How to lose customers and alienate people

This article is part of our Opinions section.

In the late 1990s, Frederick Reichheld of Bain & Company (the same guy who invented the Net Promoter Score) conducted a study on increasing customer retention rates by 5% to determine the impact on profit. His findings blew the minds of customer-obsessed execs everywhere. Reichheld found that increasing customer retention rates by 5% can increase profits by anywhere from 25% to 95%. Think about how profitable companies could be if they built better products and mastered the art of retaining their customers!

With this in mind, the economics behind customer retention and profitability may be less complicated than the average business owner imagines. Many businesses will claim they are ‘customer-centric’ and ‘customer-obsessed’, and we’ve all lost track of the number of times we’ve heard a business claim it puts its customers at the heart of everything it does.

The simple reality is this: when it comes to retaining customers, the first step is to make sure you’re not hacking them off. Long-term CX strategies to promote customer satisfaction are great, but you may find that – to start anyway – 90% of what it takes to keep your customers is about not doing the obvious things that will upset them.

Top offender: ignoring customer feedback

Your customers have taken time to let you know what could be improved about your business, from how well your software works to what their expectations of a product are. Yet even with this valuable insight in hand, you don’t use it to make changes that serve your customers.

This is the quickest way to push away customers because it demonstrates to them that you don’t have their interests in mind.

Every business owner wants to produce innovative concepts and services, but this shouldn’t alienate your customers who have come to you for a specific purpose. Customer feedback is essentially a roadmap to how you can make your business better, and many businesses fall foul of thinking they know more about what their customers need than the customers themselves.

Less obvious: not knowing who your customers are

If you don’t know who your customers are then you’re going to lose them…

Every business is not for every customer, and that’s okay. You should always have your customers in mind, knowing the problem and who you’re solving it for. Trying to ‘catch them all’ isn’t a sustainable business strategy, and reduces how effective your business is for particular customer personas.

A well-executed product or service should solve a problem or improve the lives of relevant customers, and diluting your business model to try and cover every possible persona means you’re actually turning away the customers you have the capacity and knowledge to serve. If you want to have engaged customers who keep coming back, stick to areas where you can genuinely deliver, and handle them well.

Hidden perpetrator: not being accountable for your mistakes

Every business and every product has its faults. And it’s just as it is important to accept this internally, and understand why there has been a failure, as it is to own up to your customers.

People are scared of admitting to their mistakes, but being honest with your customers about where your business hasn’t delivered, and showing a genuine commitment to rectify this, adds so much more to your customer relationships.

Ultimately, people buy from people, and we’re all far more willing to accept the apologies of a business that is actively fixing mistakes and providing a better service, than that of a business that puts their head in the sand and refuses to acknowledge where they can improve.

Understated wrongdoing: not making adequate provision for customer feedback

Many businesses consider making provisions for customer feedback a customer service task. They only care about the bugs or defects in a product, rather than putting in a proactive effort to hear what customers have to say.

Even when customers do give feedback, there’s generally a poor processing of it. Either it is fragmented and lives within siloes, or there is too much information, and product teams cannot handle it.

In some cases, companies will assign another team to manage this feedback, but those teams usually don’t have the product context needed to analyse it effectively. Dedicated product management tools are proving themselves a key resolution in this area as they can centralise feedback from various sources, and advancements in AI can process this feedback quickly, ensuring businesses can take action and keep customers up to date in how they are leveraging feedback.

Businesses need to delve deeper into the problem of managing feedback by asking for it at the right point in time. It’s not enough to just generally ask for feedback, but should be targeted to when an event takes place – such as when a transaction is completed or a customer is looking to cancel a subscription. Doing so broadens your understanding of the areas customers love and hate, and sets up businesses with clear feedback for individual aspects of a business.

Be honest: is this your response to customer feedback?

Quiet culprit: neglecting to respond to customer feedback on generic review sites, such as TripAdvisor and Trustpilot

Ideally, businesses should monitor these sites and respond to feedback left on them as this can help to regain the trust of customers or rectify an instance that might have gone wrong.

The impact is far-reaching beyond individual customers and extends to future customers who are viewing your feedback and ratings. A lot of Mom and Pop stores are very active on Google Maps, for example, and this allows them to resolve a bad experience and ensure future feedback is positive.

There is a caveat to this as these third-party sites are filled with bots and paid reviews – so they can take extra effort to manage. As a business owner, your goal should be to focus on what matters, which is your genuine customers.

The proof is out there

You may be asking yourself – is there evidence to show the business benefits of prompt responses and tangible actions to customer feedback? The answer is yes, absolutely. There are great examples everywhere. Here are a couple of companies that are winning when it comes to getting customers and keeping them:

Zappos: A prime example of investing time into your core customer, and ensuring their experience is personalised, genuine and contextual.
Figma: Even as it scaled, Figma was passionate about its original customer base, and stuck to its roots. Its customer service practice focused on speaking with users who would be engaging with its service and building a loyal community.

These are just two of many great examples of the power of customer-centric thinking – there are many other companies that are getting it right.

What they will tell you is this: at the end of the day, losing customers comes down to not putting your customers first. If you ignore their feedback, neglect to understand who they are and fail to own up to your mistakes, you will risk driving them away.

But hey, it’s not all doom and gloom! By listening to your customers, owning your slip-ups, and responding to feedback quickly and comprehensively, you’ll not only keep your customers coming back for more but also build a solid foundation for long-term success.