5 Facts about running a business that you need to know now (learning them later is painful)

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by Tom Watson on April 24, 2016

The more you know about “customers”, and what they expect and how they act, the better off you’ll be.

So I dug into some research that’s been done on the topic to see what we can learn about them. Every little bit helps!

Luckily, there are a bunch of research studies that teach us a lot about how the world of business operates. I touched on this a bit in podcast 226, and I wanted to expand on it via a post today because I think it’s so important for beginners to know the “rules” so to speak. Let’s get started…

5 Facts about running a business that you need to know

FACT: Customer loyalty can be worth 10 times as much as a single purchase 

Why is this true? Because a loyal customer will generally hire you again. A loyal customer will likely also refer you to others. Plus, to top it off, a loyal customer will also be inclined to use any new services you roll out over your career (like window cleaning, carpet cleaning and other add on services).

FACT: 73% of consumers love a brand because of friendly customer service.

Though it may be hard to get customers to love you, it’s clear the way to their heart is via awesome customer service. This is why you need to jump through hoops, to make the people who choose you, as happy as much as possible. At the end of the day it’s their wallet, and they will spend where they feel like they are being treated the best.

FACT: A 2% increase in customer retention has the same effect as decreasing costs by 10%.

WOW… that’s a stunning statistic isn’t it? Working just a little harder to keep what you have is better than slashing costs across the board. Imagine for a moment that you had a 10% increase in customer retention. That would be off the charts!

FACT: It takes 12 positive service incidents to make up for a negative one.

I was taught that every customer “interaction” is what’s called a “moment of truth” between you and the customer. And these moments of truth can be only two things… positive or negative. You want as many as possible to be positive BECAUSE you need 12 positive ones for every negative one. Remember, the customer is KEEPING SCORE!

FACT: Americans typically tell 24 people about negative customer service, they only tell about 15 people about positive experiences.

The take-away from this fact is that bad news travels more than good news. So be careful about how many people you disappoint because if you let down too many you may have a hard time over coming the negative publicity you’ve created about your brand.

Do you have any facts you’ve read about that you would like to share? How about any comments on the ones above? If so don’t be shy, leave your thoughts below and get the conversation started.

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