Organizational Behaviour; Impact On Customer Retention

If you are worried about customer retention & acquisition, evaluate how you can take better care of your customers – don’t reduce price. Happy, loyal customers will stick around and also recommend your product / service.

The Harvard Business Review suggests the average business loses 50% of their customers every five years. As a strategic marketer I’ve measured client retention and Lifetime Value (LTV), that shows the best clients usually stay only for four years… rarely longer than six. With most leaving within the first two years.

Why Do Customers Leave?

According to the U.S. Small Business Administration and the U.S. Chamber of Commerce (sorry to all my Canadian friends):

  • 68% leave because they are upset with the treatment they’ve received (Customer Service)
  • 14% are dissatisfied with the product or service
  • 9% begin doing business with the competition
  • 5% seek alternatives or develop other business relationships
  • 3% move away
  • 1% will pass away

So 82% (68% + 14%), of clients leave because their complaints or misunderstandings were not solved and / or they were made to feel dumb, ignored, disrespected, angry or unimportant. In other words, poor organizational behaviour is pushing clients out the door. They’re not leaving because of the product / service, price or marketing / advertising. How’s that for a reality check?

There are many studies that demonstrate it’s cheaper to satisfy and keep an existing (good), customer than to add a new customer. Customer acquisition can easily cost four to five times more, so what would happen if you put that expense into your training budget? Customer retention?

Adding new customers is important for company growth because there’ll always be attrition. Consumer habits and income do change, and people move or people pass away (as examples). But it’s important to spend time and money wisely by investing in organizational behaviour and organizational development that supports your clients and your brand.

How To Retain Customers Longer

What should you do if you want to help customers refer new business to you? I suggest you start by finding out what your clients love and don’t love about you. Most businesses never ask – I bet your competition doesn’t… which is an advantage for you.

When I start working with a client I recommend we survey their existing clients to find out what they like and don’t like. If possible I also want to survey past clients to find out why they left. If 82% of your customers are leaving because they are upset or dissatisfied with service…. wouldn’t you want to know what to fix? Today a combination of online email surveys and one-on-one phone surveys are:

  • Efficient
  • VERY informative
  • Not expensive

I recommend employees also be included in the research – they often have great ideas. Surveys and brainstorming are great ways to engage employees. But be certain to keep their findings and language separate from your clients.

Surveying clients lets you hear the good and the bad from their point of view and in their language (very important). If you are going to design a marketing or training program you want to use the perspective and language that’s relevant to your clients, not your corporate perspective.

Once you have the perspective and language of your clients you can:

  • Measure the gap (to your goals)
  • Design programs that fix what’s wrong
  • Overlay your goals and organizational values

With this information we’re able to design programs that are strategic for your business, relevant to customers / prospects and branded to your core values. We’ll also be able to support positive organizational behaviour by aligning your customer service training strategies into:

  • Sales
  • Implementation
  • Product Development
  • Office Management
  • IT
  • Finance / Invoicing

Share The Responsibility Of Customer Retention

Make sure everyone at your company knows they are part of the solution.

Show staff how to demonstrate the desired behaviour. Why do you need to show them? Well, we’re all individuals with our own personalities, history, education and life experiences. As an example, it’s not surprising that your idea of “Managing Expectations” is different from mine. Without training to get everyone on the same page, is likely their approach will be quite different. So, work with your employees to discuss how to demonstrate your corporate values and to develop customer service expectations.

Your customers are people, and people are social animals. Yet many of us hide behind our email and website… even sales and customer service people. As customers, we are starved for personal contact and want a chance to feel important.

Customer service is personal – it impacts the individual – it builds relationships that last beyond the transaction, beyond the billing cycle. Personal customer service is what builds customer retention. For the same reason, if you’re treated poorly you’ll not forget it. Never make the customer feel dumb, ignored, disrespected, angry or unimportant. If you do they’ll likely become part of your lost customer statistics.

Personal Case Study 1:

I know I cannot forget the consistently bad attitude I’ve experianced from my doctors receptionist. She is terrible but he is great.

Her latest faux-pas was that she called me to move my appointment. When we found a time and day that fit she just hung up. I was literally left holding the phone. While my first instinct was to call her back, I knew it would do no good to address it directly with her – and likely she could use her power to call and reschedule again.

If they were retail or a business to business relationship I would be long gone… but it’s not easy to find a doctor you trust! But I’m also not referring business.

Personal Case Study 2:

There is a gourmet burger shop at the top of my street. I was enjoying going there and even began to follow them on Twitter.  But, after a particularly rude experience that an employee initiated I have actively boycotted them… and told all my neighbours. Rudeness is not how you reward loyalty.

There are lots of fast food places to eat at.


Every business makes mistakes, and most these things are forgivable if you own up to them and fix them. But good customers will not forgive you for consistently bad customer service. They’ll leave as soon as they can and they won’t forget it.

Happy communicating.

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About Bruce Mayhew
Bruce Mayhew is a Leadership Coach, Keynote Speaker and Corporate Trainer who builds strong client and co-worker relationships that give clients a competitive advantage. Our training and development programs include: ■Generational Differences ■Effective Business Email Writing ■Email Etiquette ■Phone Etiquette ■Behaviour Event Interviewing (BEI) ■Mindfulness ■Using Linkedin to Build Client Relationships ■Objective Setting Made Easy

2 Responses to Organizational Behaviour; Impact On Customer Retention

  1. sam says:

    very important information about organizational behaviour

  2. Pingback: Does Customer Service Live In Corporate Values? « Bruce Mayhew Blog: Business Communication

I’ll enjoy reading your thoughts and your experiences.

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