Want to Improve Sales and Customer Retention? Keep your Promises


The formula for success in small business is very simple – keep the promises you make to your customers. The relationship between customers and business owner is like an unwritten contract. Both parties expect the other to honor their side of the contract. In it, the business owner promises to sell his products or services at the advertised price with the best possible customer service. In return, the customer promises to keep giving business to you as long as you keep your side of the bargain.

As long as both sides continue to honor their sides of promises the cycle continues. The problem arises when there is a breakdown in the promise that businesses are supposed to keep – you increase the price of your product or service to an unreasonable level, you do not provide the service that customers have come to expect, the quality deteriorates and so on. The customer will forgive you once or twice for breaking the promise, however when they see the pattern being repeated for some time they will move on and stop giving you the business. As we all know very well, there are number of the other businesses willing to make similar promises and establish contract with them.

Broadly speaking, you are making promises in two different ways – explicitly and implicitly. When you advertise your products and services with the words like “Best”, “Prompt”, “Guaranteed” you are making explicit promises. You are also making a promise when selling them for a specific price. These explicit promises are somewhat easier to deal with. After all, you have thought about them before advertising.

The implicit promises are different. These are the promises you may not even realize you have made. They are the result of your everyday transactions with customers. When you provide excellent customer service day-in and day-out you have made an implicit promise to your customers. They have come to expect this from you every day. If you start to cut corners by hiring less qualified employees or not spending enough in business operations the customers will notice the change and feel cheated. If the pattern continues beyond one or two episodes they will start thinking about moving to your competitors.

The breakdown in promises hurt small business owners more than the larger enterprises. This is because your pool of customers is small to begin with. You cannot afford to lose many customers before it starts affecting your sales and bottom line in a significant manner. In addition, you are doing business with a relatively small, local demographic. The word about your breakdown in promise will spread quickly. Remember, an unhappy customer is likely to tell 10 others. You do not have the luxury of time when it comes to making amends with your customers.

As we all know the best way to keep your promises is to under promise and over deliver. I will show some practical examples of how to do it in the next post. In the meantime, let me know your thoughts in the comments below.

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Comments

  1. I agree completely! TRUST is the name of the game, and that goes hand in hand with keeping your promises. At the end of the day, the TOTAL focus needs to be on the customer. One mistake fine, two OK, three makes a trend. What people need to do is learn how to make one customer happy BEFORE getting too far ahead of themselves. You just shoot yourself in the foot, throwing away all the hard work you spent getting that account in the first place by doing it backwards.

    • SmallBizViewpoints says:

      Tom – Very well put. Particularly what you said about throwing away all the hard work by putting yourself ahead of customers is very true. I see many business owners making this mistake and regretting at the end.

  2. Agree with this article. Implicit promises and customer expectations can be quite tricky for businesses. It’s often the case that the business uses their own expectations, or what they think is reasonable to guide them. Unfortunately, what they think and what the client thinks might be vastly different.

    Two ways you can handle this are to either find out what their expectations are and/or set their expectations.

    Finding out what they expect can be difficult, but here are some things that are influences: service level of your industry and competitors, their personal experiences and whether they think you are reasonably priced or expensive. If your competitors offer great service you need to try extra hard. Your client might have had some exceptional service from other companies lately. When your prices are on the upper end of the scale, service expectations rise accordingly. The reverse is possible as well, in which case you are lucky.

    Setting clients’ expectations is something that many businesses don’t do well. Especially when they are trying to get a sales. Try not to promise the world just to close a sale.

    • SmallBizViewpoints says:

      Steve – Thanks much for your insightful comments. Completely agree with your views on customer expectations. Finding out and / or setting customer expectations is the key to success for small businesses. As I mentioned in the article under promise and over deliver can go a long way towards improving customer perceptions of your business.

      Harry

Trackbacks

  1. […] that we say outright and communicate in our marketing and advertising. But don’t forget about implicit promises. These are expectations that your customers develop based on all the times they do business with […]

  2. […] is going to suffer. As I argued in earlier post, you have to keep promises you make to customers to improve your sales. It is those implicit promises you make without realizing you are making them that have big […]

  3. […] to your business day after day. In the previous post, I mentioned that small business owners can improve sales by keeping the promises they make to their customers. The relationship between the business and the customer is analogous to a bank account. Every time […]

  4. […] Signing an unwritten contract. You may not think of it this way, but each time you make a sale of products or services to a customer, you effectively enter into an unwritten contract. Once you adopt this approach to customer relationships, you’ll probably never look at your business the same way again…or want to. Instead of simply moving on from one sale to the next, you’ll look at each transaction as a set of promises made between you and your customer, says blogger Harry Vaishnav. And they are promises that must be kept if your business is to succeed. Small Biz Viewpoints […]

  5. […] Signing an unwritten contract. You may not think of it this way, but each time you make a sale of products or services to a customer, you effectively enter into an unwritten contract. Once you adopt this approach to customer relationships, you’ll probably never look at your business the same way again…or want to. Instead of simply moving on from one sale to the next, you’ll look at each transaction as a set of promises made between you and your customer, says blogger Harry Vaishnav. And they are promises that must be kept if your business is to succeed. Small Biz Viewpoints […]

  6. BizSugar.com says:

    Want to Improve Sales and Customer Retention? Keep your Promises…

    The formula for success in small business is simple – keep the promises you make to your customers. Under promise and over deliver is how you can keep customers….

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