Risky Business

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Author and entrepreneur Tom Panaggio encourages business owners to go out on a limb for successful customer relations.

In today’s fast-paced, impersonal  world, it’s easy to hide behind a computer screen rather than dealing with clients face to face. They might read your interactions—as cordially professional as they may be—as indications of a personal relationship and expect friends-and-family discounts and perks as a result. Your natural instinct may be to back away and maintain your distance, but that, says Tom Panaggio, author of The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge (River Grove Books, 2013), would be a mistake. “Keeping customers at arm’s length inevitably erodes the connection between you and them, which, sooner or later, usually leads to the customer taking his or her business elsewhere,” he says. “Nobody likes feeling unimportant, and with all of the choices out there today, customers don’t have to settle for it.” Between the loss of future revenue, the sunk costs incurred to gain clients in the first place, and the potential damage from negative word of mouth, losing customers can have a serious impact on your bottom line, especially if they’ve split because they felt unappreciated or neglected. Here, the 30-year business veteran shares his strategies for opening up and avoiding “customer churn,” one step at a time.

For many entrepreneurs, the phrase “it’s not personal, it’s business” is more than a motto—it’s a way of life. Unfortunately, according to Panaggio, the truth is that every customer interaction is personal, and for small business owners especially, it’s important to risk getting closer to clients. By showing them that you are engaged in their experience, that you understand their needs, you let them know they are appreciated—and not just for the income they may bring your way. “The good news is, showing customers that you value them on a personal level doesn’t have to be difficult,” he says. “Communicate using face-to-face interaction whenever possible. Send handwritten thank-you notes to show people that you value their business. And you can always take a cue from my favorite street-hot-dog vendor, who remembers each customer’s face, along with their name and specific hot dog preference.”

Keeping the lines of communication open is key to maintaining solid relationships, but just because the customer is always right doesn’t mean that customer interaction is always convenient. Dealing with phone calls, requests, and complaints when you have other pressing matters may seem like a hassle, but, according to Panaggio, making yourself available to your clients is crucial, even if you’d rather be doing something else. “Look at the way you do business from the customer’s perspective,” says Panaggio. “Does the customer have to navigate a confusing labyrinth of phone options to talk to you? Do you wait days before responding to emails? Remember, communication has to happen on the customers’ terms, not yours, if they are going to remain happy.”

Of course, boundaries are also important. Back when interaction was limited to phone calls, snail mail, and in-person visits, it was easier to remain aloof, but in our 24-7 culture, people expect instant access and answers. To remain relevant, Panaggio recommends using technology to stay close, but not too close. “This can be a tough balancing act,” he says. “Customers are sensitive about personal information, such as email addresses, purchase history, and preferences, as well as how it’s used. When you embrace the risk of getting close, you must commit to using personal information to draw customers closer, not drive them away.” He suggests refraining from flooding your clients’ inboxes with general promotional emails and limiting yourself to only the most pertinent Facebook updates. “You’d be much better served to use what you know about your customers to create highly targeted and personalized direct-marketing campaigns,” says Panaggio. For a spa owner, that may mean reviewing your clients’ service history to offer treatments specifically designed to match their preferences. According to Panaggio, this tailored approach is “vastly more effective than general media campaigns.”

As tempting as it may be to depend solely on the ease and expediency of electronic communication, an over-reliance on technology can be counterproductive. Panaggio proposes a blend of the old and the new for best results. Email is a simple way to deliver files and documents, for example, but convoluted explanations and more in-depth conversations are best dealt with over the phone.

For many spa owners, devoting this much time and energy to client maintenance may seem like a lot of work for the same return, but Panaggio notes that doing the bare minimum for your customers can be damaging to your spa’s future prospects. “Customers have many choices, and if they aren’t more than satisfied, they’ll take their business to the competition,” he says. To garner positive buzz, Panaggio advises exceeding your customers’ expectations by just enough so that they’re pleasantly surprised. “That’s where word-of-mouth advertising begins,” he says. “When you hit that point, there’s a multiplier effect to the investment you made to secure the customer.” The one-off  client is valuable, but you’ll reap more rewards—and referrals—if you put in the effort to keep your customers around for the long haul. “Take the risk,” he says. “Draw your customers closer. Invest in them. Make an effort to understand how they think and what they want and keep in constant contact. Trust me: Getting personal is worth it.”—Maya Stanton