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How to Keep Your Customers Loyal

There are four reasons that customers switch vendors. Here's how to make those reasons irrelevant.
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When customers leave for other vendors, it's always your fault.  Therefore, you'd best understand why they leave and what you must do to keep your existing customers loyal.  Here's why they leave and what you can do to prevent it.

1. The competition undercut your price.

This only happens if you allow your product or service is easily replaced.  For example, if you're selling printer paper to a huge firm that does in-house printing, they'll eventually find somebody who can supply the paper for less.

To avoid this problem, offer products and services that are customized rather than standardized.  Constantly "up the level" of customization so that competitors can't easily slip into the account and replace you.

For example, rather than printer paper, you might want to offer a service that writes, edits, proofs, prints, binds, and delivers your customer's most important documents.

2. The customer got lousy service.

There is nothing that kills customer loyalty faster than treating a customer like crap when they really need your support.  That's why it's insane when companies treat customer service as an expense to be minimized.

When you treat your customer shabbily, it leaves a sour taste in their mouths.  That's a taste that NEVER goes away, so the minute that customer has an alternative, that customer will go elsewhere.

The only way that you can provide lousy service and still have customer is if everyone in your industry is equally awful (like the airlines).  And even then it's only a matter of time before a competitor gets smart and figures out how to make your customers happy.

3. Your product quality dropped.

If I've seen it once, I've seen it a thousand times: a company with a great product decides it can make a little more profit by outsourcing manufacturing to China or some other place where cutting corners is a way of life.

The result is inevitable: products that look like the great old products that they used to be but which quickly break (or don't work right) because the manufacturer saved $.00000001 per unit by using substandard materials.

Yes, it's possible to prevent this kind of downward quality creep, but only if somebody in your company is willing to "ride herd" on the entire supply chain, and check absolutely every item and every part.  (Apple, for one, is very good at this.)

4. The customer's needs changed.

This happens all the time because the business world constantly changes. Your challenge as a vendor is to constantly expand what you're offering before the customer's needs change out from under you.

To do this, it's not enough to be in constant communication with your customers.  You must anticipate where your customers will be in a year or two and respond to that reality long before the customers arrive there.

The defection of a customer should never be a surprise.  If it is, then you're not paying attention to what's important to your customers.  In that case, you need to seriously reset your priorities because you've got a "go out of business" strategy.

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IMAGE: Enderst07/Flickr
Last updated: Jul 23, 2013

GEOFFREY JAMES | Columnist

Geoffrey James is an author, speaker, and award-winning blogger. Originally a system architect, brand manager, and industry analyst inside two Fortune 100 companies, he's interviewed over a thousand successful executives, managers, entrepreneurs, and gurus to discover how business really works. His most recent book is "Business Without the Bullsh*t: 49 Secrets and Shortcuts that You Need to Know."

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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