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Why Are Your Customers Leaving (and What Are You Doing About It)? Part I

Why Are Your Customers Leaving (and What Are You Doing About It)? Part I

Outshining your competitors and creating a great customer experience takes time, effort, and energy, but the benefits are well worth it when customers stick around.


Did you know that…

  • Businesses lose $1.6 trillion per year when customers move away from them.
  • Recruiting new customers costs five times as much as retaining current ones and it costs 16 times more to build a long-term business relationship with a new customer (versus cultivating an existing one).
  • The average customer spends 67% more in their third year as a customer versus the first year.
  • A 5% increase in customer retention can increase a company’s profitability by 75%.
  • 80% of a company’s future revenue will come from just 20% of its existing customers.

These sobering statistics apply to any company that depends on a growing customer base to not only stay in business, but to thrive and grow year-over-year—electrical distributors included. With customer acquisition costs rising each year, and with increased competition coming from both online and offline channels, the need to keep customers happy and placing orders is becoming more important than ever.

“Businesses in any industry, including electrical distributors, lose customers for two main reasons: either they damage an existing buyer relationship or a competitor outshines them,” Brian Carter, president at business consultancy BCG points out. “If you want to maintain and grow your customer base, you have to maintain your buyer relationships, make sure your marketing, sales, e-commerce, and customer service are up to par with all your competitors, and find ways to outshine your competitors.”

Why are They Leaving in the First Place?

Figuring out how to keep customers in place and happy isn’t always easy, but it helps to take a step back and determine why they’re leaving in the first place. And while most companies are quick to blame their competitors’ lower prices and/or stiff competition from e-tailers like Amazon Business, the reality is that—much like when a marriage ends in divorce—there are probably underlying factors at work.

Ed Marsh, an international business consultant and founder of Consilium Global Business Advisors, says too many companies are quick to blame “The Amazon Effect” for stealing their customers, when in reality the Toys-R-Us and Brookstones of the world were probably headed for their demise even before Jeff Bezos began his takeover of the e-tailing world.

“Those examples break down under scrutiny,” says Marsh. “The Bellevue Mall in Seattle, for instance, is growing rapidly in the shadow of Amazon, and even has an Amazon retail store. And Toys-R-Us lost its way when the quality of the ‘mini theme park’ experience that was such a powerful draw for children and parents alike, began to fade compared to other entertainment.”

So, if they don’t want traditional shopping malls and theme parks, what do consumers want? And more importantly, what do B2B buyers desire from their distributors? According to Marsh, they want insights—those real, deep, impactful pieces of information that make them better at their own jobs. “When they don’t get that,” says Marsh, “they default to price, selection, and free shipping as decision criteria.”

Outshine and Outlast

It’s a competitive world out there, where everyone seems to be knocking on your best customers’ door, trying to outdo you. To survive and thrive, electrical distributors must create a great customer experience, which includes both an impressive web experience and a frictionless e-commerce experience. “You need to try to make your e-commerce as good as Amazon,” says Carter, “which means making it convenient, with great product descriptions, user reviews, search engine optimization (SEO), and more.”

The buck doesn’t stop there. Distributors that want to retain their customer bases must also grow and own those relationships through best-practice offline and online sales and marketing. Using content marketing like white papers and e-books, for example, companies can share their knowledge and educate their customers in a way that helps those customers do their jobs better. And, investing in both paid search ads and social ads ensures that prospects and customers actually see that content.

“If a YouTube video plays in a forest and no one is around, does it make a sound? Nope,” Carter quips. “So, use targeting options like search and social ads to make sure people see your marketing content. Then, that content can do its job of helping salespeople throughout the sales process; drive both offline and digital-only sales, and keep customers coming back for more.”


SIDEBAR: 3 Ways to Keep Customers Coming Back

Figuring out why customer leaves (i.e., “customer churn”) is a complex puzzle that can be difficult to solve and even harder to overcome, but it’s a necessary exercise for companies that want to maintain one of their most valued assets:  a ready, willing, and able customer base.

Musing of Entrepreneurship’s Casey Hill, chief partner and consultant at Hill Gaming Company, gives electrical distributors a 3-step process for increasing customer retention:

  • Focus on relationships. You can’t always win, and you don’t want to win, the race to the bottom price-cutting war. Instead, focus on instilling loyalty in your base through personalized outreach, even in-person meetings, and making sure you are invested in staying dialed in with how the client is viewing things. “If a company is simply buying from you based on precedent and there is no relationship,” Hill says, “it will jump ship when someone offers a lower price.”
  • Engage them on the new mediums (Facebook, Twitter, LinkedIn etc.). Customers now consume information on a ton of different platforms. Make sure you have evolved past simple print magazines as a way of connecting with your clients. “Also, use these avenues to create a human brand,” Hill suggests. “Share about your team and make people feel connected.”
  • Cultivate the relationship daily. A relationship that is not increasing in lifetime value is on a path to churn. “Continually be looking at how you can grow and expand the value of existing relationships,” Hill says. “The best way to not have someone at risk for leaving, is to have someone looking to grow with you.”


In part II of this article series, we’ll give you a laundry list of top strategies that all electrical distributors can start using now to keep their customers happy, in place, and buying more.

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Bridget McCrea  is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.

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