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HPMD Quotes & Sources

Nordstrom, Federal Express, IBM, The Morgan Bank, Frito Lay, American Express, McDonald's, Disney, and all too few others seem to understand that service pays. The PIMS [Profit Impact of Market Strategy] data base once more provides decisive support. It split a sample of firms into those rated as better and those rated as worse than average on service --by their customers. The better the performers on service charged about 9 percent more for their goods. They grew twice as fast as well, and picked up market share at 6 percent a year, while the also-rans lost share at 2 percent a year. The bottom line: a 12 percent return on sales for the top half in service as seen by the customer, versus a paltry 1 percent fro the rest. Some difference!
Beneath such gross indicators are more finely tuned ones. A study by Technical Assistance Research Programs [TARP] revealed these facts: Twenty-six of every twenty-seven customers who have had a bad experience with you fail to report it. The principal reason is not surprising: They expect no satisfaction if they do bug you. The scary part comes next --some 91 percent of those who complain won't come back. Scarier yet, the statistic dropouts holds as true for $1,000 purchases as for $1.79 ones. And perhaps worst of all, the average person who has been burned tells nine to ten colleagues; 13 percent of the malcontents will spread the bad news to twenty or more people.
There is some hope. The data show that, depending on the industry, you can get 82 to 95 percent of these customers back, if you resolve the complaint in a timely and thoughtful fashion. Other studies are even more optimistic. A well-handled problem usually breeds more loyalty than you had before the negative incident.
Finally, the study yields a clincher: It costs five times more to go out and get a new customer than it does to maintain a customer you already have."

Short Quote:

It costs five times more to go out and get a new customer than it does to maintain a customer you already have. --Tom Peters
© Copyright 1996, 2000, HP Management Decisions Ltd., All Rights Reserved.

Author:Peters, Tom
Title:Thriving on Chaos
Place (City):New York
Publication Date:1987
Source Type:Book
Quote Number:103
Categories:Customer Service