Category: strategy

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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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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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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

 

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Try and Try again – or maybe not?

 

When I was a child, my parents often exhorted me to “Try & Try again” if I failed at something.

In business, all too often I meet companies who, when something is suggested, respond with “Oh that doesn’t work – we tried it some time ago and it failed”

If you dig into that & get them to recall the details, it’s amazing what you can find.

A direct mail campaign didn’t work for us
Well, in fact you only sent one piece of mail, to a small selection of your past customers

We tried using a different system
This is one of my favourites. In general people are resistant to change and prefer to do things the familiar way. If they aren’t convinced of the need to change, your team will prefer to see the new system fail.

It was too complicated
Well, it might be, but it is more likely that the proposal wasn’t broken down into its component parts. You can eat an elephant, one mouthful at a time, but if you start with the whole elephant on the plate it can be a bit intimidating.

Most of the time, business don’t try often enough or hard enough. They are not convinced of the strategy, and go into it halfheartedly, then withdraw at the first obstacle. That’s a recipe for failure.

If you are going to try something new, research it, plan the steps, and then execute it wholeheartedly, with real commitment from the leaders of the business.

You could still fail because your strategy was incorrect, but most of the time

Initiatives fail for poor execution, not faulty strategy.

 

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Perception and reality

Most businesses think they provide good service to their customers and they are probably right, if they are still customers.

Some time ago, I was managing a large distribution business. Every year we commissioned a “Customer Satisfaction Survey” from a third party. It was a report that we debated at some length, to see if there were opportunities to improve our services.

The problem with that report (and I am sure many similar exercises) was that the answers didn’t change very much from year to year. We were asking the people who were using our services, and the very fact that they kept coming back to buy again told us we were providing adequate service – and the report reinforced that view.

What we really needed to do was to ask the people who didn’t buy from us, or even better the customers who no longer bought from us but instead had found an alternative supplier. What made them change?

You and your customers may think you provide good services. What do the people who tried you and went elsewhere think?

Marketing & Sales people will tell you that you can much more easily reactivate a past customer than find a new one; you can do much more to improve your services by asking a dissatisfied customer what you did wrong – and in the process perhaps that dissatisfied customer will give you another chance.

What have you got to lose by asking?

 

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You don’t have to do it all alone

 

Collaborations and partnerships are a great way to move your business forward.

I’ve been to several events recently where the emphasis was on collaboration and sharing resources to achieve greater results, but I have been to others where the focus was on business development, or marketing, or international trade and in each case there’s a partnership element to success.

I have been helping a client make space to grow their business. They are so busy with the day to day firefighting that they don’t have the time (or the energy, or the resources) to look at the things that will help them advance.

One way to look at this is to review the organisation structure – even if it is just you – through an organisation chart.

Put names in all the boxes and then underneath each make a note of where you are today:
How much time are you spending on this area?
Is this your core skill?
Can you delegate it?
Can you outsource it?
Can you automate it?

Now answer the same questions again – this time as if you were looking at the business as if 3 years have passed.

That’s given you the starting point, and your destination. Now all you need are the steps to get there.

 

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Are you getting the best results from your business?

 

Part of creating a successful business is to focus attention and effort on the areas that are going to bring the most reward.

There is a fundamental economic principal sometimes referred to as the law of diminishing returns where the first additional resources applied to a production process give far greater output results than those applied later.

One way to imagine this is to think of a seized wheel where the first few drops of oil enable the wheel to move. Adding more oil will improve the lubrication and the process, but those first few drops make a massive difference.

In business, it’s really easy to keep adding more oil to the process that is running. You’ve done it before and you know that it had a good or even a great effect. You don’t have to think too hard about it!

Fixing the thing that isn’t working, or starting a new project or process may well require you to put in greater initial effort but the return may well be much larger.

Applying this thinking to a sales & marketing context, perhaps you are well established in a market, with a particular type of customer. You understand their needs, you have a presentation and a product or service that has been successful in the past and you know how to win more business. There will come a point where doing more of the same will not have the same effect, and it will take more sales & marketing effort and expense to win new customers.

The alternative strategy might be to identify a new market, where you are not established and you don’t have the same level of knowledge. The initial resource required – especially from leadership – will be greater – but the returns may be even greater still. If you now have two markets where you are established, instead of one, you have a more robust and less risky business.

You can apply this thinking to many different aspects of the business. You don’t have to keep doing more of the same if the results don’t warrant it. Are you getting the best results for your efforts?

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Perception is reality

In almost any walk of life, it does not matter what you think. What matters is what the observer perceives.

Gustave Flaubert said “There is no truth. There is only perception”

If you are in any doubt just ask any politician!

If your team think you are likely to react badly to certain types of news or information, they will hesitate to share it. You’ll be left in the dark, and perhaps get a nasty surprise when it is too late to do anything about it.

If your suppliers think you don’t value their efforts, they are less likely to help out when you need that order expedited.

If your customers think you don’t care about them – the reality is the perception – you don’t care – or at least not enough.

I’m reminded of the Robert Burns poem, To a Louse, part of which is

And would some Power give us the gift
To see ourselves as others see us!
It would from many a blunder free us

You can avoid a lot of problems by asking how am I/ we being perceived, through employee surveys and customer surveys.

You can gain even more insight from exit interviews with staff who are leaving, and from former customers who are now buying elsewhere.

Ask your suppliers how they rate you as a customer.

Just asking the questions is a really good start. People love to be asked for their opinion, and making the effort to give them the opportunity will be beneficial.

Structured questioning, where you aim to uncover opinion in particular areas will sometimes provide greater knowledge but always allow for free-format comments.

You may think your business is the best thing since sliced bread, but what you think does not matter.

All that matters is what others think.