7 Reasons Why Your Business Loses Customers

Published: September 16, 2021, Last Updated: February 2, 2024

Writer at Finturf.com
Writer: Martha Pierson
Editor at Finturf.com
Editor: Anais Osipova
Reviewer at Finturf.com
Reviewer: Michael Needham

All businesses lose customers. According to Profitwell.com, this average customer retention rate by industry is:

  • Retail: 63%
  • Banking: 75%
  • Telecom: 78%
  • IT services: 81%
  • Insurance: 83%
  • Professional services: 84%
  • Media: 84%

While none of these industries can keep all their customers, it is possible to decrease the losses. The first step is figuring out why they leave.

Why Is Your Business Losing Customers?

There are many reasons why businesses lose customers, from a bad customer experience to lack of advertising. Below are seven reasons why your company may lose customers.

Faulty Team Structure

Group business meeting.

An organizational structure is a framework in which managerial tasks are performed. It defines job positions, responsibilities of each employee, the delegation of authority, and superior to subordinate relationships. Having a faulty team structure can lead to a loss of customers.

No matter the type or the size of your business, every organization must have a structure because:

  • It plays a vital role in keeping order
  • It gives a clear structure about the responsibilities of each part of the business It provides a straightforward design about the working style of the company
  • Clearly defines the levels of management
  • If you are losing customers, be sure to make some structural changes and align them to serve your customers best
  • Not having one can lead to a customer’s negative impression of the company

Take a home services company, for example. Friction between management and the sales staff would be felt by the customer. Imagine a potential client being mistreated by a sales staff exasperated by management over wage issues. Even if the sales team only inadvertently takes frustrations out on the shopper, the customer would be unlikely to ever visit the store again.

Poor Customer Service Experience

One of the most significant reasons why companies lose customers is poor customer service and customer dissatisfaction. If a client has had a bad experience at your store, not only will they not return to your store, but they also will tell their friends not to buy your products or services. This leads to significant losses and can put your small business at risk of failing.

To avoid sending unhappy customers who have had poor customer service to your competitor, you have to train your sales staff well. You can also hand them a good customer service handbook with a list of rules. For example, you can include in your directory the L.E.A.S.T method (Listen, Empathize, Apologize, Solve, Thank) for your staff to refer to when a client is complaining to find the source problem proactively solve it before they become a lost customer.

You may also want to hire a few customer support representatives in the onboarding process of your brand. Business owners can also send out surveys to their clients to get direct feedback on the customer service and any possible negative experience.

Wrong Pricing Policy

Pricing affects consumers’ decision-making. A small business owner needs to have an excellent understanding of their target audience and consider the customers’ perspectives when they are developing their pricing policy. You can’t price something above what people value it. Consequently, businesses must understand how their consumers think and how they value things because it will be easier for them to adopt the right pricing policy. You may also want to incorporate POS financing software into your business to facilitate your existing customer’s purchases.

There is no one size fits all pricing policy, and a company’s policy can either make or break recurring customers. Make sure to read our guide to pricing policy to determine the right one for your business.

Website Technical Issues

Web developer working on computer.

Website technical issues are also related to a poor customer service experience. Poor navigation, improper redirects, slow page loads, and images that are not search-friendly will encourage your existing customer to leave and never revisit your business’s website.

To ensure your visitors have an enjoyable user experience, make a purchase, and increase your small business’s bounce rate, you need to solve your website’s UI/UX issues. You can use tools like Chrome DevTools or hire a programmer to repair your website.

Not Paying Attention to Customer Feedback

If you want to stay ahead of your competitors, treat your customers’ feedback as the most valuable source of information for your business. Companies can leverage customer feedback to make a profit. However, if you are not paying attention to customer feedback, you lose much-valued information that can help your brand thrive. Customer feedback allows companies in the following ways:

  • Determine if your customers are happy with your product or service
  • Reduce customer churn
  • Detect areas that need to improve
  • Measure customer satisfaction
  • Understand customer loyalty
  • Grasp your customer base and repeat customers
  • Predict future financial conditions
  • Create a better customer experience
  • Improve customer retention
  • Upgrade brand’s unique value proposition
  • Create a stronger relationship with your customers

Not Building a Strong Relationship with Customers

Financial advisor meeting with clients.

You may have noticed by now that poor customer experience, not listening to your client’s feedback, and not building a solid relationship are all interlinked and lead to your business losing valuable customers. If you want to be successful in your business, you have to have great relationships with your current customers. If you don’t build a relationship with your clients, they are more likely to go elsewhere. To avoid losing them, you need to ensure that you create a connection and invest in a relationship. Consider the following before you start to develop a relationship:

  • Get to know your current and prospective customer
  • Exceed expectations
  • Show gratitude and reward loyalty
  • Ask for their feedback
  • Be consistent
  • Establish trust

You may also want to incorporate customer relationship management (CRM) tools into your business to manage your relationships with your clients. This can also help you increase your sales funnel.

Lack of Advertising

To attract customers and make a profit, you have to be visible and promote your business. You may have a better product or service than your competition, but potential customers don’t know it because you don’t put it out there. Use your social media platforms to your advantage because advertising lets people know that you exist, are open for business, and have something to offer.

Advertising on social media should be an essential element of your business plan because it:

  • Creates customer awareness
  • Creates name recognition
  • Boosts company image
  • Educates people about your product or service
  • Invites new customers

You may also want to read our merchandising tips to increase sales.


Customers are the resource upon which the success of the business depends. If you can’t make your customers come back, your business will not be around for long. Advertising will bring new customers in, but excellent service will keep the customer coming back. Therefore, it is vital to avoid the most common causes of losing customers.

Martha Pierson

Content CreatorMartha Pierson is a marketing strategist and business development expert based in Glendale, California. As a content creator for the Finturf blog, Martha shares her vast knowledge and experience with readers to help them build and sustain successful businesses. Her articles offer practical tips and actionable advice that entrepreneurs can implement immediately to achieve their goals. Martha also provides insightful analysis of current trends across different industries and offers expert guidance on how businesses can adapt to changing market conditions.

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