The loyal customer is the lifeblood of all successful travel agencies. Faced with the challenges of technological change, disintermediation, and evolving business models, customer retention is more important than ever.
If you asked most travel agents you would hear something like: “All of my customers are repeat customers.” For a few that may be the case, but the little evidence that is available suggests otherwise for the vast majority of agencies.
In order to improve customer retention it’s important to first figure out why customers don’t come back. General business statistics suggest the following:
- 1% die
- 3% move away
- 5% supplier or product problems
- 9% unresolved complaints
- 14% price issues
- 68% service related
There’s not much we can do about the first reason, and for travel with our reliance on the internet the second item may also be less of a challenge for us. Supplier-related problems are legend in the agency world and that should be the topic of another article, but for the purposes of this one, let us simply say that the retail community must find a faster, more efficient way of dealing with supplier issues.
The others factors – which total over 90% of the typical reasons customers don’t return -- we can impact significantly and directly. Let’s look at each:
Unresolved Complaints
How important is complaint resolution? A typical dissatisfied customer will tell 8–10 people about their problem, 1 in 5 will tell 20. Talk about a virus!
However, there is hope: 7 in 10 complaining customers will do business with us again IF we resolve the complaint to their satisfaction. If the problem is resolved on the spot, 95% of customers will do business with us again. The bottom line: fix complaints immediately.
When we call the customer on their return from a vacation and ask about their experience, the last question we need to ask is: “Is there anything you think we could do to improve service?” If the customer mentions a problem, do whatever you can to fix it immediately.
Price Issues
In the retail travel industry it’s likely that price issues are a larger factor than listed above, simply because pricing has become so transparent thanks to the Internet and because so many discounters have trained the public over the years to put the focus almost entirely on price for many travel products.
Here are a couple of points to consider:
• A customer gained on price is a customer we will lose on price.
• There is no correlation between relationship and low price.
Sure, price is important to just about everyone, but you’d be surprised to learn how many people don’t mind paying a little more if they enjoy your service and if you make their life a little easier. To those customers who will cross the street to save $10, you should simply wave goodbye – they won’t likely be a loyal customer across the street either.
Agents need to discuss their value with customers – the time we can save them, the additional services we provide, the backup we offer if something should go wrong. Too often we are afraid to blow our own horn and we resort to the easy sell – trying to win on price. If we put the focus on memorable service, the results can be much different.
Customer Service…or Indifference in Customer service…
Two of the great enduring myths of the travel agency business are:
- If we provide good service, the customer will come back again and again.
- If we provide good service to the $99 seat sale customer, they will come back and book a round-the-world cruise.
These are BOTH myths.
AT &T did extensive research on this topic and discovered 50% of “satisfied” customers will still leave within 3 years. Only when the customer is “completely satisfied” is there a strong link to loyalty. The AT&T studies revealed that if the satisfaction level rises to 8 out of 10, the retention rate raises to 85%, and if one can achieve excellence…achieving 9 -10 out of 10, 95% will remain.
In a recent Gallup poll 46% of customers who described themselves as ‘satisfied’ said they would consider seeking a different source for a product or service, whereas only 5% who described themselves as ‘completely satisfied’ would consider leaving.
There is a strong correlation between COMPLETE satisfaction and loyalty. Even better, there is a strong relationship between complete satisfaction and referral – very happy customers are likely to recommend you, and referred customers have a higher retention rate.
Why Do Customers Not Come Back is Part 2 of a 3 part series on Customer Retention which can be found in the Periscope Section of OpenJaw
Next Time:
Part Three: How To Improve Customer Retention
