Create profitable customers with efficient management of expectations

By Betina Munkholm Johansson, Loyalty Group

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.

Do you know when your customers are profitable?

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."

How you exceed the customers' expectations

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."

Find a description of our solution for efficient expectation management here