Retail Make Up Sex

Did that subject line get you? I thought it would The customer is mad. You didn’t do what she wanted, maybe you weren’t friendly enough, maybe you didn’t know enough about the product. Whatever the problem, you have to fix it, the consequences for not doing so are severe. Even if she’s mad, you’re going to want to keep her as a customer. It costs five to six times as much to get a new (first time) customer as it does to keep a current one. ^[1]

Furthermore, long term customers are usually more profitable.  A 5% increase in customers retention can boost profit by 25% to 125% ^[2] You also run the risk of her leaving and telling other people and losing potential customers because of her bad experience. Clearly you have to keep her from leaving angry, but how?

Play Nice

Customers were asked what single factor best defines high-quality service. The most frequent response was personal attention. ^[3] You have to let the customer know that you are concerned that they are upset. Tell them that you will personally do everything that you can to fix the situation. Make them feel like you are on their side.

Be friendly from your first interaction, whether or not the customer is complaining, an aura of kindness goes far in any industry. There are certain customers that will make it hard to be nice. You have to try to maintain your cool, no matter what the customer does or says, you have to respond politely. Her reaction will escalate if you respond in anger, whereas overreaching politeness has the power to diffuse the whole situation.

Give It Away

No, you shouldn’t give away products to every customer who files a complaint. However, you can offer coupons, discounts, and the occasional freebee. It also helps if you have reasonable and bureaucracy-free return policy. Customers who are disappointed in a product do not want have to fill out tons of forms to get their money back.

Just under 60% of Australian respondents said they refused to buy a particular brand if prices were too high, but that number jumps to 75% when high prices were combined with poor service – the highest figure worldwide. ^[4]

The solution is in the problem, if you offer a dissatisfied customer a coupon or discount, you are both lowering the price and showing exemplary customer service.

Over Deliver

Seven out of ten complaining customers will do business with you again if you resolve the complaint in their favor. If you resolve it on the spot, 95 percent will do business with you again. ^[5] This is why you have to go ‘above and beyond’ to fulfill the needs of a complaining customer. Right away is better, but after the fact is okay if that’s not possible.

It is important to keep every customer you have. A five percent increase in customer retention will yield a 25-100 percentage improvement in profits.^[6] It is worth your effort and the price of the discount or return to keep a customer. Put yourself in the customer’s place and imagine what you would like out of the interaction. The ‘Golden Rule’ is often the key to customer retention.

You know from previous posts that Bad Customer Service is costly, whichever way you calculate the costs of losing a customer.

^[2] http://waiterbell.wordpress.com/2006/04/06/research-commonly-quoted-customer-service-statistics/

^[3] http://findarticles.com/p/articles/mi_m3190/is_n29_v25/ai_11070542/

^[4] http://www.smartcompany.com.au/retail/customer-service-in-australia-hits-new-low.html

^[5] http://www.prlog.org/10320523-are-companies-cutting-back-on-customer-service-in-bad-economy.html

^[6] http://www.financialsense.com/fsu/editorials/tycoon/2008/0725.html