The Rising Tide of Customer Defection
by Laurence Haughton
Right now somewhere between 32 and 94 per cent of all customers are thinking about ditching their current supplier for the competition.
About one-third of all insurance clients are looking around.
Over half of all cell phone customers are on the edge (the same is true in financial services).
Four of five apparel buyers are ready to switch.
And 94 out of every 100 diners who bought a burger last week may not come back this week.
And the stats are no better in professional services and B2B.
55 per cent of enterprise software buyers are real antsy.
61 per cent of executives who outsourced something say, "Going forward, we'd love to find someone else to outsource with."
Some think this is a trend ... a sign of the times. "People aren't as loyal as they used to be," one businessman said. "And Wal-Mart has taught consumers all that matters is the lowest price."
There's certainly some truth in those observations. Competition is crazy, customers are fickle, and everybody is too busy to think about the long term value of a good relationship.
But in my research for my book "It's Not What You Say... It's What You Do: How Following Through at Every Level Can Make or Break Your Company" I uncovered a deeper reason, what I think is the root cause for the rising tide of customer defection (and potential defections) across all sectors.
A lot of customers just don't like their suppliers!
40% of Yellow's clients didn't like them.
When Bill Zollars took charge at Yellow Trucking he asked the folks at headquarters, "What do our customers think of us?"
"They like us," Yellow's top managers assured him.
But Zollars wasn't so sure. He knew from his years at Kodak that head office executives can often be way off in their assessments of what customers are actually thinking. Zollars needed a fact-based, accurate benchmark of Yellow's customer sentiments so he could quickly make the right moves and radically improve Yellow's revenues.
Bill Zollars is one of the few big company CEOs who still thinks like an entrepreneur. So instead hiring an outside consultant firm to conduct a 12 month customer satisfaction survey, Zollars suggested his executive team roll up their sleeves and dig into several boxes of customer invoices.
"Find out," he told them,
Needless to say the results of this simple study were like a cold slap in the face. In 4 out of ten cases Yellow had failed to follow through on one or more of the fundamental things their customers expect.
"How can they say 'our customers like us,'" Zollars thought. "We let them down 40 per cent of the time."
Zollars knew what he had to do. He engaged executives and employees at every level, from headquarters to the loading docks and everywhere in-between, to implement an aggressive initiative to fix their follow through.
Is customer defection a trend?
Is customer defection a megatrend, caused by circumstances beyond any businessperson's control? Definitely not.
As Bill Zollars told the teams at Yellow, "...if you fail to follow through on what customers expect they can't possibly like you." And (as nobody should need to tell any businessperson) customers who don't like you are more likely to defect.
Copyright Laurence Haughton. All Rights Reserved.
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