Customer Satisfaction? Is that what you really want?
Prompted by one of our clients - KC Drains - see www.KCDrains.co.uk we have decided to begin a section related to true customer satisfaction - loyalty.
Consider the following points:
Net present value: If you gain a new client, how much profit will you obtain from that client over the lifecycle of your relationship? Cost of sales: How much money (or time - since time is money) do you invest in acquiring these new clients? Cost of sales2: How much similar time do you invest in retaining current clients? Cost of sales3: How do they / should they compare? Markets are a conversation: How much do you (and your staff) understand about you client, their business and their requirements? The back end of your business: What sales / marketing proposition do you offer your clients to make them come back to you? USP?: Why do your customers buy from you and how do you differentiate yourself from your competitors? Net Present Value
How long do you keep a new client. Are your sales one off or do your clients come back to buy more? If your business falls into the latter type, you had better be very sure of your cost of sales. However there is yet to be a business we have come across that cannot have a back end. To calculate the lifetime value of your clients, multiply the average number of years you keep a client, by the average profit you would expect during the course of a year. There is some clever maths you can do using your cost of capital or just plain interest rates on the high street in order to calculate the Net Present Value of those clients. This is very similar to how venture capitalists or the stock market might value your business.
Cost of Sales
I bet you spend more time chasing around finding new clients than looking after your existing ones. Why is that? Do you not look after those clients you have and lose them to your competitors? Do you competitors lure them away with special deals? We will not go into that now, but you should get a handle on exactly how much time you spend courting new business, so that when you measure up against the Net Present Value of your clients.
Cost of Sales 2
So how much time and money do you spend with your current clients? How do you engage with them. How are they made to feel special? If they only see you as a commodity provider, they will leave you as soon as your business proposition ceases to be the most attractive, so what are you doing to understand what they really want from your business? How about those people in your company, do they think you look after your customers? If they think you don't care, how do you think they will treat the orders of those clients you spent so long, with so much money, courting in order to get their new business?
Cost of Sales 3
So how much time should you be spending chasing new clients and how much with existing clients? Unless your business is a new one and you don't have any existing clients, you should be spending at least 80% of your sales time talking with not to your existing clients. This leaves only 20% of your time and your budget to be spent on finding new clients. Please don't misunderstand me, if your are entering a new area, or a new market, then this counts as a new business. But if you have simply developed a new product, then it should have been developed with your clients not on the design / marketing managers whim. When you involve customers in the development of a new product / service then you are beginning to "get it" and they will begin to become loyal to you. We deal with this more below in Markets are a Conversation.
The back end of your business
This is where you should be really making your profit. Normally your cost of sale to existing clients is much less and much easier. They know you, they trust you (hopefully) and they already know what to expect from you. You are set up on their accounts system, there is no issue with administration. So with all that in place, how can you benefit from that relationship. Well firstly the best way to sell something in the first place is to put yourself in the shoes of your customer. So if you are seeking the benefit from this relationship, don't you think your customer is too? So give them a benefit, and let them do something for you.
Markets are a conversation
This is a very large subject. Driven by early internet pioneers, I would suggest you read the 95 theses which can be found at www.cluetrain.com which suggests that the more integrated we become as a result of information technology, the more we reliant we become on a human voice for reference and the more indifferent we become to hermetically sealed "marketing" spin. As one of the "theses" states for both customers and employees of your company - "hyperlinks subvert hierachy" - essentially you want go to where the information is straight away, and you don't care much who is in charge.
Welcome to your new sales force.
Your customers are your new sales force - so if you do a good job of looking after them, not only will you sell more to them, but if you give them the opportunity, they will bring you more customers. So here is your opportunity - we want you to tell us how you talk with your customers, how they get involved in your business, what you do to keep them and how you help them to find you more customers. We will be posting some excerpts here and hope you will add some of your own in the forum and asking for advice there. Click here for the forum. or if you would like Activa to help you talk to your clients please Contact Us to arrange it
What does your promotional material, or your website say about you? Now think what we have already considered - both you are and your customers are immune to marketing material. So why do you produce it? The simple answer is because everyone does and everyone always has, so it is comfortable. This is the "fur lined rut" that business seems to be stuck in. The internet like other forms of information technology is a method of communication, and that must be a two way conversation. Your customers are already talking about you and you are invited, if you make it easy for them, you might just get listened to as well! Go to any automotive manufacturer website and see if you can find anywhere you can discuss their product with someone. All they offer is their range of cars spinning in virtual space in your choice of colour. Millions have been spent on this, but if you want to talk about their cars, you have to go somewhere else.
USP?
Coming back to your promotional material - let's say you manufacture widgets or write software. Your promotional material will say something like "We are committed to quality, we use state of the art machinery, we put our customers first" or "We deliver bespoke high performance solutions that truly understand our customers needs" - does that ring true? Guess what, every other software company or widget manufacturer says exactly the same thing about themselves, so why bother?
What you need to establish is what (if any) your real Unique Selling Point is.
Unique selling points in today's market place usually revolve around 2 areas:
The back end of your business e.g. if you buy one CD from my website today, you are offered the opportunity to come back and buy as many as you want at 50% discount for the next 3 weeks. The concept of what some progressive marketeers call "Risk Reversal" - at this stage I don't want to go to deep into risk reversal as it is again a huge topic but just one example - Activa Consulting offers consultancy for ISO 9000 - we also state that if you do not achieve certification we will work for free until you do. So the risk is down to us. You are offered either a day rate or a fixed price. So you know how much it will be to deal with us and that's that. We offer this certainty because it removes a barrier between us, one less obstacle between you buying our services and not. If you would like Activa to help you talk to your clients please Contact Us to arrange it