As customers, we’ve all experienced lousy products and services. Most of us shrug it off and vow never to buy from that company again. Yet there’s a special few who go the extra mile in getting their revenge.
If you’ve shared your bad experience with others, complained to the company, or gave a bad review on social media you’re part of that special few.
Sure, at one time or another, we’re all been part of that group.
Do you know how much money you’re costing companies every time you write a bad review, or call customer service to complain?
To put bluntly, you’re costing them ALOT!
As consumers, this may sound like justice being served, but if you’re a business owner, you should be concerned and here’s why.
Unhappy customers create a domino effect of revenue loss.
Companies lose much more then life time revenue. In Fred Richfield’s book The Ultimate Question 2.0, Fred explains the domino effect unhappy customers (detractors) create which results in huge revenue loss.
How can a detractor create a domino effect of revenue loss?
The unhappy customer takes their anger out on your frontline staff creating low morale. Dealing with 1 or 2 disgruntled customers is common place. Yet, as the number of detractors grow, the greater the impact on company morale and job satisfaction. The once serene workplace turns into a negative work environment which results in talented staff quitting.
Employee turnover is an expensive problem.
A Huffington Post article titled, How Much Does Employee Turnover Really Cost, by Jack Altman, states the cost of losing an employee is 1.5-2.0x an employee’s annual salary.
Darn you unhappy customers!
In addition, detractors impact revenue by bad mouthing your company. If your company’s brand isn’t well establish this could spell disaster, especially if you lack enough social proof to overcome negative reviews. For a prospect to consider your services, it could take 5 to 10 positive comments for every negative comment made.
To truly know how much unhappy customers are costing your business, calculate the potential revenue of a lifetime customer, plus the cost of loss staff, plus the loss of prospects and referrals. Multiply this number by each detractor and that’s how much revenue your company is losing.
Yes, it’s a big number and why customer relationships are so important. Customers can be your best salesforce, or your worse critic.
In essence, unhappy customers can put you out of business.
So moral of the story, do right by your customers!