6 Major Reasons Customers Switch Companies Or Products

Have you ever experienced the loss of a major client or customer? If you haven’t then congratulations. However, if you are in business long enough, it will eventually happen to most of us. I know it has happened to me on more than one occasion. We learn from it and move on. These 6 reasons apply to almost any type of business, online or offline. I will break down in percentages why customers change products or companies.

1 – Negativity. When you customer experiences a negative situation from the representative or customer service, this reflects badly on the company and everyone involved. If your customers needs aren’t addressed promptly with the proper approach you have a lost customer waiting to happen. Statistics say 68% of customers switched products or companies due to negativity in dealing with issues.

2 – Unresolved Complaints. Indifference towards a customer and their complaints will result in a customer going elsewhere for their product or service. When the proper effort is not displayed to resolve a customer complaint a lack of respect is shown to that particular customer. When you are in a leadership position, make sure complaints aren’t ignored but rather dealt with efficiently and properly. If these complaints aren’t resolved promptly, you will lose a customer. So deal with complaints as they arise. Statistics show 17% of customers switched products or companies due to unresolved complaints. If these complaints are dealt with promptly, you may save 17% of your customers. That’s a highly significant number that is within your control.

3 – Price. When a customer changes companies or products due to price, this shows a lack of value exhibited for your product or a lack of a good business relationship with your customer. In my opinion, for me to switch products or companies based on a marginal price difference is nominal assuming I have excellent customer service and a good working relationship. On the other hand, if I am purchasing in bulk (10,000 widgets with a $1 price difference) this price variance becomes highly significant and has to be addressed for the sake of the bottom line. Statistics show that 6% of customers change products or companies due to price. If you build great value in your product, a slight price variance form your nearest competitor can be justified. The benefit from your product is far greater than the competitor, and your price is justified.

4 – Buying From Relatives. You know the ‘ole saying, ‘Blood is thicker than water’. Well it applies in business as well. Statistics show that 5% of customers change products or companies due to buying from relatives. This reason is practically beyond your control. This is just a part of doing business and you have to live with it.

5 – Relocation or Moved. When a company changes its physical location you may lose a customer. I know I like to keep my business locally, so if I relocate to a different city or state, I am more apt to do business with local companies. Statistics show only 3% of customers change products or companies due to relocation.

6 – Death. Only 1% of customers are involved in this category. Death is inevitable and cannot be controlled. When death occurs to a customer or a major purchaser, a shake-up within that customer or company inevitable results in a change in where they purchase their products or if they purchase at all.

So, statistically speaking the 100% breakdown in why we lose customers looks like this:

68% from negativity; 17% from unresolved complaints; 6% from price; 5% from purchasing from relatives; 3% from relocation; and 1% from death.

What can you learn from this? Spend most of your time (80%) on issues 1 & 2, and your business will prosper.

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