The non-profit sector is largely a service based industry with success often defined by the level of customer service an organization offers their membership at each touch-point. It is in the area of customer service that many valuable lessons can be gleaned from the for profit business sector.
The Technical Research Project reported that on the average, 25% of a company's customers are unhappy to the point of leaving and only 5% will voice their dissatisfaction. To quantify the percentages, a company with 1000 customer's results in 250 dissatisfied and only 12 will ever voice their dissatisfaction. Result: 214 will leave and the company will never know why. A complaining customer is the first step towards process improvement and capturing loss revenue streams. (Study not specific to the auto industry.)
The loss of an unhappy customer is not only measured immediately in lost revenue but also in prospective business as they will tell 15-20 people of their bad experience. 250 upset customers could result in as high as 5000 people with a negative view of your brand (5 times the amount of the previous examples customer base).
Sure a company can patch the holes, temporarily at least. A happy customer will tell 3-4 people of their pleasant experience and a company can offset loses with an aggressive marketing and advertising strategy to find new customers. According to Flowtown, the cost to acquire a new customer is 6.7 times more expensive than the cost to retain an existing customer. Additionally new customers require more personal selling, setting up new accounts, price sensitivity whereas existing satisfied customers have reduced pricing sensitivity, are more likely to refer business, and repeat purchases.
Revenue decreasing, expenses increasing, brand recognition disintegrating - the profitability math simply doesn't add up.
A few key points:
- Landmark Study - The Form Corporation, found that 70% of customers who stop doing business with a company do so because they received too little attention or poor quality attention.
- The Profit Impact of Market Strategy Study found a high customer satisfaction rate is more indicative of profitability than any other variable.
- William Ban said that "today, more than ever before, enterprises must create value for their customers in a way that is demonstrably superior to that of their competitors."
Understand that if a customer complaint is resolve on the spot 90% of the complaining customers will continue the business relationship.
Key Takeaway: High membership satisfaction equates to a solid retention rate which strongly contributes to the lifetime loyalty of a member - a metric that will keep your association relevant for many years to come.
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Bryan Harrison
Speciality Equipment Market Association (SEMA)
Sr. Manager of Networks
Diamond Bar CA
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