How to Lose a Customer in 10 Ways

Business.com / Starting a Business / Last Modified: February 22, 2017

Gaining new customers is critical, but make sure you are also holding on to your current customers too.

Starting a business is not for the faint of heart. There is nothing that can prepare you for the highs and lows of creating, managing, and hopefully growing an organization.

And at the heart of all of that growth, is adding new customers.

But most people focus on only half of the customer experience, selling new customers. This is only part of the equation. Once you sell the customer, you have to keep the customer.

And focusing on customer retention pays off. It's almost five times cheaper to keep a current customer versus acquiring a new one.

Are you losing customers in more ways than you can count? Many businesses are, especially in the first half of 2016 so far. There have been fewer IPOs than ever before and more layoffs.

That means budgets are tight and companies are cutting back. And it makes focusing on losing customers even more important than gaining customers.

So, if keeping your current customers happy is so much more cost effective than selling, why do so many organizations focus hard on sales and not on customer service?

Every day I see Fortune 500 businesses focused on the wrong aspect of the customer journey. They devote millions of dollars toward sales and marketing, but then very little on cancellations.

When customers cancel it's called churn. This churn can end up destroying your business slowly and quietly.

Here's how to lose a customer in 10 different ways, and more importantly how to correct them:

Related Article:10 Customer Service Books Every Business Owner Should Read

1. Product Is Too Expensive

This might seem a little obvious, but most customers will take their business elsewhere if they feel that your products are too expensive. Maybe they are even happy with the product or services themselves but believe they are overpaying. Or maybe they were happy with what their money earned them at first but now someone else is offering them similar products or services for less.

Consumers now can search and investigate almost everything online, and often find multiple companies offering anything they need. So while you do not have to be the cheapest, maintaining prices that sit above your competition better come with impressive perks or create fantastic experiences. It is always a healthy practice to monitor your competitors and consider if adjustments need to be made.

2. Slow Response Time

Time is money, right? We've all heard it before. At the very least, time is one of the things in life that can't be replaced. This is why fast food, online shopping, and 24-hour deliveries have become popular. We want things quick and we don't want to wait when we need something or require help.

One of the quickest ways to lose customers is to make them feel that their time is not important. From responding to inquiries about what you provide to answering service or complaint calls, slow response times to customers needs or questions can quickly lead to unsatisfied people who will find someone else to spend their money with.

And this is something that customers will often let you know about when it is an issue. They will complain and you should listen to them. Maybe you need more staff. Maybe whoever is answering customer service messages needs replacing. Or maybe you just need to make it a priority. Whatever it is, don't waste any more time wasting the time of your customers.

3. Better Competition

Successful products, services, and ideas breed competition. Sometimes it happens in a matter of weeks and sometimes it takes years. But eventually, anything that succeeds will gain the attention of someone else. When this happens you must continue to refine your business and find ways to improve your product. Pay attention to what your competitors are doing and mimicking.

Try new ideas that they aren't, and even find ways to improve on what they bring to the table. Run promotions that reward their customers for jumping ship. Finding success and profit for a short period of time isn't often hard. What keeps a business going is the growth that comes after the initial surge. Do not let your business sit still. 

4. Rude Employees

Sadly not every employee you will hire will end up working out perfectly. Eventually, a customer will complain about a rude employee, it happens to every business. Is it an isolated incident or is this someone who has had multiple issues? No matter the answer, the first step is correcting the problem with the customer and listening to their point of view. Then assess the situation. Let the customer know you plan to respond.

If this is a regular issue then the response needs to be removing the employee from the situations and likely even termination. Do not let a bad employee chase away business because you want them to succeed or have some sort of personal reason for keeping them around. Eventually, they will keep costing you return business and possibly your business altogether. 

Related Article:Customer Service Crimes: This Is Why Your Business Is Failing

5. Broken Promises

One of the greatest tools you possess in selling your business and products to someone can be promising certain returns or performance marks from your company. Upholding promises often leads to customers singing your praises and telling others about your business if you continue to deliver.

But promising things and then failing to deliver more than once often will result in customers taking their money elsewhere. While wowing potential consumers with promises and tales of what you can do for them might get you that first chance, promising things you know you can not deliver is not just setting your business up to fail once but to fail those customers expectations. That will quickly cause customers to leave your business and never come back.

6. Product Defects

While having defects in your product might not always be your fault, responding to and fixing them almost always is. Defects and problems lead to unhappy customers and products that often can not be used as they planned. This simply comes back to fixing the problem or issue that is consistently popping up.

If it comes from your end, put the effort and time into correcting the product so it delivers what customers expect. Handing your consumers something that is flawed from the start is a horrible business practice that will quickly become something that former customers will tell others about. 

7. Buyer's Remorse

Most have felt it in some fashion in our lives. If you have not yet, buyer's remorse might definitely pop up some day when you make a big purchase like a car or house. For some, this sense of regret and uncertainty can hit from buying almost anything. Did they make the right choice? Was there a better option? Was someone else cheaper?

You can not always stop this mindset but you can help combat it with your customers. Make sure to educate and guide your customers to what they both want and need from your company. Make sure they know as much about what they are getting as possible. Support their purchases rather than forcing them into things they don't want. Help see to it that the customer gets something they will be satisfied with and understand from that start.

8. Improper Expectations

We all form a set of hopes and expectations with almost everything we purchase. It could be that you hope that $30 steak you just ordered will taste great or it could be that you expect the new software you just installed last week will help your company improve in some way.

Often expectations are formed around what we think something can do and what others tell us about it. While a salesman's job is to, of course, try to get people to purchase your product, selling something as a world changer when it may just be a helpful application or convenient tool will form unattainable expectations with your customers.

Of course sell what your business is trying to do. But this again goes back to broken promises. Do not help push customers to expect things from your business or products that you know will not be delivered. Let them know what you can and can not do for them. Try to sell them, but educate customers in the process. 

9. New Management

When new management enters the picture because of a shift in style or there is a loss of former management, it can be a tough transition for both sides. The customer is used to things being done one way and working with certain people. So part of what new management teams have to account for is a transition period they will have to sell existing customers the company again and make them feel comfortable that their needs will still be met.

Related Article: One to One: Why “Broad-Strokes” Customer Service Strategies Never Work

10. Word of Mouth

Still one of the greatest sources for attracting or losing customers is word-of-mouth sharing by people who have used a product. Now it has grown to online review sites, review scores on sites like Google, and people sharing their experiences through social media. In fact, one study showed that a single negative Yelp review could cost a business a million dollars.

Start with making sure you are pleasing your customers, to begin with. Many of the topics above deal with ways that will help you find out what is leaving customers displeased. But then promote positive feedback and sharing. Give discounts or rewards to happy customers that spread their experiences and retain your customers. Run giveaways and promotions for your customers that are sharing with others.

At the same time, respond to and learn from bad word of mouth reviews to train your employees and yourself about what was wrong initially so they can avoid those mistakes with other customers.

Ultimately, businesses exist because they provide happy customers with something they value. And with most successful business relationships, customers begin to form bonds with companies.

If you regularly communicate and focus on keeping customers you will be wildly successful in your business venture. Likewise, a continued partnership with a company leads to both sides gaining an understanding of the other and what each side expects. So, make sure you are not only gaining customers each month but keeping them too.

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