6 Reasons Why Your Small Business is Losing Customers (And What You Can Do About It)

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Like it or not, if your business is like most businesses, it is losing customers.

You work hard (and often spend hard) to acquire new customers.

In a perfect world, those customers would stick around.

But this is not a perfect world.

Even if you’re just starting your business, you must understand how to reduce future customer churn. Knowing the proper strategies will put your new business on a faster path to growth.

And if you run an existing business, you’re already frustrated that your company regularly loses customers.

Recent research from McKinsey & Company reveals that only 13% of customers were loyal to a single brand. The study found 87% of customers shopped around, and 58% switched to a new brand.

Image courtesy of McKinsey & Company

This begs the essential question – why do people regularly shop around?

What motivates customers to abandon the businesses they know and buy products or services from competitors?

It’s time to closely examine why your business is losing customers and what you can do to fix it.

Here are six common reasons why customers leave small businesses and 12 tips you can use to start turning the tide.

1. Poor customer service experience

Few things can sour a customer experience more quickly than poor customer service.

Your customer service team is not just a department in your company; they are your business’s ambassadors.

They’re on the front lines every day interacting with your customers. Your customers probably interact with them more than anyone else at your business.

To a customer, your support team is your business.

And a sharp tone, lengthy delays, or a poor resolution all have the power to cost your business a customer.

Shauna Geraghty, a clinical psychologist and head of talent at the global customer support innovator TalkDesk, explains:

Customer support is the backbone of any business. It has the ability to make or break a customer’s experience and, therefore, impacts your company’s bottom line in many ways.

But, before you shake your head and say, “Our customer service is just fine!” you might want to know that there’s a good chance that you won’t be able to tell that there’s even a problem. Geraghty reveals that:

…over 90% of customers who are dissatisfied with your customer service experience will, rather than telling you if something is wrong and how you can improve it, just not come back.

So, if you’re not paying attention to your customer service policies and performance, there’s a good chance that neglect is costing your business.

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What you can do:

Outline thoughtful, positive customer service practices. Start with an internal audit of the policies that govern your team. Conduct interviews with customer support managers and representatives. Bear in mind that you’re not looking for rotten eggs or places to assign blame; instead, you should be looking for points of friction.

Assess what company policies lead to customer dissatisfaction. What internal issues prevent the reps from supporting customers quickly and effectively? Use this data to improve your customer service practices.

And bear in mind these three golden rules of customer service:

1. Respond quickly.
2. Acknowledge when a mistake is made and make it right.
3. Treat the customer with respect and empathy.

Support your customer support team. Your team can’t do their best work if they don’t have the resources to do their jobs well.

So, give your customer service team the resources they need to provide your customers with excellent service. This includes the technical infrastructure and the autonomy to make choices that will benefit your business and support your customers.

Your business will reap the benefits of happier customers and happier employees!

2. Your product or service failed to meet expectations

If your customer has a poor experience with your product or service, the evidence of that experience speaks for itself. Changing a customer’s mind about your business is hard if your product or service fails to deliver.

Customers shouldn’t stick with your business if your product or service isn’t up to snuff. With a marketplace full of options, they should take their valuable time and money elsewhere.

The effects of a weak product or poorly executed service can be brutal – especially in our fabulous digital age of fast communication.

Disappointed customers are likely to share their disappointment with friends on social media. And angry customers will post angry reviews for other prospective customers to see.

Before you can type h-t-t-p-:-/-/w-w-w-…. your business is losing customers, and sales have dropped.

What you can do:

Design and build a quality product or service. Your product or service should do what it claims to and do it well. Don’t think that marketing magic or any other business trickery will make up for an inferior product or poorly executed service.

So, work with a talented product designer. Test. Build with quality materials. Adapt your service based on customer feedback. Do whatever it takes to create and deliver a service or product that is worth paying for.

Manage expectations. Misaligned expectations can be as detrimental to your business as a weak product. No matter how excellent your service or product is, if your customers were expecting something else, they would not be happy.

So, make sure you understand what your business’s brand promise really is. What expectation of value are you creating for your customers?

Now, articulate that brand promise and manage the customer experience to deliver it fully.

3. You didn’t show the value

Price is important to most customers.

But the price isn’t typically the most crucial factor.

After all, price is what a customer pays. Value is what a customer gets.

If your price is disproportionate to what you’re offering in return, customers will move on to their next option.

Small businesses are generally not financially able to engage in price wars. Your business should stand by its prices. (I’m giving you the benefit of the doubt that your pricing was carefully thought out and is proportionate to your product or service… It is, right?)

If your pricing still seems inappropriately high to your customer, you’ve failed to show the customer the value included in your price.

Sales expert and emotional intelligence coach Liz Wendling points out:

Customers are attracted to value not “the lowest price or the cheapest in town.” It has nothing to do with price and everything to do with the value you are conveying. When your potential customers tell you it is about the money that is actually customer code for “show me the value.”

If you’ve clarified your price to your customers but not the value they gain, you’ll lose that customer.

What you can do:

Identify your unique value proposition (UVP). What excellent value do you bring to your customers that other businesses don’t? This is your unique value proposition.

A UVP clearly explains how you will solve your customer’s problem, the benefits included, and what differentiates your offer from the pack. Taking the time to nail down your UVP internally will enable you to better explain the value to your customers.

Clearly articulate your UVP on all platforms. Publish the benefits of your product or service on your website. Educate your customer support and sales staff so that they can speak fluently about the value included in your pricing. And feature your unique value proposition on the landing page for every offer.

No matter where your customer meets your offer,  the unique value proposition should be there, too.

4. Your business is inconsistent

In business and life, consistency breeds trust.

Consistent things can be relied upon. And something that can be relied upon doesn’t need to be worried about.

The peace of mind that trust brings is valuable to your customers.

As we pointed out previously,

Customers can’t get to know (and trust) your business if they don’t have the opportunity to experience your brand in a consistent manner.

So, if your business is inconsistent, you’ll lose trust… and business.

Think about it – would you rather spend your money at the restaurant that gets your order wrong half the time or the restaurant that delivers your customer’s order perfectly every time?

Inconsistent branding, including using your company’s name or logo differently on your site and social networks, uneven quality, unreliable service… any of these can potentially drive customers away.

What you can do:

Deliver an experience that customers can rely on. This starts with you and your employees.

• Educate all of your employees about what a good customer experience should look like.
• Create a brand style guide to establish uniform branding guidelines and share it with your design team and everyone responsible for creating marketing content and materials.
• Hold your employees accountable for delivering a consistently positive customer experience.

Create strong customer interaction policies. If you have a refund policy, consider it carefully before launching it. Do you offer exchanges? Store credit?

Whatever your policies are, ensure they will serve your customers well before you implement them. Then stick with them! Be consistent.

Rebrand, if appropriate. Sometimes, the best approach is to rebrand and create a more consistent, stronger brand identity.

5. You don’t learn from your mistakes

Today’s businesses have access to more information than ever before.

In addition to good old-fashioned books, the internet provides expert resources (and many inexpert resources) on nearly any topic. Entrepreneurs can share ideas and strategies on online forums and networking groups.

And don’t forget online feedback.

In the age of social media, Yelp, and Google Reviews, there’s no excuse not to know where your customers think you’re going wrong. Failure to follow up and make things right with unhappy customers will not only cost you their business, but it’s also likely to scare prospective customers away as well.

Your business can recover from a misstep and salvage a customer relationship if you’re willing to acknowledge the mistake, learn from it, and make things right.

However, ignoring negative reviews and customer complaints will only lead to lost customers.

What you can do:

Maintain an active repair presence. The internet provides free feedback. Monitor the most popular review sites and take the time to follow up with dissatisfied customers. Take advantage of this public forum to show that your company is willing to listen to its customers and make things right.

Take negative customer feedback to heart. Listen to complaints and adjust to improve your product or service. This will help you hold onto upset customers, improve your business, product, or service, and create a better experience for everyone. Many online survey tools offer ways to capture feedback, helping you quickly identify issues.

6. Your sales tactics are out-of-date

When I make a purchase, using heavy-handed sales techniques is a great way to guarantee that I will purchase elsewhere.

And I am not alone.

Customers today are savvier than ever and generally resistant to “being closed.”

When you wrote a business plan, you may have focused on aggressive sales techniques because those techniques made sense when you started your business.

But markets and people have evolved, and sales techniques in many industries have also evolved.

Today, aggressive sales techniques are likelier to drive customers away than lead to positive results. Leslie Ye, for HubSpot, writes:

The old sales playbook — dragging prospects through a sales process and strongarming them into a purchase — only worked because there was no better way for buyers to buy.

Today, things have changed. Buyers have access to more information and more options than ever, and salespeople who still operate under the Always Be Closing model will find that ironically, more doors than ever are closing on them.

Leslie isn’t the only critic of pushy, manipulative sales strategies. Private sales coach Stan Way describes these outdated tactics as “like salt on a slug.”

If your sales techniques focus on manipulating or coercing a sale, your business is actively chasing customers away.

What you can do:

Employ value-based selling techniques. Take the time to learn what your customer needs. Then offer value-based solutions that address those needs. Show how your product benefits the customer and allow them to decide if it fits them.

Build relationships with your customers. If you’re trying to sell with every single customer interaction, you’re doing it wrong. Instead, focus on establishing trust with your prospective customers.

Have honest interactions and provide value through helpful content and entertaining social media engagement. Then, when a customer needs the product or service you provide – they’ll turn to you, their trusted resource.

Tend to your flock

The key to growing a business is maintaining your customers while acquiring new ones.

So, stop leaking customers.

A problem you haven’t identified is still a problem. So, be willing to take a good hard look at the areas where your business may fall short.

Then take the necessary actions to remedy the problems you find.

Examine your customer service policies and your product or service itself.  Where can they improve?

Can you better show the value and provide a more consistent customer experience? Then do it!

Are you overlooking customer feedback? Do you employ outdated sales techniques?

Today’s the day to remedy that.

Your business growth depends on it.