Because of my work in the field of hospitality, I read quite a few books on the topic of customer service and thanks to great authors like Chip Bell, Scott McKain, Colin Shaw, and others, I always complete a book more prepared to serve my own clients.

Recently I was reading a book by Leonardo Inghilleri and Micah Solomon titled, Exceptional Service Exceptional Profit. I had already underlined several refreshing insights when, on page 43 of the book, I highlighted this sentence:

Individual customers are irreplaceable.

I was so energized by the sentence that I called to my wife in the other room to share it with her.

Conventional thinking about customer retention is that customers are replaceable. That is, when one customer leaves, there’s always another to take his or her place.

But the authors are not talking about the anonymous masses. They are talking about Mr. Lewis in room 512 who cannot access the Internet, Ms. Connor who’s been on hold with technical support for seven minutes (and counting…), and Mr. Garcia who is challenging an unexpected split plate charge on his check at table 17.

If Mr. Lewis, Ms. Connor, and Mr. Garcia are not satisfied with their experiences, they may choose to defect from one provider to another in search of improved quality, responsiveness, value, or a number of other factors. And because a majority of customers do not complain—you’ll never know that they left or why they left.

And here’s the scary part: Mr. Lewis, Ms. Connor, and Mr. Garcia are irreplaceable.

When they decide to quit doing business with you, they are gone. Forever. You may attract a new customer’s spending but you won’t receive another nickel from these three individual customers. Ever.

A great illustration of this truth is the cable industry. In 2006, cable TV companies had 68.5 million video customers. The number fell to 63.3 million in 2009, according to research firm In-Stat.

Why did cable customers defect? To save money? To get better quality? Or were they just tired of waiting for the cable guy to arrive between the hours of 9am to 1pm?

How much revenue does each customer represent to the cable company? My last cable bill was $119.79. That’s $1,437.48 per year. At that rate, my lifetime value to my cable company is significant.

Calculate the lifetime value of your own customers. Given that total, can you really afford to lose even one because of a lapse in customer service?

Recognize that when one of your customers (e.g., Scott Lewis or Jill Connor) defects, he or she is irreplaceable. And his or her lifetime contribution to your business—including future spending, feedback, and referrals—can never be replaced. Ever.

Thanks to all of you who participated in this year’s survey! The unique perspectives shared in the survey feedback and analysis produced some interesting results. My hope is that the information can be used to improve the product and service quality for those who choose to read it, share it, discuss it, and act upon it.
All the best,
Steve

Abstract

In a recent survey, industry professionals identified the top three contributors to the industry-wide decline in customer service. Each of these causes is presented along with suggestions intended to mitigate them and support employee and customer satisfaction. Additionally, examples from The Ritz-Carlton, Nordstrom, and Starbucks are provided as illustrations of what each company does, in part, to consistently excel in employee and customer satisfaction. Finally, interpretations of the data are offered with an eye toward providing cost-effective training and a follow-up structure that improves employee commitment to continuous improvement.

For more complete results and analysis, click here.

Starbucks card winners:

Jeff B., Phoenix, AZ
Mark C., Frankfurt, Germany
Lisa G., New York, NY
Ron H., Fullerton, CA
David M., Easton, CT
Robert M., Englewood, CO
Kent P., Lincoln, NE
Marianne S., Washington, DC
Jane U., Dallas, TX
Joe V., Indianapolis, IN