Service versus Sales

August 13th, 2007   •   13 comments   

Used car salesman (courtesy of Chaka Raysor)

I am always puzzled why companies spend a lot more energy and focus on trying to sell rather than pleasing their customers. If you don’t already know, customer retention is a far more profitable strategy than customer acquisition. That, plus the fact that word of mouth is taking off more than ever in this ad-saturated age of increasingly powerful social networks. Here are some sobering statistics which tells you why you should pamper your existing customers rather than court new ones:

  • A typical dissatisfied customer will tell 6-10 people about the problem. A typical satisfied customer will tell 1-2 people.
  • It costs 6 times more to attract a new customer than it does to keep an old one.
  • Of those customers who quit, 68% do so because of an attitude of indifference by the company or a specific individual.
  • About 7 of 10 complaining customers will do business with you again if you resolve the complaint in their favor.
  • If you resolve a complaint on the spot, 95% of customers will do business with you again.

(Source: Customer Are Always)

Studies have also shown that a Customer’s Lifetime Value (CLV) can be far greater than that of a single transaction. In fact, 70% of a telco’s revenue comes from 30% of its customers: those who stay for years and purchase increasing levels of service. There is a nifty way to calculate CLV here.

Now shouldn’t you start paying more attention to those customers who made you who you are?

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  1. ET
    posted on Aug 14, 2007 at 1:55 AM

    I like this post.

    I don’t know if I am right but my observations even among the MNCs and big corporations, they define business improvement or progress as how much new business they can generate instead of how much revenue can they generate from the current pool of customers. Even through annual reports, the key progress they often preach for the new financial year is again… how much new business can they look forward to generate.

  2. posted on Aug 14, 2007 at 6:10 AM

    I agree strongly with you on this. I must ask Chris to come over and read this. 🙂

  3. posted on Aug 14, 2007 at 6:11 AM

    …. and a lot more people who want to keep their business going or wanting to make profits.

  4. posted on Aug 15, 2007 at 1:37 AM

    et is quite right. It seems management is always more pleased about new acquisitions than maintaining customers – it looks better to investors, perhaps.

    Sometimes its also ownership… sales, marketing and business development is run by one dept, and customer by another, or worse, outsourced.

    Just look at our dear telcos. Attractive price plans and gifts for new subscriptions, but loyal long term subscribers don’t get much of anything.

  5. posted on Aug 15, 2007 at 1:43 AM

    In the light of my recent unpleasant experiences with Reader’s Digest and Wearnes Automative (S’pore’s sales and service agent for Renault vehicles), I couldn’t agree with you more on what you have raised here.

    I have blogged about the former experience. One more to come… soon. I definitely tell more than just 6-10 people about my bad experiences.

  6. imp
    posted on Aug 15, 2007 at 5:18 AM

    i think that in general, it’s easier to ignore ‘complaints’ and bad service than to risk a ‘confrontation’ by attending to it. So much proven stats on the merits of good customer service = retention = positive effects. but organizations are still not doing it. only the handful are. i can’t help but think that bad customer service also effects from the individual customer service officer. a case of narture over training/nurturing and it’s just not possible for them to understand customer service and be nice.

  7. posted on Aug 15, 2007 at 12:37 PM


    Yeah you are right bro. Too often, the focus is on expanding market share, bringing in new businesses, and scoring fresh customer acquisitions. I wish sometimes that they don’t neglect existing customers but time and again, it happens.

  8. posted on Aug 15, 2007 at 12:38 PM


    Thanks for your support! Yes, I wish more people will think of customers more as friends than as money trees. There is just so much potential in being nice to your current customers and not forgetting them.

  9. posted on Aug 15, 2007 at 12:42 PM


    Telcos are the worst culprits I tell you. I only got a call recently from a Big RED telco only because they wanted to sell me a new phone and sign me on a new two year contract. Long term customers just get the %tage discounts and that’s it. Sometimes its not all about money….

  10. posted on Aug 15, 2007 at 12:44 PM


    Yes, I have been closely following your misadventures and I think you are doing the right thing. I am just about to blog about our public buses shortly too. Maybe when I am infuriated enough…

  11. posted on Aug 15, 2007 at 12:46 PM


    Yeah its true that one’s own upbringing and personality makes a difference in one’s service attitude. The sad thing is that most Singaporeans are brought up on the notion that serving others are only for the downtrodden and despised in society. This is one of the critical issues why we face this service crisis in Singapore.

  12. posted on Aug 15, 2007 at 5:28 PM

    Yes, that seems to be the question that is going through people’s minds lately – Why don’t companies get it? Why can’t they understand that it’s important to nurture the relationship they have with their current customers?

    Thanks for the food for thought!

  13. posted on Aug 16, 2007 at 1:17 PM

    customers are always,

    Hey glad to have you here! Its an age-old question yet so many people don’t practise it. I suppose it may be more difficult to be nice to current customers than those whom your bonuses depend on. Its really time for a change.

    Thanks for the wonderful statistics! 😉

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