by Tom Panaggio, author of “The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge“
Here’s one of business’s dirty little secrets: Many business owners prefer to keep their customers at arm’s length. They’re very careful to keep every interaction strictly professional, never getting overly personal or friendly. After all, if you get too chummy with customers — or even appear too interested in or sympathetic to their personal circumstances — they might start to want more from you: better pricing, extended credit, lengthier conversations, access to your services on nights and weekends, etc.
And then, of course, other business owners stay aloof from customers for a different, more instinctual reason: In a digital age dominated by email and computer screens, they simply don’t know how to interact with customers face-to-face and avoid doing so at all costs.
Both reasons for not getting close to customers can feel safe and self-preserving for business owners; however, they’re anything but. Keeping customers at arm’s length inevitably erodes the connection between them and you, which, sooner or later, usually leads to the customer taking his or her business elsewhere. Nobody likes feeling unimportant, and with all of the choices out there today, customers don’t have to settle for it.
Unless you’re running your business from underneath a rock, you know that losing a customer is a big deal because it has a significant impact on your organizational health. Besides the loss of potential future revenue, any sunk costs (costs you initially incur to gain the customer) are unrecoverable. Plus, there’s no telling how much damage negative word-of-mouth might do to your company’s future growth (or lack thereof).
If you lose a customer due to price or other circumstances beyond your control, then fine. However, losing a customer because he or she felt unappreciated or underserved is inexcusable. It indicates serious flaws in your internal business processes that can lead to additional losses.
Fortunately, there are concrete things you can do to avoid “customer churn” — so long as you’re willing to face your unwillingness to invite them within arm’s length and accept the risk of getting closer to your customers. Here are five specific risks you must take with your customers:
1. Risk getting personal.
Many entrepreneurs use the phrase “It’s not personal; it’s business” to justify keeping their customers at arm’s length. But the truth is, especially if you’re at the head of a small business, every customer interaction is personal. If that makes you uncomfortable, relax. “Getting personal” doesn’t mean that you need to become your customers’ best friend — simply that you need to get engaged in their experience and show them that they matter, that you understand their needs.
When they work with you, your customers should feel like they are entering the bar on the television show Cheers: ‘where everybody knows your name, and they’re always glad you came.’ Whether you want to admit it or not, customers can tell when you see them only as ways to boost the bottom line, and they don’t particularly like it.
The good news is, showing customers that you value them on a personal level doesn’t have to be difficult. For example: Communicate using face-to-face interaction whenever possible. Send thank-you notes — preferably handwritten ones — to show people that you value their business. And you can always take a cue from my favorite street hot dog vendor, whose most powerful marketing tool is his memory: He remembers each customer’s face along with their name and specific hot dog preferences.
2. Risk keeping the lines of communication open.
Yes, it’s true that customers aren’t always convenient. The phone often rings when you’re eyeball-deep in an important project. You can easily spend a half-hour answering a completely irrelevant question. Sometimes, you hear requests and complaints that make your life a lot more complicated. But despite these risks, it’s crucial to make yourself available and keep the lines of communication open.
If you want to retain your customers, you need to make it easy for them to get in touch, ask questions, and resolve issues, even if you’d rather be doing something else. And to ensure that your process actually works, you’ll need to ‘stand in your own line’; in other words, look at the way you do business from the customer’s perspective. For instance: Does the customer have to navigate a confusing labyrinth of phone options to talk to you? Do you wait days before responding to emails? You may think that everything’s fine because you and the customer do eventually connect, but the customer may have a different perspective. Remember, communication has to happen on the customer’s terms, not yours, if they are going to remain happy.
3. Risk staying close (but not too close).
Before technology made it possible for people to connect with each other anytime and anywhere, customer-business interaction was limited to phone calls and in-person visits. This made it relatively easy for entrepreneurs to stay aloof. Today, though, technology has changed that model. Businesses that don’t use email, have websites, and invite customers to become social media “fans” are seen as very old fashioned and probably won’t keep their doors open for long. To remain relevant, entrepreneurs must use technology to stay close — but not too close.
This can be a tough balancing act. Customers are sensitive about who has their personal information — such as email addresses, purchase history, and preferences — as well as how it’s used. When you embrace the risk of getting close, you must commit to using personal information to draw customers closer, not drive them away. Nobody wants an email inbox clogged with general promotional emails, for example, or a Facebook newsfeed dominated by gratuitous updates to your company’s page… much less a breach in personal privacy!
You’d be much better served to use what you know about your customers to create highly targeted and personalized direct marketing campaigns. For instance, an automotive dealership might use customers’ purchase history, service records, and scheduled maintenance recommendations to create emails designed for specific recipients based on the year, make, and model of their automobile. And good news: This tailored approach is vastly more effective than general media campaigns, too!
4. Risk stepping out from behind technology.
Today, many small businesses that wouldn’t be able to exist without technology are thriving. However, some entrepreneurs are indulging in too much of a good thing by hiding behind technology — whether they mean to or not.
Technology can streamline and improve, but it can also serve as a barrier. Before incorporating a new tool, device, or program into your business, ask yourself what its effect will be. If it improves the customer’s experience, it’s worth adapting. But if it makes only your own life easier, tread cautiously. Sure, you may love that your website’s new ‘leave a comment’ feature means that you can review customer feedback at your own leisure, but your customers may be increasingly frustrated by the fact that you don’t feel the need to pick up the phone as often!
In many instances, a blend of old and new will be most effective. For example: Sure, you can use email to send files to a client — it’s more convenient for everyone than regular mail! But don’t include a long, convoluted explanation in the email. Call the client and talk him through the documents in real time so he can ask questions and you can correct misconceptions.
5. Risk going above and beyond.
When many business owners hear the phrase “going above and beyond for a client,” what they really hear is “spend more time, resources, and effort — but get paid the same.” That’s a bad way to look at taking good care of your customers. In fact, when you don’t risk doing more than you absolutely have to, you’re hurting your company’s future prospects.
In today’s competitive global economy, you absolutely must provide enough value to keep customers loyal over the long term. The days of being the only [insert your type of business here] in town are over. Customers have many choices, and if they aren’t more than satisfied, they’ll take their business to the competition.
He adds: “All that you have to do is exceed your customers’ expectations, not by a huge margin, but just enough so that they’re pleasantly surprised. That’s where word-of-mouth advertising begins. When you hit that point, there’s a multiplier effect to the investment you make to secure the customer. Remember, a client’s real value is not the revenue made from their first order, but the total long-term value. The cost of acquiring a customer can be significant, but the cost of losing one—as well as all of the business that person might have brought to you — is greater.”
Customers require consistent care and investment. You can’t keep yourself separate from them if you want to be successful. So take the risk. Draw your customers closer. Invest in them. Make an effort to understand how they think and what they want and keep in consistent contact. Trust me: Getting personal is worth it.
Tom Panaggio, author of “The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge“, has enjoyed a 30-year entrepreneurial career as cofounder of two successful direct marketing companies. In 1983 he cofounded Direct Mail Express (DME) in Daytona Beach, Florida, with his siblings Mike and Kathy. As CEO of spin-off RME in Tampa, Florida, Tom headed a company that created the most effective lead-generation program in the financial services industry.