Volume 52, July 2005: Customer Retention

Keyzine: An E-zine for Leaders about the People Side of Business

This is a monthly electronic magazine for anyone who wants to be a better leader, coach, facilitator, or simply, to tune up their people skills. It is a complimentary publication, devoted to the next evolution of Quality Thinking.

Publisher: © Key Associates, LLC, 2005 ISSN # 1545-8873

“Stronger timber does not live at ease. The stronger the breeze, the stronger the trees.” — Elfie Page, Dan Rather’s grandmother

“The man who will use his skill and imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.” — Henry Ford

“Service to others is the rent you pay for your room here on earth.” — Muhammed Ali

“You can hardly make a friend in a year, but you can easily offend one in an hour.” — Chinese Proverb


  • What’s Hot in Leadership
  • Maintaining Yourself as a Leader
  • Frequently Asked Questions from Leaders
  • Educational Opportunities
  • Useful Websites & Newsletters
  • Articles/Publications

What’s Hot in Leadership

  • Inviting feedback from all customers.
  • Never breaking a promise without personal communication first.
  • Being there when needed.
  • Exceeding expectations.

Maintaining Yourself as a Leader

Your greatest ally is someone who will give you honest feedback. Sadly, unhappy customers walk (96% defect) – and they tell others (at least 9 other people) about their negative experience. More than 13% will tell at least 20 other people and exaggerate the story of their frustration. They rarely tell you. Their primary complaint: “an attitude of indifference.” Losing customer confidence, which takes years to build, can be lost in a few minutes. Are your channels open for feedback? Their feedback is a gift. Talk to customers – employees, clients, patients, vendors – and listen deeply. Accept what they say. Be willing to act immediately and make changes. The customer whose problem you solve is your ally for the duration. If it’s hastily resolved, 96% of those will do business with you again. And will tell 5 to 7 other people. They become your champions! Word-of-mouth marketing is the cheapest and most effective strategy! (Figures from Sanders, Fabled Service, 1995.)

Frequently Asked Questions

“What erodes customer confidence?”
Mainly, broken promises. All you have in business is integrity – living at your word. As Werner Erhardt of est said, “Make promises you can keep; and keep the promises you make.” If you can’t keep an agreement, rework it. There are service elements that are deal-killers:
  • Inconsistent service
  • Rude people (attitude of indifference)
  • Poor accessibility when needed
  • Time wasters
  • Late/partial/wrong delivery (errors)
  • Poor quality
  • Unfair price
  • Making excuses, blaming, defending any of the above.
“What do we do when we make a mistake?”
We are all human, and mistakes happen. First of all: empower people in your system to take responsibility for a problem and take action. Forbid the making of excuses, blaming, and defending. Here’s a formula:
  • Admit fault. “Glad you told me.”
  • Validate their feelings. “I know you are angry.”
  • Apologize. “Sorry we fell short of your expectations.”
  • Assure them that you will take care of them.
  • Ask, “What would make you feel better about this?”
  • Provide it or “option (find a substitute that will make it up to them).”
  • Work with the customer on resolution.
“We do a satisfaction survey. Isn’t that enough?”
A satisfaction survey is not sufficient for gathering all the customer data you need to improve. Noriaki Kano described three levels of customer knowledge:
  • Level I – Assumed, expected. If these elements are missing from your service, you will get complaints. This is “must-be” quality. Question: What are the basics? How well are we doing?
  • Level II – Requested. “More is better” quality. These add-on’s typically bump your satisfaction scores up. An example would be bending the rules to accommodate a customer. Question: What more could we do?
  • Level III – Delighted. Customers cannot tell you they need these. They just know they are happier for it, when they experience it. This is called “surprising, attractive quality.” Delighters come from innovations. Level III’s would cause customers to brag; they are the features that retain customers and draw others to your business. Question: How could we surprise and delight you?
“We get plenty of random complaints that are not picked up by our satisfaction survey. What do we do with these?”
Keep a log of “Customer Murmurs.” Write down stray remarks in a designated book, and periodically review them for trends. Anyone may write in this book. In fact, keep one in your waiting room(s). This a tool that captures all the things you forgot to ask on a survey. Another technique is Rounding or Customer Debriefing. In person, face-to-face, ask, “What experiences delighted you during your visit/stay here? What were some of your disappointments?” Listen and learn.



  • But I Don’t Have Customers, American Media, Inc. (1997)-21 min.
  • The Hidden Customer: Internal Customer Service, Salinger (1989)-19 min.
  • We’re on the Same Team, Remember? CRM Films (1996)-20 min. (available through LearnCom, 1-800-824-8889)

The value of customer retention: Customer Retention.

Training solutions: seminars, DVDs, online materials: Customer Service Training.

Key Associates offers one-day, on-site training, linking quality to customer service: Customer Course. A specialized version, directed to internal customers, is available.

Useful Websites & Newsletters

Keyzines related to the topic: Dealing with Difficult People, Keeping Good People, Employees as Customers, and Feedback.

Feedback from customers, free library: Customer Retention.

A 2% increase in customer retention has the same effect on profits as a 10% reduction in cost: Customer Retention.

Develop a customer retention program: Developing a Customer Retention Program.

Find out why good employees walk: Employee Attraction and Retention Analysis.



Buy MK’s latest book!