In the world of business, everything comes with a cost. Whether the cost is something that is listed on your balance sheet or, a hidden cost, which may never actually be realized. These cost’s may not even be something you know you are paying for, but rather just a impact on your actual profit.
One of the potentially most costly expenses that your business can incur, is that of losing a customer, that you did not need to lose. Now some customers you will lose no matter what you do, because they don’t need your product any more, or sometimes they just move away. However it is the customers that you lose that could be prevented which will cost you the most.
If a customer just does not need your product any more then you really have not lost anything, as such. This is mostly due to not losing any potential future income. If the customer is moving away, then there is some loss, as you did hve future potential with that client but you are losing that potential. However not due to any fault of your own.
When it comes to losing a customer due to poor customer service or a price disagreement, or any number of other reason’s. Then you are costing your business potential future income. Firstly you are creating the cost of having to find a new customer to replace the lost customer, which from the article “The cost of acquiring a customer” you can see that this can be a cost that adds up if you have to find a lot of new customer on an ongoing basis.
Another cost you are incurring is the lost potential income from this customer. Every customer in a business has a Lifetime potential value. This is the potential value of the customer over the lifetime that they are a customer. Depending on your business for some customers this can easily add up to quite a big loss. Not an everyday cost of doing business but a cost that would normally create value in your business. Retaining customers is one of the most important aspects of business, otherwise you really do not have a business but rather just an ongoing challenge to keep the cycle going.