent of them will stay with you

Six Factors

Value

  • Offer good value wherever possible, if customers believe they are getting a good deal they will be much more likely to stay with you. Some businesses try to charge extortionate prices to customers, this brings extra money at the time; but in the long run, customers will have no loyalty to them, and eventually they will have no customers at all.
  • Make sure that your customers feel they have got their money’s worth – while being sure to price things at a sustainable level (apart from on special offers).
  • Demonstrate the value delivered with honest reporting and updates together with timely notice of equipment that may need to be replaced.

Consistency   

  • Be sure to remember why your customers came to you in the first place.
  • What was it about your IT business that attracted them? You need to be sure that while you change in order to attract new customers, you do not alienate the older customers that you want to keep.

Communication

  • Be sure that you let your current customers know that you appreciate their business and that you want to keep their business. Consider offering special discounts on new products or services to your loyal customers. Let them know what is going on with your company and what your new products and services are.

Sincerity

When you construct special offers for existing customers – be sincere. Make sure that the offer really is for their benefit and does not disguise some hidden agenda.

Relationship

  • One of the key reason customers become loyal is their relationship with the employees of the business. Your Help Desk and Operations staff are the shop window for your IT business. Friendly staff make customers feel valued, and if the quality of service is also good, customers feel a personal tie to your business.
  • The ability to form friendly working relationships with your customers is one of the biggest advantages small businesses have in the marketplace. Greeting customers politely can make them feel appreciated - just one minute talking to each person is all it takes to get the ball rolling.

Trust

  • It may seem obvious, but by far the most effective way to make customers loyal is to treat them well. Provide good services at a reasonable cost, provide friendly customer service at all times, and deal with complaints as quickly and effectively as possible. Be honest, and give the customer reason to trust you. Loyalty rarely exists without trust.

Next Steps

Talk to your customers and ask them what they want. When next you meet a client, ask them open questions about how they feel about one of the six factors above in your case. Get to know your customers. Ideally so that they feel like they have a friend who happens to provide their IT services and products.

Article 1. Controlling the wheel of fortune

Article 2: Strategy: The Foundation of Growth

Article 3: A sales strategy for accelerating growth

Article 4: Marketing and Your Proposition

Article 5: Help Desk - a profit centre or a cost?

Article 7: Vendors: Suppliers or partners?

Article 8: Building a product and services strategy

Article 9: IP and your managed service

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Image: Shutterstock

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