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January 9, 2010

Keep customers to build your bottom line

Satisfaction surveys give indicators to perceptions

Katie L. Reim

With the new year in full swing and if you are a business owner now is a good time start thinking about how you can add to the bottom line of your business.

Glenn Muske, Oklahoma State University Cooperative Extension interim associate dean, assistant director, family and consumer sciences, said often when business owners think about adding to their bottom line they think about finding new customers.

“Ideas such as advertising, public relations and promotion often come to mind as a marketing plan is laid out,” Muske said.

“While those options all offer possible positive returns or increased net profits, the one aspect often overlooked is looking internally at how current customers feel about the service they receive from your business,” he said.

Information can be gathered by asking questions such as “how would you rate today’s shopping experience while at our store?”

Muske said that while a more detailed and sophisticated survey may be more helpful, two or three key questions can tell the owner a great deal about the customers’ perception of the business.

“One option that few owners never look into is finding those customers who are not returning to the store and asking them why,” he said. “Along with that, contact customers who you know left feeling dissatisfied and see if there’s something that can be done to bring them back.”

Why is there such an interest in keeping existing customers as opposed to trying to locate new customers?

Muske said, in monetary terms it is an easy argument to make.

“On average it costs approximately $20 to get a new customer while only $1 to $2 to retain an existing customer,” he said. “As the owner it’s to your benefit to try and make each and every customer experience a good one. This means even in situations where the customer has a complaint, you may want to think about not only listening and responding with some options, but also absorbing some of the costs of keeping the customer coming back.”

It is also important to realize the importance of an existing customer is to think of them in terms of lifetime value.

Muske said today customers maybe spending $1,000 in a business, but think of what this means over a lifetime.

“For example, say if a customer comes in once a month, that customer is worth $12,000 to you this year,” he said.

The relationship with each and every customer may grow, which means more sales to that customer. In addition the business receives word of mouth advertising when customers talk positive about their experience.

To get started, Muske said it is easy.

“It’s as simple as posting a note reminding yourself of ‘lifetime value,’” he said. “When an unhappy customer leaves, it may help to remind yourself that $240,000 ($12,000 that year plus potentially the $12,000 of the 20 people they are liable to tell) just walked out and it’s important for your business to see how to make their experience an enjoyable one.”

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Keep customers to build your bottom line
by Katie L. Reim , , Sat Jan 09, 2010, 09:35 PM CST
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