A common situation for many small businesses and SMEs is having an immediate need for cash today, and taking action without considering the consequences for tomorrow. Although cash is certainly an important element for operating a small business, many entrepreneurs don’t understand that certain actions they take to obtain cash can lead to harmful consequences in the future.
A need for cash should never override prudent business decisions that can affect customer relationships. When business owners or managers consider cash to be the most important factor in their businesses, overriding product or service offerings and customer relationships, negative outcomes are certain to occur. Small business owners should not have the attitude of “make what we can today and worry about tomorrow when tomorrow comes.” With this philosophy, tomorrow will come along with lost customers, a negative reputation, and decreased profits.
You need long-term, favorable relationships with your customers in order to build a successful business. Securing future sales is as important as current sales. Thinking today about satisfying tomorrow’s customer sometimes means letting a sale “go” if all the factors are not right. When customers have satisfying buying experiences, they are more likely to become repeat customers. A combination of returning customers and new customers will build your customer base, leading to business growth and sustainability.
The flip side of a satisfied and returning customer is a dissatisfied customer. Once customers fall into this category, it is highly unlikely they will ever return—once lost, lost forever! But, this situation does not tell the entire story. The residual effect of dissatisfied customers sharing their bad experiences with others can damage your company’s reputation and be detrimental to your profits.
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Negative Actions = Negative Results
Here are a few sales actions that can produce immediate cash, but may also cause lost business in the future:
Promising too much. When a business promises its customers more than it can deliver simply to secure a sale (i.e., over-promising and under-delivering), disaster may loom in the future. It is far better to take the opposite approach—under-promise and over-deliver.
Lack of customer service. So often a positive sales presentation turns into lackluster customer service once a sale is completed. During the sales phase, everything the customer asks for can be accomplished; however, once the deal is consummated, there is a quick change of attitude. Customers remember promises and are not too quick to forget.
Short on details. No one likes the hassle of reading the fine print of a sales or service agreement, but it’s necessary, depending on the product or service sold. While it might be easier for a small business to avoid all the legalese, problems can arise if customers think they agreed on one thing, and the business thinks they agreed on something entirely different. Take time on the front end to agree on all the fine points of a sale to reduce customer disappointment in the future. It is far better to rely on written details than your customers’ memory.
Positive Actions = Positive Results
Returning customers are like a cash annuity for your business. As sales increase and satisfied customers give excellent recommendations and reviews, this can create a compound effect on revenues and profits. Long-term business success relies on this type of steady growth: customer retention enhanced with new customers. In contrast, a business that’s constantly obtaining customers, losing customers, and gaining new customers is wasting its efforts and profits.