Crain’s Small Business Adviser: Laura Sheridan urges readers to take the Customer Retention Quiz

As featured in the September 10, 2012 issue of Crain’s Cleveland Business:

Take the Customer Retention Quiz

We all know that the most important part of any business is its customers. Without them, there wouldn’t be a business. So why do so many companies spend most of their marketing budget chasing new customers instead of nurturing the ones they already have?

Customer retention, not acquisition, is the key to growing your business.

You’ve seen the data: 5-to-1. That’s the cost of acquiring a new customer versus keeping an existing one. If you buy this, then it’s time to manage your business to leverage the economics of retention. How about starting with taking a fresh look at your customer service?

Manage customer service to catapult your customer retention results. We all believe that we treat our customers like gold, but is it true?

Take this customer retention quiz and see how you’re really doing:

Do you think of your customer service department as an accounting expense line item or an opportunity to delight customers?

Savvy business leaders prioritize long-term brand reputation over short-term profit. They treasure the opportunity to speak directly with people who have proactively contacted them. They view people who call with questions and concerns as potential brand ambassadors who they can delight, rather than problems or ticket numbers.

Is your best manager in charge of customer service?

Top talent belongs in your customer service department. Think about your best manager and imagine what he or she would do if put in charge of customer service. Then, add a staff of “A” players with amazing listening skills, real empathy and tremendous company knowledge. Your customers will notice and your financial results will improve.

Are your metrics focused on reducing talk time or delighting customers?

Do you measure the length of customer service calls and reward those reps with the shortest call times? If so, it’s time to flip that paradigm. If you think of each call as an opportunity to better understand and meet a customer’s needs, then call length isn’t the right measure.

Are your policies designed to make things easy for you, or your customers?

How many times have you signed up for a service online only to have to type in the same information multiple times? How about your return policies, warranties and response time? Are you making it easy for customers to keep coming back to you? When designing policies, put yourself in your customer’s shoes.

How often do you and your senior managers listen to customers versus pitching a new product? Do you ask how you can improve or are you always in sales mode? When was the last time you asked a customer about their business?

Enough said.

At staff meetings, how much time do you devote to sharing customer feedback and talking about their concerns?

Staff meetings are a great time to share educational customer service case studies. Or, use them for brainstorming on how to make it easier to do business with your company. How about asking each manager to talk to a few customers about their experience working with you and then devote a meeting to review what you learn?

Have you critiqued your marketing materials and web site to see if the messages talk about what you care about, or do they resonate with your customers?

We’ve all experienced them. Web sites that are inwardly focused that go on and on about how the company is so great, but fail to quickly tell you why you need them. They list lots of features, few of which seem to apply to you. Maybe it’s time to review your materials to see if you fall into the same trap.

So, how’d you do with the customer retention quiz?

If you’re not managing customer service to improve retention and therefore financial results, it’s time to take a fresh look at your priorities. What’s your answer to the question, “What business are you in?”

I asked the president of a large medical practice recently, and he responded “customer service.” This was a doctor! He gets it.

Next time a customer calls with a complaint, take advantage of the situation! You now have an opportunity to talk to your customer, solve his or her problem and begin developing a long-term relationship. Sure, it’s nice to add new customers. It just makes a lot more sense to nurture the ones you already have.

Laura Sheridan is president of Viva La Brand, a Cleveland-based marketing strategy and ad agency search firm.