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Risky Business: How Repeat Customers may Jeopardize your Future

By Jeff Mowatt |

When I speak at conferences and corporate meetings about customer service I often hear managers reminding their team members about the importance of repeat business. The assumption is that if customers keep spending their money with you, they must like you. But is that really true? Many business owners and managers are unaware of the harsh reality that some folks who spend their money with your organization may not enjoy doing business with you at all. The consequences of this can be staggering. Consider the example of my local video store.

For three years, my wife and I lived in a neighborhood where most weekends we'd rent one or two movies at the local video store. That meant that every year we visited that business literally dozens of times.

We recognized the handful of the store's employees. And I'm sure they recognized us (at least after our first hundred visits)! Yet, the service that we received went something like this.

They'd ignore us completely as we'd enter the store. When we'd approach the cashier, place our video selection on the counter, a gum-chewing employee would avoid making eye contact with us, stair at our video, shift his or her gaze to the cash register while simultaneously muttering, "Phone number..."

We'd obediently supply the information, and our hard earned money, not just for one visit - but repeatedly for three years!

Of course, it's crazy to support a business where the service - isn't. But since it was the only video store in the neighborhood we didn't think it was worth driving an extra 20 minutes out of our way just to pick up the same 'new release." So, we kept going back.

In other words, we were repeat customers - but we certainly weren't loyal.

Businesses that are run like that accept a huge risk. The moment a new competitor starts-up within the same vicinity, the existing store doesn't lose some of its customers - it loses most of them. And the loss has nothing to do with selection, décor, or pricing. It happens when management assumes that since they have repeat customers - that means they have loyal customers. Big mistake.

Incidentally, when a competitor did eventually open a store in the neighborhood, the first store did indeed close down and laid-off all the employees. Not a happy ending.

As a manager, how do you know that your customers are in fact loyal? Ask. In a round-about way, that is.

As a part of your day to day customer service operations ask your regulars, "We want to make sure you're happy doing business with us… so how are our products and services working for you?"

Most often the customer will not want to offend and reply that you're doing fine. The key then is to follow-up with, "Is there anything you think we could do to improve our service?" That's when customers tell you what they really think, and what you really need to hear as a manager.

Repeat customers do business with organizations because they feel that they have to; since there's no convenient alternative. Loyal customers do business with you because they want to. Proactively checking-in with your customers to ensure you're still meeting their needs is easy. And it's essential if you want to prevent your employees from becoming complacent and your business from becoming obsolete.

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