Author: Guy Letts, Director of Customersure
When I landed a job with responsibility for running customer services and growing a large revenue stream, I soon learnt that bringing in new business wasn’t the whole story. It was important to look after what you already had, too. And if you could get the existing customers on your side, then the icing on the cake was more repeat business and more word-of-mouth referrals.
The breakthrough came when we realised that there were two different skillsets required – marketing for attracting new business, and customer satisfaction for keeping it. It became clear that marketing and service were two sides of the same coin.
With hindsight it’s obvious, but the problem is that while most companies have proven processes for sales and marketing, I see hardly any with a systematic approach for customer satisfaction. Which means growing the customer base is harder than it needs to be and revenue leaks away needlessly when business is lost that could have been retained.
This post is a summary of what I learnt, with a simple suggestion on how to achieve growth in customer satisfaction and revenue.
Step 1 – Understand how customer satisfaction is linked to profit.
I rarely meet people who say customer satisfaction’s not important. Quite the opposite, most people find it easy to say it’s vital. But few people have a systematic approach to improving it. Which means some sales are lost, and even some customers are lost, when it’s completely avoidable. You just need to find a reliable way of getting early warning of any problems.
It’s remarkably simple compared to the effort people put in to hitting their sales number or tracking profit. I guess it’s rare because none of us are taught how to do it. We don’t really know what to do.
One of my friends did an MBA and he told me, "We had sixteen modules. We covered sales and marketing, people and structures, markets, business models and economics. But we didn’t have a single lesson on how to keep customers once we’d won them."
I was fortunate (kind of, it had a few challenges) to have a role where I had the opportunity, and the responsibility, to find out how to do it. It took four years of trial and error (mostly error on my part), but we cracked it.
And the good news is, it’s simple and it works. (Well, it’s partly good news. Dieting is simple and it works, but it’s not easy.)
On day one, I was given a 10% growth target. On day two, I found out we had 10% attrition.
So the first 10% of new business was just going to replace the lost revenue, and after all that hard work, we’d be no further forward.
Step 1 Task 1 – Get a grip of the facts about your customer base.
This is important because sometimes it doesn’t feel like you’re losing customers, or missing out on orders, but you need to know what’s going on so you can fix it and reap the benefits.
So many people have told me they don’t lose customers. But with many business models it’s really hard to know for sure. For the most part they just quietly slip away, or become infrequent, without you noticing. And when I ask if there are some customers who they haven’t seen for quite a while, they usually break a smile.
So start measuring some of the revenue drivers:
- Understand how many new customers you’ve won in the last year, and more importantly how many you’ve lost (or who haven’t placed an order in, for example, 12 months).
- What’s happening to average frequency of purchase?
- What’s happening to average spend?
- How many customers have come through personal recommendations (and how many could you be getting)?
When you see the size of the opportunity, and you know it’s easier to sell to existing customers than to new ones, then the decision to do something becomes a lot easier.
Step 1 Task 2 – Everyone in your company needs to understand the importance of customer satisfaction and the part they play.
The danger here is that some people think that only ‘front line’ people affect customer satisfaction. But everyone does. One way or another, whether it’s policy decisions, how you deal with suppliers, how people answer the phone…everything that anyone does has an effect on whether one of your customers would be prepared to recommend you. It could even be how a relative was treated at interview. It all influences your reputation, upwards or downwards.
That means everyone in your company needs to understand their personal role and responsibility in making sure every interaction they have with a customer, directly or indirectly, leaves that customer feeling afterwards that they want to recommend you because their experience was so good.
It’s a cultural challenge as well as a skills challenge. But the return on investment is huge.
To continue reading part 2 click here