Have you ever had the misfortune of realising how much something is worth after you lost it? The true value of things is often realised when it’s too late. Customers are the same. Think of some of the ones you have lost and wished you had them back. Especially when you compare them to some of the challenges, you may have today. Most of us have been fortunate enough to learn to protect the good things we already have and make sure we leave nothing to chance.
Customer loyalty is the greatest asset a company has. If you take out the hard assets like real estate and equipment and in some cases, unique IP, what’s left is customer loyalty. In a merger or acquisition, it’s referred to as ‘goodwill’ and in large transactions, it’s worth tens of millions, even more. So, wouldn’t you expect such a critically valuable asset to be protected and nurtured to grow?
Your golden opportunity
Consider how many of your personal transactions are delivering you an average experience, rarely are they extraordinary. So often we are lured in by the marketing message only to be left with an experience of, ‘it’s just the same as the others’. Companies spend fortunes attracting buyers and then leaving them abandoned after the first purchase chasing the next one.
One of the most effective ways to protect the bottom line is to reduce waste. Reducing unnecessary waste in business is the most basic responsibility to the shareholders, besides the fact its just poor business management. So many companies try to impact the bottom line via sales growth; the first customer transaction is the most expensive transaction. After that each time we sell to the same person, the customer acquisition cost reduces.
The most powerful way to increase your bottom line is to ensure you deliver the highest possible standards of customer experience. Doing so increases their transactions with you, and if you deliver excellence, they will buy more from you each time, increasing their average dollar sale value. It’s incredible how many companies do not measure their average dollar sale value and transaction rates with their customer base. There’s a goldmine of profit growth just waiting to be tapped.
Protect what you have invested in
Consider how much time you have already invested with your existing customer base, especially where some have taken more energy and effort to obtain. If you don’t ensure you can leverage back this asset you are leaving a fortune behind and wasting the resources you have already invested in. Ensure you can identify your ‘A’ grade customers and make sure everyone in your team knows who these wonderful customers are. When times get tough, these are the ones who will support you, and you must always take great care of them as their revenue is critical to ensure your cash flow projections.
It’s really simple, just not easy
When your ‘A’ grade customers are protected, you then move on to your ‘B’ grade customers. These are often where the goldmine of opportunity lies. You haven’t earnt their unshakable loyalty yet, however it’s on offer for the smart operator who knows a great opportunity when they see it. Your ‘B’ grade customers are usually in this category because your team haven’t delivered an experience they truly value and respect. Often this is best served by an account manager than a salesperson who is seeking our new markets. A highly effective account manager will ensure they understand the challenges the customer has and can see where the opportunities are for solutions.
Do you have protection?
When you have identified and worked out the strategy for optimising the revenue from your ‘A & B’ grade customers, you then move onto protecting them, for the long term, 1-3-5+ years ahead. To do this, you really must understand them, and this requires a high standard of CRM. If you don’t document and learn about your customers, then you haven’t earnt the right to their unshakable loyalty.
Each year you must allocate a target for customer retention, there are those who leave you that is acceptable (mature out of your market etc.) and other circumstances out of your control. Outside of this, you must be able to predict the customer churn rate accurately. Only accept those who qualify all the rest you must fight hard to keep. If most companies worked as hard at keeping customers as they did when they first sold to them, they would be in a much stronger position.