The Real Cost of One Lost Customer

No storeowner likes to lose a customer. But the real financial impact goes well beyond that one customer. Retail strategy consultants Rich Kizer and Georganne Bender, of Kizer & Bender in St. Charles, IL, have developed a formula to put a number on the real cost.

1. What is your average customer sale? $_____

2. How many times a year does this customer come in to buy?

3. Based on the above, how much will this
customer spend in your store in one year? $_____

4. How many years is that customer potentially your customer?

5. Multiply the number in question 3 by the number in question 4 to calculate
the lost lifetime sales of this customer:
$ (question 3 answer) x (question 4 answer) = $_____

6. But there’s more, Kizer & Bender say. Studies show that the average unhappy customer tells 10 people about her bad experience. Social media balloons that. So if your unhappy customer tells 10 others, and they decide to no longer shop with you, what’s the total cost? Multiply the dollar amount in question 5 by 10, then add in the original customer’s lifetime sales (question 5) to get the answer.
$ (question 5 answer) x 10 = $ _____ + $ (question 5 answer) = $_____

Each store, and each customer at your store will be different. But say you have a customer who has been coming in 4 to 6 times a year, spending an average of $65 each time, and she will likely remain your customer over the next 10 years of dancing. Following Kizer & Bender’s formula, that one unhappy customer would cost you $2,600 to $3,900 in lifetime sales. But that’s not all, because the 10 people that customer is likely to tell are worth another $26,000 to $39,000 in lost sales. Now, add in the original unhappy customer’s lifetime sales, and the number grows to a whopping $28,600 to $42,900. That’s a pretty tough number to make up.

Yes, Even for Brick-and-Mortars
Your online presence can make or break a purchasing decision.
Even when people shop in a local brick-and-mortar store, its online presence is an important factor in their purchasing decisions, according to The Why Before the Buy, a recent study from YP Marketing Solutions. While high prices are the biggest turnoff to customers, 8 of the top 10 reasons shoppers won’t even consider shopping at a local store have to do with an inaccurate, incomplete or inconsistent online presence: businesses with negative ratings and reviews, inconsistent information, inaccurate information on their website, wrong contact information listed online, no website, no testimonials or reviews, a website that is hard to navigate and no photos or videos online.

Almost two-thirds of the survey respondents (64 percent) used two or more online sources in a single shopping search. “This makes a strong case for the need to have a solid and widespread presence across the web—on online directories, industry websites, review websites, social-media channels, a business’ own website and more,” concludes the study. “In other words, local businesses need to make sure they are seen everywhere consumers are looking.”

What Shoppers Look For

Beyond basic contact information, businesses need to make sure they add rich content wherever they appear online: images, videos, coupons and offers, event calendars and business hours to entice the customer to make your store the destination for their purchase. And since more and more consumers are doing their searches on smartphones, your website needs to be mobile-friendly. What kind of information do consumers weigh in their searches? Primarily, prices, products and services offered, customer service and location. Then they consider coupons and offers, familiarity with your business logo, photos and videos, “about us” or “history” details and testimonials or recommendations from friends or family.

Tip: On a regular schedule (first Monday of each month?), check that all your online entries (directories, your website, social media) are consistent, accurate, complete and up-to-date. Once every quarter, audit your online presence as a whole to see what’s missing, what could be improved or freshened up.


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