Author: Tim Luscombe

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What are the best ways to keep your customers?

It’s much easier to sell to an existing customer than it is to a new one, but many businesses don’t have a formal program to retain their customers.

When you measure all the effort that goes into winning a new customer, all the money and management time you spend acquiring those new customers, compare that to the amount of time, money and effort you devote to keeping your existing customers.

If there is no formal program or incentive, or if you are not measuring your customer retention, the chances are that no one is focused on it. What’s measured is managed.

If you compare that to the pay TV industry, businesses like Sky have separate departments devoted to customer retention. They don’t call them that – it would be a bit too obvious – but if you want to negotiate your contract and reduce your fees, tell Sky you are thinking of leaving and you will probably end up talking to the disconnection team. They have the authority to offer you special deals to keep your business!

Giving an existing customer a special deal is a great way of hanging on to them, but the special deal doesn’t have to be money!

You might offer early access to a new product or service (that’s a great way of testing something new as well, by the way) or perhaps you’ll invite them to join your dedicated knowledge area, where they can learn more about your business.

If you can foster a sense of community among your customers, that will help. People love to belong to a club.

Probably the most important part of keeping customers is communication. If you don’t keep your customer informed, you are saying that you don’t care about them. If all you do is transact with them, they will never be a fan or an advocate for your business.

Whatever else you do, communicate!

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It can be lonely at the top

The more responsibility you have in whatever field, the fewer people you can share with.

If you are leading a business, the people in that business look to you for advice and guidance. You are supposed to have the answers – because if you haven’t got them, who has?

In the workplace you are bound up with all the emotion that comes with leading a team.

You’ll be feeling responsible for the team, and for the business.

That can make your position a lonely place. You can’t talk about your problems to your colleagues, your customers, your suppliers or your service providers – all the people you come into contact with on a daily basis. Some business leaders are lucky enough to have an understanding partner, who will at least listen!

There are two strategies to deploy to help you avoid the worst effects of this trap.

Firstly, surround yourself with trusted advisors. These are people you must be able to trust and discuss issues with, and who can bring dispassionate objectivity to bear on your problems. They could be independent business advisors (I know one of them!) or perhaps other business leaders who operate in a different sector. There are many peer groups to facilitate such support.

Secondly, be more open with your colleagues at work. There’s nothing wrong with being human, and indeed if you are more open you will build stronger relationships with the people around you. The stronger those relationships, the greater the trust and honesty will be and the easier you will find things.

There will always be those areas where you cannot discuss the issues, but they are probably far fewer than you think they are. Just make sure you are not spreading loads of FUD (Fear, Uncertainty and Doubt)

Business Leaders are people too!

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Is there a SPOF in your business?

Is there a single point of failure in your business?

I’ve lost count of the number of businesses I have helped identify and deal with the single point of failure in the business.

Sometimes, this is a computer system. It’s not robust, possibly not backed up properly and if it were to fail the business would grind to a halt.

More often, it is a person. If that person isn’t available, is sick or on holiday, things don’t get done and eventually the business fails. That’s not you, is it? It is often the business owner, with all the levers of control in their own hands.

Perhaps it is a single contract with a customer. That represents such a high proportion of your business that if you lose that contract the business will go under. You don’t have to do anything wrong for the worst to happen – it could be something completely out of your control. Perhaps the customer is taken over, or they lose their customer…but you still lose out.

Sometimes it can be a supplier, or a component from a range of suppliers that is rapidly coming to the end of its life.

Do you know where your points of failure are?

Are you sure that computer backup is actually working ok? When was the last time you tested it? How many people actually know how to restore from a backup?

If it is an individual, training can help. Delegation is often something that doesn’t come easily, but it is a vital skill to avoid becoming a road block. Delegate a responsibility, not a task, and try offering support with the delegation “What do you need to make this happen?”

If it is a customer or a contract, put your efforts into diversifying that business. It it’s a supplier, look for alternatives.

If you do have a single point of failure there is a law that says you will get caught out – eventually!

 

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Stick to your kinitting

Stick to your knitting

That’s an old saying that my parents would have used – and perhaps their parents too!

In today’s world the one eyed man is no longer king – to borrow another phrase from the past – the specialist is the king.

My speaker colleagues from the US talk about Niches (rhymes with itches) to Riches.

Successful businesses focus on the one thing that they are really good at. That’s the area where they can compete and outdo everyone else.

Less successful businesses offer a range of services, where some of them are not as good as others.

Sometimes, they would be better off saying “No, we don’t do that but we know someone really good who can help you”

In practice I prefer to say “Yes but” in preference to No. Starting with a yes is much more likely to get a positive response than a no!

This isn’t just about delivery it is also about marketing your goods and / or services. Successful marketing campaigns are laser focused on the customer and the benefit that customer will receive.

In the speaking world great speakers are really clear on who the audience is and the take-away the speaker is going to provide.

What is it that you do? What’s the great benefit you give your customer? Put in into one sentence.

Now test that assertion by substituting your competitor’s name. If the sentence is still true, you haven’t found your unique selling proposition.

If you can’t find it, ask your customers. You might be surprised. When you have your USP put it at the heart of everything you do.

 

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What are your business cycles?

A way to understand and benchmark your business is to identify the cycles within the business.

The sales cycle is the period from the initial contact through to the point at which a sale is made.

The delivery cycle is the period from the receipt of the order or the signing of the contract through to the completion of the delivery of the product or service.

The production cycle is a sub-cycle of the delivery cycle and is the period from receipt of the order through to the completion of the product (but not its delivery or installation)

The order to cash cycle is the delivery cycle plus the credit terms taken (not offered) by your customer.

You can extend this thinking to almost any part of the business but the key point to recognise is that the longer the cycle the more resources are required to complete the cycle.

At its very simplest level if the order to cash cycle is (for example) 120 days that means you have to fund the operating costs of the business for 120 days.

Add to that a sales cycle of (say) 90 days and you have to fund the business for 210 days or the best part of a year. Ouch!

In practice, of course, in an established business the cycles overlap so that the cash from last month’s orders is available to fund this month’s overheads, so it doesn’t look anywhere near as bad.

However, if you can shorten the cycles in your business you’ll reduce the amount of cash tied up in the business and take the pressure off working capital.

Check by talking to other businesses in your sector to see if their cycles are similar to yours. You might find their experience is different – so you can implement improvements in your business.

If you really do have an extended production cycle, think about asking for partial payment as the work is being done rather than waiting until everything is complete and delivered.

 

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Exceed your customer’s needs

I often find my clients are limiting their business options at the outset by telling themselves and everyone else “we’re only a small company” with the implication “we can’t do that…because we are only a small company.”

Ask the alternative question “what would a world class company do?” followed by “how can we do that?” and you may well be surprised by the results. Size is not everything!

There will be times when you are limited because you don’t have the resources, but more often than not it is a question of mindset, not resourcing.

Every giant corporation and every industry leader was once a small company, but they didn’t let themselves be bound by their size, so why should you?

It is not just about copying from world-class if you really want to stand out. It is about best meeting or exceeding the needs of your customers – and if it is important to your customer, it should be the most important thing to you.

In several sectors a handful of companies have completely disrupted existing markets by applying technology to change the way things have always been done. You could choose Uber for disrupting the travel industry, or AirBnB for the hospitality sector.

Both companies identified a that the incumbent providers (even those that were world class) fell short of customer needs and built businesses around meeting those needs.

They didn’t copy what the existing world-class providers were doing and they didn’t limit themselves by their size.

The fundamental question that you should be always asking is

“What do my customers want, and how can we best meet that need?”

Not every business can be an AirBnB or an Uber, but every business can do a better job meeting its customers’ needs.

 

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What’s the mood today?

 

Have you ever had to work with a moody boss or a moody colleague? Consider yourself lucky if you haven’t – I know I’ve had a few occasions where I’ve been snapped at for no good reason – or at least not one that I knew of at the time!

How does that make you feel?

If you are inconsistent in the way you respond to your colleagues or lead your team you are sending mixed messages, and the real meaning of your messages may get lost in the noise generated by your moods.

At the very best it will probably mean that your colleagues will wait until you are in a good mood – just so they can spoil it with the bad news they’ve been saving up!

At the worst, you don’t get to hear about the problem until it is a disaster – when you might have dealt with it early on, when it was just a small problem.

If you have a team member who is sometimes in a bad mood, they can put the rest of the team off their stride.

The mixed messaging, whether from the top down of from peer to peer, destroys trust and creates barriers.

If your mood is changeable – if you are having a bad day – this first step is to tell people. They know already, so it is not a secret, and by opening up you make yourself appear honest and therefore more trustworthy. You’ll also find that telling people (you don’t whine about the reason, just say that you are a bit grumpy today) takes the pressure off you because you don’t have to pretend. That alone will make you feel a bit better!

If it is a team member who is having a bad day, telling them that you have noticed has much the same effect. Don’t get dragged into a long discussion about their woes – for some people the glass is always half-empty and they will drag you down with them – but you can show that you are paying attention. You also show the rest of the team that you are aware and watching. The grumpy one is on notice – being grumpy with your peers is one thing, being grumpy to the boss is something else!

 

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Cross Training to keep your business fit! 

 

For me, cross training in a gym is a distant memory but I am sure some of my readers may still indulge. In a business sense, cross training is a great way to improve the business.

In a well-designed induction program a new team member may experience several different departments over a number of days or weeks. That allows them to start on the job with a wider understanding of how their work impacts upon the rest of the business. It’s a really good way to bring someone into the team and make sure they have a decent understanding of how the business as a whole gets things done.

It’s not often that you see the same principles being applied to established team members, but it can be a great way of making sure that departments work together, rather than forming silos where information is retained within the department and competition with other departments rather than cooperation is the order of the day.

Tesco used to require the senior team (from directors down) to spend some time on the shop floor every year. I wonder if that no longer happens, and some of their problems can be related to the disconnection between the leaders of the business and its customers.

When you acquire a business you should have a plan to integrate the two businesses and a very powerful way to blend the cultures is to have an exchange of staff.

I’ve used cross training with the credit and collections teams, working with the sales team. The credit team can be very dismissive of the sales team – I’m sure you have heard phrases like “Those lazy sales folk, they can’t even get the credit application form completed” but get the credit team into the meetings and they’ll realise (a) how much else is going on to secure the customer and (b) how clumsy the credit application form is. In one case I remember the credit application form was reduced from 8 pages to 2.

Cross training really can keep (your business) fit

 

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Don’t be a day late and a dollar short

 

There is s a great American saying used to describe a failure. It’s often used to describe how an individual performs, as in “He is a day late and a dollar short”.

The English equivalent is “Too little, too late”

The business lesson is directly connected to expectations.

If your customer expects a delivery on Wednesday and you don’t deliver until Thursday, in your customers’ eyes you are a day late, even if you always planned to deliver on Thursday.

In the same way, if your customer thinks that you will do more than you think you are going to do you will come up a dollar short!

I am sure you don’t set out to be a day late and a dollar short – who would?

You can avoid that by making sure you have a solid grasp of your customer expectations at the start of the relationship. If it is a complex service or project, map out the steps of the project and assign responsibilities. Often, with complex projects, you as the supplier cannot make progress until the customer has completed a task, but if that dependency is not clearly stated guess who will get the blame!

If it is a customer complaint, time is of the essence. If you can get back to your customer quickly – even if it is just to say “we’re working on it” – that can alleviate some of the perception.

The other side of the coin is how you can turn your customers into raving fans.

Under promise and over deliver is a frequently heard truism, but the over-delivery has to be managed. There’s no point over delivering if what you are adding are things the customer does not want / need or value.

The crucial steps are to understand (and manage) your customers’ expectations, work out what is really important to them and then over-deliver in that area.

 

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Agree before you disagree

 

I’ve been asked to help with a group of three dentists, where one wants to retire and have the other two buy him out. The remaining partners are in no hurry to help him exit, there is no agreement in place and they have a complex set of legal structures. Feelings are running high, no one is happy and the business is suffering.

I’m also helping another business owner – a husband and wife team – who raised some money through crowd funding last year, but before the deal could complete their fellow directors entered into an agreement with a couple of the investors and they went into competition. My client is suing the competitors, and has secured the patent on the product and the heart of the business, They just need lots of money to continue to fight their corner!

It doesn’t matter how well you get on with your partners, your suppliers or even your customers right now, it is a good idea to have some way of resolving issues before they become too serious.

Every business should have a procedure for resolving customer complaints – and ideally one that gives the customer a very quick resolution. That usually means empowering those on the front line to deal with the challenge.

Every supplier should have a set of conditions, or terms with sanctions that apply if the terms aren’t met.

Every group of shareholders – especially in private companies – should have a shareholders agreement, so that when the time comes you know what will happen next.

It’s a much better idea to agree a process and procedure before you disagree