ROE, or Return on Engagement is often the place I start with most of my clients to measure the effect of social media to the bottom line. This ‘engagement’ comes in the form of feedback, good or bad from customers. The goal is obviously to make the good experience a great one, and the bad experience, an opportunity to turn around to good.
The first and most glaring benefit of keeping a customer satisfied is the cost savings. Typically it costs 8 to 10 times more to bring in a new customer than retaining a current customer. Investing in customer service actually has a larger impact on your bottom line. If a customer keeps coming back, your costs on a one to one ratio actually continue to go down.
On the flip side, if you tick off a customer, and make no effort to remedy that situation, that person is likely to tell 12 of their closest friends. I’m not sure where the number 12 came from, but how many people do you know that have only 12 ‘friends’ on their Facebook page? I think the takeaway here is that one dissatisfied customer will convince at least 12 people not to do business with you.
As a former sales manager at Circuit City, I know first hand the results of lousy customer service. When I was first hired, being called to the front counter a hundred times a day to deal with complaints quickly made me realize where my effort needed to be. When our ‘people’ first culture began to take shape, I saw customers personally asking for sales reps by name, and even spending more in our store because of the level of customer service they were receiving. Even in a large and transaction heavy environment I saw relationships being built, and customers returning each time they had an electronic need. Unfortunately that approach was not embraced throughout the company, and now Circuit City is just another large company that went under.
A very large company in fact, that had hundreds of stores nationwide and enjoyed a top 3 status as an electronics retailer, which leads me to my next point. We take for granted the sales we have, and only focus on the sales we don’t have. What would happen to your bottom line, if you could get a current customer to return to your place of business 2 or 3 more times each year? I realize some businesses don’t have that luxury and have longer buying cycles, but many do have this opportunity, and miss it more often than not.
I realize many of you are trying hard, and even though you mean well, you miss the real mark here. Offering coupons to come in and buy a pie for $10 is great and you may have to do it to remain competitive, but what really is going to keep your customer coming back is a great tasting slice of pizza, and people who thank that customer, remember their names and recognize their patronage in special ways.
Why does this always sound so hokey? Ask any successful retailer what their best form of advertising is, and you always get the same answer…’word of mouth’. If that’s true, how come you don’t have a rewards program, or a real ‘referral’ program? How come you don’t ask that patron personally, to join your companies Facebook page, or to sign up for your ‘deal of the month’ club? Is it too much work…would you rather just spend 8 to 10 times more money to bring in a new customer?
Ok, I don’t want to guilt you to death, I realize you started a business to do what you love, and maybe you’re not a ‘people person’. Than hire someone who is, and make sure everyone on your staff that has direct contact with the customer is fully trained to appreciate the magnitude of a consumer who wants to do business with you. In the world of Social Media and the internet, offering these programs and keeping in touch with your consumers has never been easier, and more rewarding.