Do you manage what matters to your customer?
Good, Bad and Just OK.
"Even your most loyal customers always have a choice about where to take their business".
Promoters – loyal customers who actively promote the company and give constructive criticism back to the company to see it improve.
Passives – customers who are not enthusiastic or confident about the company. They will leave for another supplier and are waiting for better offer to come along.
Detractors- customers who are unhappy with the company and will actively voice their dissatisfaction, damaging the reputation of the company.
"As far as the customer is concerned, the interface is the product".
All of us in business know that success depends on winning and retaining customers. Reducing customer attrition or churn, or the rate at which customers stop using your products or services is therefore a key focus for management. How can we measure if we are doing a good job at keeping our customers? We can use the customer retention rate.
To have a true figure, it is necessary to assess the number of customers remaining at the end of the period without including the number of new customers acquired. The number of remaining customers may be calculated by subtracting N from E. To calculate the percentage we divide the number by the total number of customers at the start and multiply by 100.
700 – 200 = 500. 500 divided by 1000 = 0.5 x 100 = 50% customer retention rate.
In this example above, a catastrophic drop in customer retention is shown. In real life, losing so many customers would have a drastic impact on an organisation's revenues and profit. The impact would be felt in lost sales and the cost of acquiring new customers to replace those lost.
These figures sound tame now but they were published before the internet was invented. We know now that empowered customers can inform thousands of people of their customer experience, at the click of a button. Dissatisifed customers who upload a video to youtube that goes viral,can attract millions of views negatively impacting a company's PR and share price, as United Airlines found out recently to their cost.