By Betina Munkholm Johansson, Loyalty
The first order from the new customer is on board. A
long sales process is completed and the focus can now be put on
making money. But shortly after the client is starting to express
dissatisfaction with the cooperation, and may even terminate
cooperation saying that " it did not live up to expectations". So
what went wrong and how can you ensure that the new customers will
stay with you longer?
It is always expensive to lose customers. When customers say
goodbye it means lost revenue and increased pressure on Marketing
and Sales, which will run even faster to compensate for the now
missing revenue. Customer churn is however particularly problematic
early in the customer relationship. At that time, the company has
spent considerable amounts on sales and marketing to get the
customer in house, and the investment must now at least give
payback to cover the costs.
The problem is that the expectations that Marketing and Sales
create among the new clients, are not always being met. The result
is that the new customer, who seeks confirmation of the purchase
decision, already is being disappointed and dissatisfied at an
early stage because of unrealistically high expectations. The
customer is looking for alternatives, even before the company has
recovered its initial acquisition costs.
Mikkel Korntved, CEO of Loyalty Group, said: "Many companies
have no idea when their customers actually become profitable. When
is the cost of sale to the customer covered? After 3 months, 1
year? 5 years? If the breakeven is for example after 5 years, and
the company loses 20% of its customers every year, in principle
none of the customers ever become truly profitable. Companies
should therefore ask themselves when they actually make money on
their new customers."
Customer retention depends on your company's ability to meet and
exceed customer expectations. Therefore it is crucial that your
company is able to identify and manage the expectations of the new
customers early in the sales process. The basis is an assessment of
the expectations the customer has to the cooperation at an early
stage in the relationship.
Ask your customers how they expect the company to meet their
expectations and use this knowledge to manage and exceed future
customer expectations when the products or services are delivered.
Such an early evaluation also allows you to capture any
dissatisfaction and disloyalty of every customer and take steps to
maintain and strengthen relationships before the clients are
seeking other alternatives.
Mikkel Korntved, CEO of Loyalty Group, explains: "An active and
effective matching of expectations strengthens the company's
ability to retain new customers and through that secure potential
revenue and profit. At the same time the company will focus it's
efforts towards customers on the basis of specific knowledge and
develop relationships through added sales."
Loyalty Group A/S | Smedeland 30 | 2600 Glostrup | Telefon +45 70 25 26 27 | email@example.com