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Very few areas of life have been spared by Covid-19, especially in the business world. At the start of the crisis, for example, we saw customers abandon brand loyalty as items flew off the shelves and shoppers migrated to online channels. This is a fairly common cycle: when circumstances change, people explore other options because this process helps them determine if their current option is actually right for them.
Unfortunately, this experiment has concrete consequences for companies. A survey of small business owners found that 82% lost its most profitable client after Covid-19 swept the country. And despite Paycheck Protection Program loans injecting cash into hundreds of thousands of small businesses to maintain their payrolls, many were still unable to keep their doors open. In July 2020, just five months after the initial lockdowns, an analysis estimated that over $1 billion in PPP loans had gone to now defunct companies.
These types of statistics aren’t exactly comforting to small business owners and entrepreneurs, and as a result, many have decided to bend over backwards for their customers in hopes of retaining them for the long term. But while I understand the sentiment, becoming a yes-man won’t have the effect you desire.
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The art of saying “no”
When you increase customer retention by just 5% can increase profits by 25% to 95%, it’s natural to want to respond to every request with a “coming right away!” But customer demands cannot always be met exactly as expected, and trying to fit a square peg into a round hole is dangerous.
As the leader of a software company, I’ve seen time and time again that customers usually know what kind of results they want, but sometimes their demands and the desired results aren’t the same. In these cases we must be good the partners and push back. Business leaders trying to improve their retention should adopt a similar mindset – focus their effects on be a good partnernot a sycophant.
Still, saying “no” can be tricky, so here are some strategies you can adopt to push back without scaring off customers.
Related: The 4 Key Principles of Every Successful Partnership
1. Prepare the ground
In my own business, I’ve found that the best way to ensure client projects don’t go off the rails is to set clear expectations from the start. At the start of every project, we dedicate time to asking probing questions that get to the heart of what the client is trying to accomplish. Typically, this will prevent us from jumping into an action just because the client asked us to, even if it doesn’t necessarily make sense for the project’s goals. This openness around why we can or can’t do something sets the tone for the whole relationship.
Also discuss any assumptions: what happens if the project fails? What if you go over your budget? And what if things go wrong? As you progress through the stages of the project, be sure to check in with your client or client regularly. Sometimes the scope and expectations of a project will change, and that’s okay, but you should make sure you update the contract along with those changes to protect your business.
2. Be radical
You are an expert in your industry, but it is a mistake to act as you know everything. So when a client makes a fanciful request, resist the urge to be brutally honest about the seriousness of their idea. This kind of heinous aggression will just make you look arrogant and rude. Instead, work on building mutual trust by developing a relationship based on radical candour, a communication style popularized by author Kim Scott in 2017.
In short, practitioners of radical candor are able to challenge people while showing they care. Traditionally, this style of communication has been applied to supervisor-employee relationships, but it is equally relevant to clients and customers. A customer request can be nearly impossible to meet, and you need to communicate this in a way that shows them that you have their best interests at heart. It’s about highlighting how a particular route could potentially sabotage their long-term success, and because you phrase that “no” in a way that shows you care about their future, the point is more likely to land. .
Related: 3 ways to put relationships first to get you ahead in business
3. Offer alternatives
Apple is probably one of the best examples of a company that understands how to develop a seamless customer experience, even in the tricky world of technology. Its Genius Bar employees, who serve customers with technical issues, use the three Fs – smell, smell and find – to sympathize with frustrated customers. Then they use the mnemonic APPLE (which stands for Approach, Probe, Present, Listen, and Close) to guide clients to a conclusion they believe is theirs.
When you have to turn down an idea or a client request in your own business, you should always have an alternative solution waiting. Being a true partner, after all, means acting as a resource. And when it comes to offering choices, to research from the University of Minnesota shows that three is the magic number.
Businesses are scrambling to improve customer retention because happy customers are their biggest sellers and biggest advocates. But saying “yes” to every request and idea won’t get you there. Instead, learn how to gently push your customers or clients away using the tips above and watch transactional relationships turn into lifelong partnerships.