Issue #17 November 2011

Some facts about client costs

Research conducted by Boston-based global consulting firm, Bain & Company, found that an increase of 5% in client retention can increase profits by 25% to 95%. The same study found that it costs six to seven times more to gain a new client than to keep an existing one. 
 
Additional research has shown that:

  •  US companies lose 50% of their clients every 5 years.
  • Happy clients tell 4 to 5 others of their positive experience - dissatisfied clients tell 9 to 12 people how bad it was. 
  • Companies that make client service a high priority see 12 times the return on sales than those companies with a low emphasis on service. 
  • Only 1 out of 25 dissatisfied clients will express dissatisfaction.
  • 68% of clients stop doing business with a company because of poor service, yet 95% of dissatisfied clients would continue to do business with a company if their problem was solved quickly and satisfactorily.
  • 66% of customers do not feel valued by those serving them.
  • 80% of companies believe they deliver a superior client experience, but only 8% of their clients agree. 

This latter disconnect between company or management beliefs and clients perceptions is commonly based on management being unaware of client perceptions and/or being unable to accept those perceptions as the reality for the company.
 
If the bulk of your clients hold a belief about your company that you are unwilling to accept, you must either turn it to the company’s advantage or combat it.  For example, when we undertook research for a major accountancy firm, we found that their competitors were perceived as slick television shows whereas they were likened to Neighbours.
 
The client was disbelieving and indignant, but we developed a strategy for attracting quality graduates, retaining staff and managing client relationships that was based on the concept of family and community.  This was easy to implement as it built on the existing community perception held by the majority of clients.
 
The graduate campaign won awards and attracting quality people to the firm, while the cross-client refereeing program helped grow the firm’s turnover from the first year of implementation.
 
Studies have shown that companies that make client and employee satisfaction priorities tend be more profitable and enjoy stronger growth.  These companies have a core belief that today’s employee satisfaction, engagement and loyalty will influence tomorrow’s client satisfaction.  

RV Travellers - a dilemma wrapped in a conundrum!

I recently delivered a series of 11 workshops on the North Queensland RV traveller market across the Outback, North and Far North tourism regions as part of the Drive North Queensland initiative. Drive North Queensland (www.drivenorthqueensland.com.au) is being managed through Savannah Way Ltd by Russell Boswell, who is the brains behind this fantastic drive market initiative and is doing an excellent job in its implementation. It was interesting to see how some Councils understand the issues benefits of the RV market and are working closely with their tourism operators and key partners to get best possible return, while others seem quite disinterested.

Currently, RV travellers spend an estimated $3.2 billion a year travelling through Queensland and, while their average daily spend ($85 per day) is low compared to fly/stay or fly/drive visitors, their total spend is between $14,000 and $16,000 per vehicle, making them Queensland’s biggest spending domestic visitor segment. For the major tourist destinations of Cairns and the Whitsundays, RV travellers represent a very small part of overall tourist spend and authorities in these locations have little interest in attracting them to town. However, in some regional and remote locations, these travellers represent up to 70% of total visitation and have a major impact on local economies.

The good news is that current projections indicate the RV traveller market is set to increase by over 30% by 2016 and double by 2025. Unfortunately, this is also the bad news. In 2004 the Queensland Government enacted legislation aimed at stopping the loss of caravan parks across the State. This includes restricting the ability of Councils to provide alternative RV accommodation as this was seen at the time as taking business away from caravan parks. An unintended side-effect has been open hostility between the Caravan Parks Association and RV traveller representative organisations. Stuck in the middle are a number of Queensland LGAs.

The problem is a change in both the technology and demographics of the market, creating a shift in consumer demand. Since 2004, there has been an inexorable shift towards self-containment, and most modern RVs include shower, toilet, electricity generation and even laundry facilities. A significant segment of the RV market is reluctant to pay for the services offered by caravan parks because they are seen as  being superfluous. But then, where are they going to stay and who is going to provide the sewerage, water and rubbish removal services required?

In some locations Councils have been threatened with legal action by the Queensland Caravan Parks Association if they open their Showgrounds or other areas and do not charge parity pricing with caravan parks. Councils also appreciate if they offer free or low-cost accommodation there will be a cost in servicing these locations. The problem is that RV travellers stop at Main Roads’ rest areas, bush camps and other locations that were not designed for these purposes.
There are no clear or easy answers to these issues, but we all know the customer is king! If you do not deliver what your customers want, they will look for an alternative option. This means RV travellers may avoid visiting towns that do not provide a range of accommodation options, or even restrict their overall length of stay in Queensland. The dilemma for councils is, which group to fight and which to keep happy? The caravan park operators, RV travellers and their organisations, State government or even their local Chambers of Commerce? Also, do Councils address State legislation that was poorly drafted and is creating unintended consequences? As more self-contained RVs hit the road, this problem will become more difficult and its impacts more widespread. Look out for "rest area rage".

Copyright © 2024 Balfour Consulting. All Rights Reserved.