Concrete Business Managment

If we understand the business axiom that says it’s five times more expensive to attract a new customer than it is to earn more business from a past customer or through a referral, we begin to grasp the dollars-and-cents dividends to be reaped from excellent customer service.

The cost of customer acquisition is rarely quantified or understood and is almost universally understated. Whether you advertise in the phone book, local newspaper, local radio, household throwaways such as the Penny Saver, or on doorknob flyers, the money wasted on uninterested circulation is high.

What I observe today is a complacency or even laziness that comes from good times. “We’ve got more jobs than we can handle, and therefore I don’t even follow up on my leads,” people tell me. This is dangerous. It’s a belief that can lead to indifferent customer service. Why expend the effort to please customers when we are booked months ahead? The Boot Hill of American business is populated with companies operating with this misguided belief. Remember, business is cyclical. Times will change. Your phone will suddenly stop ringing. What then?

This brings us back to the economies of excellent customer service. You must understand that providing excellent customer service is not an expense but an investment. The cost of acquiring new customers through advertising rather than growing it with referrals from satisfied customers could eventually reduce your business to financial ruin.

Let’s tie customer service directly to profit. Who commands and gets the highest fees for services rendered? The slipshod operator who burns one customer after another? Or the high-quality business that has a huge referral book of happy customers? Have you ever noticed that when you are referred by one of your satisfied customers that price is rarely an issue? Why? Because the referral implies that you are good, professional and will deliver on your promise — you have a track record of success. People will pay more for a sure thing. Focusing on customer service is the path to becoming a sure thing. And what’s more, you didn’t spend a dime in advertising to attract this new business.