increase customer loyalty

Top 5 Reasons Your Small Business May Be Losing Customers

Stephen Robert Morse + Anne Shaw

Any small business owner knows that loyal customers are the best customers. They will continue to buy from your small business and may even refer their friends and colleagues. Unfortunately, most American businesses retain only about 20% of their customers—sometimes less. Here are five reasons your business may be losing customers. Once you identify which may affect your customer base, you can turn them into opportunities for improvement.

1. Providing Poor Customer Service 

Consumers today have very high expectations when it comes to customer service, and good service can increase customer loyalty. Organizations like Apple and Amazon have set high standards for excellent customer service. These leading companies have proven that putting customer service at the heart of your business model will lead to a more successful business and higher customer retention. Companies and small can learn from them to stay competitive and keep their customers.

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 instantly and permanently lose that customer to a competitor. Every interaction a customer has with your business should make them want to choose you again. While a friendly smile and positive attitude can go a long way, there’s more to it. Aim to respond to inquiries and solve problems as quickly as possible, for instance. Try setting goals around response time and positive resolutions. Train staff accordingly and empower them to make things right as needed.

2. Failing to Reward Customer Loyalty 

Great customer service may act as the water and sun when it comes to budding customer relationships, but recognition and appreciation are the fertilizer. Rewarding customers for their loyalty can go a long way.  Nurture customer loyalty by giving rewards to those who keep choosing your business over the competition. You can offer discounts and promotions through customer loyalty programs. By continually offering great value in return for their business, you make your customers less likely to take a competitor’s offer.

Monetary incentives are just one way to reward customer loyalty. Build a sense of belonging and community. Show customers you appreciate them in small ways such as featuring them in newsletters, sending birthday cards and holiday greetings, and 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 over value is rarely a good idea. For one thing, maintaining a position as a low-cost provider squeezes your margins and makes it very difficult for you to increase prices should you need to. Plus, a larger player can more easily undercut you to steal your customer base.

price vs value

A better approach to increase customer loyalty for small businesses is focusing on the value you provide. Customers derive value not just from a price tag, but also from a variety of factors such as service, consistency, accessibility and quality.

4. Using Outdated Technology

In today’s world, technology is a critical factor in the brand loyalty equation. Not only do consumers today have high expectations, but they also have short attention spans and little tolerance for inefficiencies. A slow checkout process or lack of convenient payment options­ – both online and off – can persuade some customers to move on to other businesses that provide smoother better customer experiences.

old technology

Poor or old technology can lead to you losing customers, and intuitive, simple technology can help you keep them. Make sure your websites load quickly and are easy to navigate across different devices, between computers, tablets and smartphones. Ensure your business has a social media presence—one you keep up with. 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 to keep customers who might prefer ordering takeout online.

5. Poorly Incentivizing Sales Staff 

Employee satisfaction is a barometer for customer satisfaction. If you can’t keep your staff , don’t expect to keep your customers either. So, consider how you can motivate your sales team by offering sales incentives to keep them engaged and focused on the right behaviors that not only sell but also serve your customers.

how to incentivize sales staff

Learn How to Inspire Customer Loyalty

It’s far more cost-effective and profitable to keep existing customers than to attract new ones. Avoiding these five common pitfalls that cause 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? Start minimizing customer attrition and maximizing customer loyalty with our free eBook, How to Keep Customers Coming Back for More – Customer Retention Strategies. This downloadable eBook shares proven strategies to boost customer retention, including:

  • How to find out who your most valuable customers are
  • How to use the concept of reciprocity to encourage customer loyalty
  • The best time to ask customers for feedback

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


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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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