increase customer loyalty

Top 5 Reasons Your Small Business May Be Losing Customers

Stephen Robert Morse

Any small business owner knows that loyal customers are the best customers. They will continue to buy from your small business and, better yet, they may refer their friends and colleagues. Unfortunately, the typical American business loses 10-25% of its customers every year. Some factors, such as the economic climate, are out of a small business owner’s control. But there are other factors that you have great influence over. Here are five reasons your business may be losing customers.

1. Providing Poor Customer Service 

Consumers today have very high expectations when it comes to customer service and good customer service can increase customer loyalty. Companies like Apple and Amazon have set the standard for excellent customer service, and companies small and large must adapt in order to stay competitive so they don’t start losing customers. These leading companies have also proven that putting customer service at the heart of your business model will lead to a more successful business and higher customer retention.

customer loyalty

So, what does good customer service look like? It’s all about consistency, reliability, and responsiveness with every customer interaction. All it takes is one bad experience and you may lose that customer to a competitor instantly. Every interaction a customer has with your business should make them want to choose you again. Make sure to respond to inquiries and solve problems as quickly as possible. Of course, a friendly smile and positive attitude are also integral to good customer service, so train your staff well.

2. Not Rewarding Customer Loyalty 

Even with great customer service, you need customer loyalty. Give customers incentives to keep choosing your business over the competition. It’s not enough to offer customers discounts and promotions through customer loyalty programs. If customers don’t feel they’re getting the best value by continuing to do business with you, they may move on to a competitor’s offer, which leads to you losing customers.

Monetary incentives are just one way to reward customer loyalty. Learn to continually make customers feel appreciated in small ways such as featuring them in newsletters and sending birthday cards and holiday greetings, as well as by asking for feedback and involving them in the development of new products or services.

3. Focusing on Price vs Value 

For small businesses, focusing on price vs value is rarely a good idea. Maintaining a position as a low-cost provider is challenging because it squeezes your margins and makes it very difficult for you to increase prices should you need to. In addition, a larger player will almost inevitably undercut you and steal your customer base.

price vs value

A better approach to increase customer loyalty would be to focus on value. Customers derive value not just from a price tag, but also from a variety of factors such as service, consistency, schedule and opening hours, accessibility, and quality.

4. Using Old Technology

Technology is a critical ingredient in the brand loyalty equation. Nothing may lead to losing customers or decrease customer loyalty faster than a slow checkout process or lack of convenient payment options – both online and off. Not only do consumers today have high expectations, but they also have short attention spans and little tolerance for inefficiencies.

old technology

Poor or old technology can lead to you losing customers, and good technology can help you keep them. Make sure your websites are easy to navigate across different devices, especially mobile. Ensure your business has a social media presence. Find opportunities to use technology to improve your products or services. For example, if you run a restaurant, consider listing your business on a delivery app such as Uber Eats so you don’t lose any existing customers who might prefer ordering through that service.

5. Not Understanding How to Incentivize Sales Staff 

Employee satisfaction is a barometer for customer satisfaction. If you can’t keep your staff employed for the long term, don’t expect to keep your customers either. Understanding how to incentivize sales staff can help motivate your sales team by offering sales incentives, keeping them engaged, and ensuring they’re properly equipped to take care of customers. Happy employees lead to happy customers.

how to incentivize sales staff

Guidelines and policies can be helpful to maintain consistent service levels and standardize problem resolution, but you should also make sure your staff feels empowered to make judgment calls when resolving customer issues. Your customers will appreciate that more than having to escalate problems to management.

Customer Loyalty: Learn How to Keep Your Customers Loyal

While some customer attrition is normal, remember, it is far more cost-effective and profitable to keep existing customers than to attract new ones. Avoiding or resolving these five common reasons why customers leave is just the beginning. Building customer loyalty takes time and a concerted effort but, in the end, the payoff is well worth it.

Not sure where to start? Check out How to Keep Customers Coming Back for More – Customer Retention Strategies. This free, downloadable eBook will help you learn proven strategies to boost customer retention, including:

  • How to find out who your most valuable customers are
  • How to leverage FOMO, or fear of missing out, to encourage customer loyalty
  • The best time to ask customers for feedback

You’ll also learn how to involve customers in your business’s success, as well as how to create “social proof” to drive customer interest and engagement.

Start minimizing customer attrition and maximizing customer loyalty today. Download your free copy of How to Keep Customers Coming Back for More – Customer Retention Strategies.

Next Steps: You’re busy. We get it. So why not let us do some work for you? By signing up for the weekly Small Biz Ahead Newsletter, you’ll receive hand-picked articles, How-Tos, and videos covering the latest in small biz tools and trends. We’ll do the research while you spend your time where it counts: managing and growing your business.

5 Responses to "Top 5 Reasons Your Small Business May Be Losing Customers"
    • David Dahl | March 5, 2021 at 1:22 pm

      Very good article. Thank you.

      • Small Biz Ahead | March 5, 2021 at 5:54 pm

        You’re welcome, David! We’re glad you enjoyed it.

    • Angelina Pablo | March 3, 2021 at 1:25 am

      Thank you for the information.

      • Small Biz Ahead | March 5, 2021 at 6:03 pm

        You’re welcome, Angelina!

    • Kenneth Cataldo | May 23, 2019 at 3:40 pm

      very good

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