The Silvertrac Extra
Handling Problem Customers in the Security Industry
You’ve experienced it before: dealing with a demanding, short, over-bearing, impossible-to-satisfy customer that seems so intent on milking every last dime of profit from your already thin margins.
As a security operator you have to decide if the account is worth the headache? Are the last minute change of plans or constant accusations of poor service worth the profit this account generates? Would it be better to tell this customer to “kick rocks” knowing that in 30 days they’ll be your competitor’s headache?
So what do you do?
On one hand you have the good…
Mr. Jones is a customer who is genuinely pleased with your service. Every month he pays on time, he treats your office staff with respect, and appreciates the hard work you put in. He’s been a satisfied customer for years.
Then on the other you have the bad…
Mrs. Johnson. She’s been a customer for 8 months and she’s been raising hell since the day she signed the dotted line. She expects top grade service for bottom shelf prices. She is always late on her payments and constantly questions your services. (She is the reason you have accountability tools in place, to prove that your officers are actually doing their jobs.)
If you’re like most business owners you get to a point where letting Mrs. Johnson go is a serious option. Is she really worth all the extra work?
“Hit the bricks Mrs. Johnson. We’re better off without you.”
But hold on. Let’s consider the pros and cons of cutting Mrs. Johnson loose:
- Replacing a customer costs an estimated 600-700% more than it does to retain an existing one (even one like Mrs. Johnson)
- An increase in your customer retention rate can be a big payday. An increase of only 5% can boost your bottom line by 120%.
- Similarly, increasing your customer retention rate by a measly 2% has the same cost-saving impact as reducing your operating expenses by 10%
- A 2011 study by Harris Interactive showed that 89% of dissatisfied customers will be making their next purchase from your competitor. (As bad as Mrs. Johnson is, the thought of padding your competitors bottom line just doesn’t sit too well..)
- 15% “might” share about the great service they receive; 24% will most certainly spread the word about poor services they receive..
- Market Metrics, a leading market research firm in the investment and insurance industry found that, as a business, you have a 70% chance of up selling an existing customer vs. a 20% chance of acquiring a new one.
But the real linchpin here is:
- Only 4% of unhappy customers will actually complain; the rest, you may never hear from.
On one hand, we could say that 4% is small enough not to worry about. Good riddance, right?
But… customer service is often defined by how you handle the problems, not so much how you handle the good times. Everyone can provide great customer service when things go as planned, but only quality companies are able to deliver consistent service when the ____ hits the fan.
So how you respond to the 4% is an opportunity to show all past, present, and future customers that you’re committed to quality customer service. This is even more important in the security industry in which your reputation for reliability is critical for long-term success.
So, is Mrs. Johnson worth hanging on to?
As a business owner in the security industry, you really have to try everything before letting a customer go. I’ve heard countless stories of nightmare customers that turn out to be extremely loyal in the long run.
If you do decide to let them go:
- You’ll have to spend 6 or 7 times the cost of keeping that customer to find a new one.
- Word of mouth is important. Can you afford to have bad word of mouth in an industry that is based on trust and accountability?
- There is a high probability that your customer will become even more loyal to your competitor after a poor experience with your company.
Sure, they might be looking to get an extra patrol stop for free but sometimes you have to give a little to get a little.
99% of your customers will be inherently good. And if you make it a practice of quitting on the hard accounts, you might find that you’ve lost your trust and credibility in the industry.
In the end, handling problem customers in the security industry is part of running your business. As long as they’re paying for your service, they’re generally worth keeping around.