Ohio State University Extension Fact Sheet

Ohio State University Fact Sheet

Community Development

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Keeping Customers Satisfied


Small Business Series

Wanema Flasher

Customers are the primary reason for being in business. They are the lifeline of any business, and it is important to keep patrons by avoiding or minimizing customer dissatisfaction.

How much is a good customer worth? If good customers are worth having, they are worth your effort to keep them coming back. A certain amount of customer turnover is inevitable. Some business people think they can afford to lose some customers because they can replace them with new ones. However, attracting and retaining new customers is expensive. Marketing data indicate that it costs five times as much to get a new customer as it does to keep an existing one.

Do you keep customer turnover to a minimum? Are you sure you suffer only natural and unavoidable losses? Use the self-evaluation form on the next page to give yourself an indication of how well you are doing with your business.

Impressions Last a Long Time

What makes an impression on a potential or current customer? Nearly everything you do makes an impression. Your overall goal should always be to service your customers smoothly and objectively.

Building a successful, positive image with your customers enhances credibility. Living up to that image creates valuable word-of-mouth publicity.

Are the physical facilities of your business clean and safe? Organize equipment and supplies neatly. When expanding or remodeling a business, make it as attractive in appearance as possible. Anything less gives a shoddy, unprofessional image.

Work with your employees on customer relations whether they are dealing with people in person, over the telephone or by mail. Be sure that all employees know their responsibilities.

Always have an adequate inventory on hand. Running out of supplies or not having advertised inventory results in negative publicity.

Develop a procedure for handling customer complaints. Your responsiveness has the potential to build excellent customer relations. Consider customer complaints to be a form of constructive criticism, which you can use to make improvements.

Basic Steps for Effective Complaint Management

Listen to your customers and acknowledge their complaints. Customers who register complaints expect action. Complaining involves some inconvenience and possibly expense.

Develop empathy or show concern for the customer. Personalize your response. Ask questions to identify and analyze the problem. Obtain the customer's ideas concerning possible alternative solutions.

Resolve the complaint according to policy. Decide in a fair manner what you are responsible for and initiate some positive action to remedy the situation. Follow through with the proposed resolution. When it cannot be immediately resolved, keep the customer informed of progress and notify him or her promptly when a settlement has been reached. Keep a notebook of promised action.

Keep a record of complaints and proposed action for resolution. For most small firms, this can be accomplished simply by requiring salespeople to write on an index card each complaint handled that day. These cards should be given to the manager daily. Complaints should be studied, followed up and tabulated periodically to determine trends.

What is it Worth to Keep Customers Satisfied?

According to consumer surveys, a person who has had an unpleasant experience with a business will tell 9 or 10 other people. About 13 percent will tell more than 20 other people. This negative word-of-mouth publicity can be very harmful to a business. More consumers are basing their purchasing decisions on the advice of people they know. An unhappy customer cannot be kept quiet. However, you can regain customer support by solving complaints quickly. Such customers not only may come back but also will spread positive talk on to others.

Customer Relations Self Evaluation1

Check the "yes" and "no" blanks that apply and total the number of "yes" responses at the bottom.

  1. Do you realize that your established customers, even the small ones, are your best accounts because they are easier to sell and require fewer "special deals"? Yes____ No____
  2. Do you communicate to all your customers that they are important to you? Yes____ No ____
  3. Do you encourage return business? Yes____ No____
  4. Do you tailor your service to the customer's particular needs? Yes____ No____
  5. Do your customers usually call on you when they have a tough problem to solve? Yes____ No____
  6. Do you provide any unique or special services for your customer that they would find difficult to duplicate? Yes____ No____
  7. Are your customers genuinely convinced you have their interest and welfare at heart? Yes____ No____
  8. Do you ever take a customer for granted? Yes____ No____
  9. Do you go out of your way to learn as much about each customer as practical? Yes____ No____
  10. Do you follow up to make sure your customers' orders are filled accurately and delivered on time? Yes____ No____
  11. If a customer registers a complaint, do you handle it promptly? Yes____ No____
  12. Do you always follow up on problems and complaints to make sure their resolution is satisfactory to the customer? Yes____ No____

Total "Yes" Answers

To determine your rating, add together all of the "yes" answers. Compare your rating to the scale below. If your score is:

1 Zetocha, Dale. Retaining Customers by Handling Complaints, Cooperative Extension Service, North Dakota State University. October EC 813, p-3.

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Keith L. Smith, Associate Vice President for Ag. Adm. and Director, OSU Extension.

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