Turnover in Your Business Is Pulling Customers Away

Turnover in Your Business Is Pulling Customers Away – SuperPumped Business Episode 034

[00:00:00] Ben Walters: Is your business struggling to retain customers? You feel like you're doing the same things you always do, and yet you just keep leaking customers out the back door. You can't seem to keep them doing business with you and it's killing your profitability. Well, I'm here to tell you that there may be a hidden reason why you're losing these customers and why it has nothing to do with your systems or how you deliver your product, but it has to do with the people who deliver your product. ​

[00:00:36] Ben Walters: Welcome to the SuperPumped Business Podcast where passion, purpose, and profits collide. If you want to launch the kind of growth that changes lives from the bottom all the way to the top of your organization, this is the place. I'm Ben Walters, a serial entrepreneur, pastor, coach, and consultant. If you are ready to stop playing small and start [00:01:00] building something extraordinary, let's get SuperPumped. 

[00:01:08] Ben Walters: ​Now, September, for those of you who missed it, is, we are focusing on the SuperPumped Business Podcast on the topic of turnover and the challenge of turnover, and it is a topic that really, since the pandemic, has been one that so many employers I see are struggling with, and it's only gotten worse in the sense that as the, the laws and kind of the crackdowns on illegal immigration have occurred workers are more and more scarce, and so workers have more opportunity to test their skills in other places, and there's tremendous demand for workers. And so if they don't like what your business offers, they're gonna go somewhere else. And so it really is a competition to not only recruit workers but also retain those workers. And that's the most important [00:02:00] thing. And so last week, in our first episode on turnover, we talked about kind of three ways that eats into your profits.

[00:02:06] Ben Walters: The first way is, the average worker costs a business about $4,700 to, you know, go through the writing the ad, and placing the ad into different job search websites, and then, you know, to promote that. And then the whole process of interviewing and drug testing, background checks, reference checks, all that, then you've got training, uniforms, all the other kind of, you know, costs. So that can eat up your profit if you're turning over, you know, once a year, or once every six months, or once a quarter on these employees, that starts to really add up if you are of any size business. So that's the first way it eats up your profits.

[00:02:47] Ben Walters: The second way it eats up your profits is if you decide you're just gonna really lean on your existing people when there's turnover and there's open spots, and you're gonna feed 'em overtime, and you may be gonna bring in some temps. All those [00:03:00] things you're paying at a much higher rate. So that's also going to eat up your profit.

[00:03:03] Ben Walters: And the third way, and I've seen this too, is companies just say, I just can't find people, so that's okay. I'll just cut production. And so, you know, you may have been projecting on a million-dollar top line revenue, but instead you're only operating at 60 or 80% of that. Well, that's fine and it's gonna keep your variable costs at that, at that fixed level but the problem is that your fixed costs continue to remain the same. So if you lose all that top line revenue because you cut back, you're actually gonna either be break even, or you might even be unprofitable. So those are three ways we talked about last week. If you missed the episode, go back, check that out. It's really informative.

[00:03:41] Ben Walters: But today I wanna talk about customer retention and how the problem with customer retention may actually be because of your turnover. Now, not a lot of thought or talk is given to this aspect of turnover eating at your business, but it really [00:04:00] just permeates this turnover thing, permeates through all levels of your business and all levels of really running a profitable business.

[00:04:08] Ben Walters: So I wanna give you three concrete examples today from businesses I've worked in, the ways I've seen this tear up a business from the inside out. The first is a coffee shop I owned. With any coffee shop and, and most of you have your favorite coffee shop, it, it really is the people in that coffee shop that, kind of, make it tick.

[00:04:27] Ben Walters: You enjoy getting to know the barista behind the counter or the, the person at the checkout, you know, the cashier, and there's a little bit of back and forth in that relationship. And so in my coffee shop, we had a woman named Katie, and she was a woman who loved to come through the drive through and she would say, through the speaker. Hi, it's Katie. I want my usual. Now that was awesome, as long as the people on the headset and in the barista spot knew Katie's order, right, because [00:05:00] Katie would just say that and it made her feel good. It's kinda like Cheers. Everybody knows your name, right? This is Katie. This is her drink. It was a small coffee with a couple of cream, couple of sugar. Nothing complex. But she didn't have to go through the whole order and, and the barista knew just how to make it, and then when she'd get through the window, the cashier would say, Hey Katie, it's nice to see you, thanks for coming by, that kind of thing.

[00:05:23] Ben Walters: Okay. So Katie got used to that and that we were her coffee shop. But then do you know what started to happen? We had some turnover and all of a sudden that barista that had served Katie faithfully for many months wasn't there anymore. And then that cashier wasn't there anymore. And all of a sudden Katie drives up to the drive through and she says, Hi, it's Katie. I'll have my usual. And she pulls around. She never even stops 'cause people know her, right? And then it throws this whole clunk in the wheel, right? Because Katie's order isn't in the POS system. So then the next [00:06:00] customer drives up and then their order's next. But Katie still isn't in, and Katie may be two cars back.

[00:06:05] Ben Walters: And so anyway, it, it clunked up our operations. But it also then, when Katie gets to the window, they're like, you're Katie, right? And she's like, yeah, I'm Katie. Who are you? And the person introduces themselves to cashier and they say, what would you like Katie? And then Katie goes through her order, and they put it in, and then they have to make it then.

[00:06:26] Ben Walters: So Katie waits a little bit longer, and you can just see Katie's disappointed. And so then what ended up happening was, Katie just disappeared for a while. Like a person who came through that drive through regularly, every morning, you could almost set your watch by it, all of a sudden, poof was gone. And in fast food, retail, coffee shop, it's not like you can call Katie up and be like, Hey, where'd you go Katie?

[00:06:53] Ben Walters: Is everything okay Katie? So Katie just disappeared for I, I would say maybe six months. [00:07:00] Then finally Katie came back. As the owner, I was excited to have Katie back, and so I popped my head out the window. I said, Hey Katie, it's great to see you. Glad you're back. You know, where you been? Did you go out of town or do you have a health issue?

[00:07:14] Ben Walters: What's going on? Which probably a little much, but hey, you know, I like to get to know my customer. So Katie said, well, you know, I, I'd been coming here for a long time, and everybody knew my order, and made it just right. But the last time I came, they didn't know who I was, and then they made the order and it wasn't quite right, and she said:

[00:07:33] Ben Walters: You guys as an independent shop are a little bit more expensive. Not, not a lot, but you know, maybe 50 cents more than I could get the same cup of coffee at Dunkin' Donuts or, or Tim Horton's down the street. And she said, so I thought, well, if, you know, it's all the same, I can save 50 cents every day. It's a little bit every, every week, every month.

[00:07:54] Ben Walters: And so she said, so I just haven't been back. And she said, but today I was in the neighborhood and I thought [00:08:00] I'd, I'd give it a try. So it, it hit me in that moment that, that turnover that I'd had now, it didn't affect me operationally in the sense that, that the person was still taking the orders just like the previous person did.

[00:08:17] Ben Walters: The barista was still making the drinks just like the previous person did. But because of that turnover, I lost Katie and her revenue for that amount of time. And I saw that time and time again in, in the retail setting where it, it just, those personal relationships are what keep the people coming back as customers. And when you have high turnover, you lose that personal relationships. It becomes a commodity exchange. And once it becomes a commodity, the only thing you're competing on is price. And in my businesses, I always try to offer premium products, premium service at a premium price. [00:09:00] But once you flatten that playing field to, commodity-based pricing is the only thing, I'm not gonna win with, against Starbucks or Dunkin' Donuts, any of those big national chains with massive purchasing power and just this huge operation, right? So turnover literally cost me customers in that business.

[00:09:24] Ben Walters: Now I wanna pivot and tell you another story about a big hotel brand chain, one of the biggest hotel brand chains in the world. And I was working for this particular hotel brand, learning about the hospitality industry. And every month we had a gentleman who would come to Cincinnati from England, and he was working on a startup, and British Airways has a nonstop flight from London. And so he would come in almost like clockwork right about the last week of the, of the month. And he always went to the front desk and there were a couple of front desk, customer service agents that knew him by name and would welcome him.

[00:09:59] Ben Walters: Welcome [00:10:00] back. We're glad you're here, you know, he'd say, oh, it's good to be back, you know? And then, you know, the usual banter, how was your flight and how are your kids? That kind of thing. And so there was a connection there. And then he always, he was pretty programmed, like a lot of travelers are, especially business travelers.

[00:10:15] Ben Walters: He'd go up to his room check, kind of get himself settled, and then he'd come ,back down to the, to the restaurant bar there at the hotel, and he learned to form a relationship with a couple of the bartenders. And so he, he knew them and, and as well as, you know, a server or two, and, and so they would always again, welcome him back. We're glad you're here. That kind of thing.

[00:10:37] Ben Walters: And so it was really kind of a good thing. And almost like clockwork, every month you'd see this gentleman from England check in, stay a couple days. He was a fixture at the bar. It was, it was kind of a good, good relationship. But then as in any industry, particularly in food service and hotels, front desk people, they tend to turn over.

[00:10:57] Ben Walters: Same with the, the kitchen staff, both front of [00:11:00] house and back of house. And so over time a lot of that turnover happens. So he'd roll in to check in and they'd be like, ID, you know, welcome the, the standard stuff. But there was no personal connection with the front desk check-in 'cause those new customer service agents at the front desk didn't know him from anybody, right?

[00:11:18] Ben Walters: So, checked him in properly, did their job right, didn't screw anything up, gave him the same type of riverview room with a balcony, that kind of thing. Then he'd come down to the restaurant. Again, drinking the same drink, ordering the same food that he always ordered. And it was good. It was made the same way, tasted the same.

[00:11:38] Ben Walters: But it was different bartenders because there'd been turnover in that, kind, of front of house restaurant, and different servers, and different busboy. So the entire experience, same hotel, same execution in terms of what the staff delivered, but a different experience for that customer. So that happened a couple of [00:12:00] times where the people he had connected with were no longer a part of the organization, right? Nobody at the front desk, nobody in the restaurant. And then again, like Katie, he disappears for like, I don't know, eight or nine months. You don't see 'em and you're like, oh, that's kind of weird. 'Cause you get used to seeing these people, especially the repeat customers.

[00:12:20] Ben Walters: So then he comes back eight or nine months later. And so I asked him, I said, Hey, you know, did you stop working over here? Oh, no. I've been working here the whole time every month, right at the, you know, last week of the month. But I decided after the, the changes in your staff, you know, you're a little bit more expensive than some of the other hotels. I thought I really love those people, but they're not here anymore. So let me go check out what else is out there. And he said, so I tried this hotel and this hotel and they were good too, but I thought, ah, I'll come back here, you know, for this time. But he wasn't particularly bought in.

[00:12:55] Ben Walters: It almost seemed, again, like he'd gone down to, [00:13:00] the hotel room was a commodity, and price was the ultimate decider because we no longer had that differentiator of the people. And again, do you know why? It was because of turnover. As that turnover happened, that connection with the customer was lost, and so all of a sudden he was shopping around. So business lost.

[00:13:20] Ben Walters: Third example I'll give you, I was in the commercial cleaning business for many, many years. And so the way that works is, unlike a traditional business, where you have an operation and all your employees come there, do their work, in commercial cleaning, you have employees, but they all work at sites scattered. We were scattered over seven different counties, three different states, pretty big operation, right? And so the cleaners reported to a specific job location. It could be a medical facility, it could be a school, could be a big office tower, you know, suburban office tower, that kind of thing, office building.

[00:13:57] Ben Walters: And so what I found [00:14:00] was that the customers tended to bond with their cleaners, their team of cleaners, right? And so they would get used to the familiar faces. You could count on, in most buildings, you knew who was there early, you knew who stayed late. You'd see them in the hall as you were vacuuming, or cleaning the restroom, or collecting the trash. How you doing tonight? That kind of thing. And so people got used to who they had, well, once you started turning over and, that they liked the people genuinely kind of, got to know the people. Some of our customers would give our employees Christmas bonuses or, you know, Christmas gifts, that kind of thing. This wasn't even from us. This was from a, you know, a third party that we, we had a contract with right? But that's that level of connection they had with their employees.

[00:14:52] Ben Walters: But then we would hit these rough patches where those employees would leave and all of a sudden, and, and this happens so often, you put a new [00:15:00] crew in there. They don't stick very long, so you put a new crew in, they bond with the customers for a month or two months, but then they're, they quit. They don't wanna do it anymore. They're out, and the next crew's in, and then the next crew. Well, do you know what happens when they do that? I guarantee you those customers then decide to shop that service because they no longer have a, a connection to your company through those human beings, right?

[00:15:29] Ben Walters: So it doesn't really matter if they're contracting with Service Master, or Jani-King, or Coverall because whoever they contract with is gonna bring in a new set of people and it's those people. So it really, if you don't have a connection with the people, it becomes, again, a price-based commodity where it's just bring in the cheapest one, you're, you have no bond, and you get what you can out of the relationship.

[00:15:55] Ben Walters: I recently saw this at our gym. I go to a athletic club gym in [00:16:00] Cincinnati, downtown Cincinnati, which is one the oldest, running downtown athletic club in the country. Great place. But they've gone through a lot of party cleaners from the other side, so I'm seeing this more from the customer side.

[00:16:14] Ben Walters: And so we had a long time cleaner with a particular cleaning company who did a great job, right? And everybody knew his name. John I'll, I'll say John. John was fantastic and everybody liked John. John was always smiling, how was your weekend? You know, and sometimes John spent more time talking and bonding with the, the people who came to the gym like myself than he actually did cleaning. But people liked him.

[00:16:40] Ben Walters: Then John left and they brought in a new cleaner. And I, I would argue as someone who owned a cleaning company, the new cleaner was doing a better job on the cleaning part than John ever did. But this new cleaner wasn't particularly personable, okay? So they were just kind of getting down to business, almost, get outta my [00:17:00] way, you know, gym user, because I've gotta mop these stairwells, or clean this basketball court, whatever the work was.

[00:17:07] Ben Walters: Then that person wasn't there very long and then a new person came in. Do you know what all of a sudden, the board decided to do? Let's shop the clean, let, let's put this out to bid. Let's put out an RFP on the cleaning services. And one of the board members said, 'cause it really doesn't matter we're gonna get somebody new in two weeks anyway. So whether it's someone new with the current company or someone new with a new company, It makes no difference to us. Let's just go for lowest price. And so here, this company that had served our gym well was probably, because they, the gym and the, the leadership, and the board could save a little bit, was gonna be out on their ear because of that turnover. Now, if John had never left, if that, that company had been able to retain John and keep him doing what he did so [00:18:00] well with the customers, we wouldn't have lost that customer.

[00:18:04] Ben Walters: The bottom-line point with turnover is if you are having turnover in your business, there's a huge economic toll, and I, I talked ad nauseum about that in the last episode, but it also, I guarantee you, is going to affect your customer retention.

[00:18:23] Ben Walters: There is a bond. People, you, you think they bond with companies? No, they bond with the people who work for and represent those companies. If they know and love those people, they will be loyal to that company because of that connection with that person. But once you start having a revolving door and those customers cannot bond with people because the people are constantly changing, guess what? The customers are gonna walk out that door and they may or they may not come back. And especially [00:19:00] if you are trying to be a premium product with premium pricing, the people are the key.

[00:19:07] Ben Walters: So you have got to figure out your turnover problem. I can tell you I have done this. You think about turnover problems. I have worked and figured it out in commercial cleaning. I got people to stay loyally in commercial cleaning accounts where they cleaned 17 public restrooms in a public high school, and yet they were staying 5, 6, 7 years. If you can do that, or you can get people to stay in fast food making salads, or making coffees, or lattes, or running the cash register, if you can get people to do that, I guarantee you I can help your business start turning around your turnover problem. And if you start turning around that turnover problem, you are gonna hold onto your customers you have but you are also going to bolster your [00:20:00] bottom line by tens of thousands, hundreds of thousands, even millions of dollars over the course of your business.

[00:20:09] Ben Walters: I invite you, if you are having these challenges, book a consultation with me. Let's talk about this. Let's figure this turnover thing out. I would love to dig in with you, and let's figure it out, and help you curb your turnover problem, hold onto those great customers you have, and continue to be the business you want to be.

[00:20:27] Ben Walters: I will see you next week to talk more about turnover.​

[00:20:35] Ben Walters: Thanks for joining me today on the SuperPumped Business Podcast. If you enjoyed today's show, I have two quick next steps for you. First, subscribe or follow us on Apple Podcasts, Spotify, or YouTube. And second, jump on over to superpumped.com to find out all the incredible ways we can help you launch your SuperPumped Business.

[00:20:58] Ben Walters: Keep well and I'll see you next time.