Poor Relationships Are Costing Retailers Thousands

September 14, 2012

Although it costs 5 to 7 times more money to attract a new customer than to keep an existing one, most retailers are terrible at maintaining relationships.

The sad fact is that most retailers spend thousands of dollars on advertising for new business meanwhile ignoring customers who have already spent money with them.  This isn’t simply bad business; it’s bloody stupid!

Keeping your existing customers is a fundamental of retailing and it’s not that difficult. I am constantly amazed at the number of retailers who collect a customer’s personal information such as name, address, phone number, email address, date of birth and then do nothing with that information.

To illustrate what I’m talking about here’s a personal story.

A couple of years ago my wife and I decided that it was time to buy a new television. After a bit of shopping around we settled on buying from our local Clive Peeters store.  On the day, my wife Isabella gave me a free reign and before long, the shopping list included not just a 50 inch television but also a surround sound system, hard drive recorder, his and hers stereo headphones, and a top of the line digital camera. As you can imagine, in the end I had spent thousands.

Most Melbournians would remember Clive Peeters even if they hadn’t shopped there. They seemed to be constantly advertising on radio, television and in print. I don’t know exactly how much their annual advertising expenditure was, but it was definitely in the millions of dollars.

All of this money to attract new customers, yet how much did they spend to keep in touch with me? Nothing!  I never received a single phone call, thank you card, email or personal communication of any kind even though I had bought a truck load of stuff.  I have since purchased many small and large appliances. After the lack of “love” from Clive Peeters do you think that I felt any particular loyalty to their brand?  Of course not.  On the other hand, had they kept in touch with me, Clive Peeters would have been “my store”.

Let’s take a look a brief look at what ultimately happened to Clive Peeters. Poor financial auditing created an opportunity for a payroll officer to steal around $20 million dollars. Soon after, Harvey Norman bought Clive Peeters for the bargain price of about $55 million. It wasn’t too long after the sale that Gerry Harvey claimed the Peeters name was “tainted” following the embezzlement and that store sales had more than halved. Finally, Clive Peeters closed for good.

I’m not surprised that store sales dropped following the theft, but it had little to do with the Peeters name being “tainted” as Gerry Harvey claimed. Customers don’t think that way. Some will snicker, some will laugh out loud, and some will talk about the theft around the water cooler for a few days. However, ultimately customers are in search of value for themselves. There are only two reasons why customers ever leave a business to shop elsewhere.

  1.  No differentiation between one store and another.
  2. No perceived value such as price, customer service, convenience, etc.


The main reason sales dropped was because the staff were expecting to lose their jobs at any moment and stopped caring. The cause for the drop in staff morale was poor leadership.

However, we’ll leave the discussion on leadership for another time.

For more information on how you can build loyal customer relationships that will dramatically increase your profit take action now.

To your abundant success,

Leon Skaliotis – Founder, Retail Fundamentals.

Leon Skaliotis is an accomplished retail specialist in Melbourne, Australia, who  successfully coaches Melbourne retail owners on how to create highly profitable businesses by attracting shoppers and converting them into loyal fans. His fast working principles from his exclusive programmes, My Retail Success and The Outside In Method come with a 100%  Satisfaction Guarantee and enable Melbourne retailers to:



  • Attract and Keep more Customers
  • Substantially increase their Profit
  • Increase the Value of each business
  • Free up more of their  Time

To receive your complimentary copy of “Retail Secrets Every Owner Should Know” click: www.retailfundamentals.com.au

You can contact Leon Skaliotis direct on (+61) 0425 83 3344  or email: leon@retailfundamentals.com.au


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