Conventional sales wisdom says more than 90 percent of people don’t complain after a company delivers an inferior product or poor service. They prefer to obtain their revenge by walking away, never to return. They have a passive power and they know it. But every complaint you don’t hear is a missed opportunity.
Opportunity to do what?
- Evaluate how well you are doing.
- Identify weak points in your system and processes and put them right.
- See situations from the customer’s point of view.
- Improve customer satisfaction.
- Create long-term loyalty (handling disgruntled customers well often leaves them feeling more positive about your organization than before).
The Silent Killer
The following is a true story (only the name of the business has been changed) of how customer complaints could have saved a business.
Blooming Buds was a well-established garden center on the outskirts of a growing town. An expansion that included a café, a gift shop, and an organic fruit and vegetable outlet eventually led to a variety of organizational and logistical problems such as staffing shortages, managerial inexperience, and reduction in quality. Staff members stopped telling the manager about some of the problems they encountered because he wouldn’t listen. He invested heavily in advertising and in making sizeable capital changes. He never once thought of inviting feedback from the customers. Gradually business dropped off, but nothing was done about it.
The company didn’t have a customer service policy nor did it believe in wasting money on training. Customers seemed happy enough; few complaints ever were received. In gardening terms, everything seemed rosy. But no complaints doesn’t mean that all customers are happy. Most people don’t bother complaining; they just walk away and don’t come back. Eventually, the inevitable happened; the business had to close.
It costs 10 times as much to locate and sell to a new customer as it does to an existing one. That reason alone should act as sufficient incentive to attempt to build brick walls around customer relationships in order to deter predatory competitors; and there are plenty of those out there. The following is what can happen when a customer is dissatisfied and it is not handled correctly:
- One unhappy customer tells 10 to 15 others about the experience. If it’s really bad he or she will tell the whole world.
- For every complaint that could be made, around 20 people don’t bother complaining. This means 20 lost opportunities.
- If you handle a complaint badly or with a “couldn’t care less” attitude, or, worse still, if you hide behind the “rule book,” you will lose that customer for good.
The Income Multiplier Effect
You can’t afford to lose even 20 cents because it will mount to something known as the “multiplier effect.” Here is an example of how easy it is for a small amount of lost income to multiply to dangerous proportions.
A potential customer goes into a fairly new fitness center. The center is trying to build its customer base. It employs 50 people who haven’t received much training in customer service and handling complaints. The customer asks about booking a gym session for later that day. The receptionist replies with a “take it or leave it” attitude. So the customer shrugs and walks away.
How much has the center lost in potential revenue?
- $10 primary spend: the price of a gym session
- $10 secondary spend: a drink, a sandwich, possibly a swim, etc.
- $500 potential membership fee
He will tell at least seven people about his bad experience, so $520 x 7 = $3,640. It is easy for a small amount of lost income to multiply to dangerous proportions.
When compared over time, a customer’s interest in a particular business usually increases, while the company’s interest in that customer tends to decrease. This creates a “relationship gap” that is due entirely to complacency.
Businesses must continually strive to earn the right to receive their customers’ business. Getting customer feedback and implementing an effective customer care program is a significant stride in that direction.
Jonathan Farrington is a business coach, mentor, author, and consultant who guides companies and individuals toward optimum performance levels. He is chairman of the Sales Corporation, CEO of Top Sales Associates, senior partner at the JF Consultancy, and chairman of the executive board at Top Sales Experts.