Why price isn’t the main reason customers leave?

One of the most important things we talk to clients about is the retention of their customers.

‘Customer Churn’, or ‘Customer Attrition’ or simply the loss of customers is something that, in my experience, business owners don’t work hard enough on.

Why do customers leave…

Simply put, the more customers you retain each year — the more profitable and successful you’ll be.

For example, here are 4 pieces of research I’ve gathered over the last few months on this subject, all of which demonstrate the importance of working hard to retain your customers…

1. “Price is not the main reason for customer churn, it is actually due to the overall poor quality of customer service” – Accenture global customer satisfaction report.
2. “The probability of selling to an existing customer is 60–70%. The probability of selling to a new prospect is 5–20%” – Marketing Metrics.
3. “70% of all buying experiences are based on how the customer feels they are being treated” – McKinsey.
4. “It costs 6–7 times more to acquire a new customer than retain an existing one” – Bain & Company.

I think it’s fair to say that most people think ‘price’ is the deciding factor when customers leave.

This perception is often skewed because a departing customer will often use the ‘price objection’ for leaving.

But saying ‘you’re too expensive’ is more often than not… code for ‘I’m not getting value for money from you anymore.’ It’s important you remember this.

So if you do get a number of customers saying that your prices are too high, you should be working harder to deliver more and more value to them (NOT REDUCING YOUR PRICES!).

I also think it’s fair to say that many of us are guilty of just focussing on getting more customers to the detriment of selling more ‘stuff’ to existing ones.

You know yourself how much easier it is to sell to existing customers but often it’s them who drive this, not you. Having a proactive system for selling more products and services to existing customers is not difficult. You just have to put a process in place for doing it.

I have always instilled the good practice that we should treat others how we like to be treated ourselves. Nothing is more important when it comes to existing and new customers. It’s surprising how bad people are at treating their customers. Just treating them well sets you apart from most of your competition!

…and finally, whilst of course new business is the lifeblood of most businesses, it really is far cheaper to sell to existing customers than to new ones.

Just keep all these things in mind as you look to grow your own business.