It costs five to 10 times more to acquire a new customer than to retain an existing one. If that's the case, customer retention must be as high of a priority for your business as lead generation is. To keep customers satisfied with your business, understanding the value of customer communication is vital. Know how best to speak with your customers, address their concerns and issues, and understand what they need before they ask. Watch today's Daily Brown Bag to learn how important customer retention is, and how you can ensure you're doing everything you can to keep your customers satisfied with your business and services.


Hello, and welcome to the Daily Brown Bag. Today, we’re going to be talking about the value of customer communication. I’m Chad Hill, and I’m joined by Adam Stetzer.

Yeah, good morning Chad. We talk in these videos every day about marketing tactics, bringing more traffic to your website, and getting more business, but the reality is that it costs as much as five to 10 times more to acquire a new customer than to retain an existing one. That’s a really serious fact, and I’m glad that we’re spending some time today on customer service. We’re going to dive into this a bit.

Here are a couple of interesting openers. Companies only hear from about 4% of customers who are dissatisfied, so the reality is that you don’t have tons of communication coming inbound, and the communication that you’re getting is probably from very irate people. It’s important to reach out to your customers on a regular basis so that you can hear from the full spectrum, including some of the good, although you’ll mostly hear bad. You need to be prepared for that, because people generally want to talk to you when things are not going well.

Here are some interesting stats from Right Now Technology’s Customer Experience Impact Report and the AmEx Global Customer Service Barometer, both good sources for this kind of data:

Eighty-six percent of consumers have stopped doing business with a company due to a poor customer service experience. Most of us have had this experience of being a consumer and being disgusted with some sort of bad interaction and deciding not to do business with them again. Nine out of 10 will start doing business then with a competitor after they've had a poor customer service experience. Now that doesn’t mean one bad experience and it’s over. Half of consumers will give a company up to one week to respond before they’ll cut off ties, and that’s very interesting because 57% of consumers who did receive a response back from a company after some negative interaction were actually able to rectify and feel positive, though 22% were not.

So you can move the needle, and I think that there are some interesting nuggets about that it isn’t that things won’t go wrong, but that customer service is about how you react to it and then move that customer to a better place after.

Yeah, definitely. We talk about the way to deliver great customer service and deliver great customer experience and in most cases that starts in the sales process. You want to make sure that you’re setting clear expectations up-front that everything is written down and that, of course, you respond in a timely manner. So, starting with the expectations and the sales process is something that you have to do whether you’re in online marketing like us, or whether you’re providing any number of other services out there.

Once you get that sale and you have that customer and you’ve gone through the expense of getting that customer, you really do want to have a system in place in your company for making sure that you respond to any type of customer service or any other type of deliverable in a timely way. So, again, you might want to have a ticketing system, there are a lot of different products out there. You could just use email, though sometimes it’s hard and things can slip through the cracks. We, of course, like more of a ticket-based system. But, making sure that you have a system and that you use it consistently [is important] because it’s far too easy to go out and find five or ten tools that do it, there’s a million of them out there, but you’ll be always searching for the better, new tool. Get one system and stick with it, because your whole company needs to be able to follow that process.

It’s really easy to get focused on the technology, Chad, and not really drive the culture around what needs to happen, which is each of these tickets coming in. The reason we have a ticketing system is so that we know there’s a customer behind every ticket, and we have to be accountable to resolving those. Each one is an opportunity to help a customer through, and move them from the 80-something percent that might leave you after a bad interaction down to 22% if you can have a good timely follow-up.

I think some of the open question here is, “Okay, if I have my ticketing system, and I have people in my company who believe that customer service is important, there’s still a little bit of ambiguity around what that customer really wants.” I think we can draw here from the Customer Experience Impact Report and some of the stats to help formulate a strategy. Seventy-three percent responded, “What I’m looking for is a friendly and polite employee or customer service rep.” They’re just looking for a friendly interaction. They don’t want to be preached to, they don’t want to be told “no.” Even if the answer is “no,” they want to be told in a constructive way with a rationale behind it, and they definitely don’t want someone who is curt or who is mean to them.

We’ve all seen sometimes that you can have a bombastic interaction. It doesn’t mean that the customer is okay to abuse the customer service rep, I think there’s ethics on both sides of this, but 73% are looking for friendly. The next one up is that 55% are looking to easily find the information or the help they need. It’s interesting to me that that’s actually behind friendly, but Chad, we talk about this all the time. If you’re working with your customer service team, empathy first, because empathy communicates friendliness and sincere interest and care. You can get pretty far with that, because you can satisfy 73% who responded. Behind that, though, you really have to solve the problem, because if you’re not, they just feel like you’re a friendly voice or a shoulder to cry on, but they haven’t solved the problem.

Yeah, absolutely, and that is a very frustrating experience to have. One other thing that you definitely want to include in your customer service process is finding opportunities to be proactive instead of reactive. If you’re only waiting for the phone to ring, there’s an opportunity there for your customer to get frustrated before they call you in, so being proactive is really important in good customer service. Some examples of that are, if you’re in a services business, having a monthly account review meeting where you sit down and go through the numbers and talk about the metrics, because what you’re able to do is actually establish the metrics and the things that customers should be looking at so that they’re focused on the same things that you’re working on, rather than letting them get confused and go off on a tangent about something that’s not that important.

Another example is finding ways that are maybe not a direct person calling, but other ways to communicate with your customer throughout the month or the quarter like having a monthly newsletter telling them about what’s going on in your business and your industry. That does two things. One is that it gives them some current news to let them know that you’re on top of the trends, but the other thing it does is put an impression in their inboxes that your company is looking out for them and working hard on their behalf.

Yeah, and you touched on some philosophies that are near and dear to my heart there, Chad. One of them is that things go wrong in a business. Anyone who believes that a relationship would be 100% positive all the time is probably not being realistic, and anyone who has been around the block knows that there are problems. That’s just how business goes.

What these data support is that how you react to those problems is key. It’s not that things won’t go wrong. Don’t go in expecting they won’t, try to minimize them of course, but when they do, you should have a strong customer service team who can react quickly, can be friendly, can hear the client when they don’t feel good about it, and then can solve the problem with the information and resources to get them where they need to be. Then, you can recover and you can keep that customer. It is five to 10 times more expensive to replace that customer than it is to keep them, so it’s worth the effort. We certainly would like to hear your thoughts, particularly in the internet marketing space where customer service can be particularly complicated due to some of the vagaries and the newness of the industry. Share those with us in the comments, and please subscribe to the videos.