- Copyright 2000
by SBN Philadelphia. Reprinted by permission of the publisher.
A Customer Insurance Policy
By: Mark Heisler and Suzanne Baldino Jones, Partners CBSG
Life insurance is one of those products many people need, but…well…I'll deal with it another day. Businesses deal with customer retention the same. When times are good, customers spend money and companies are in a state of euphoria over their increasing sales numbers. When everything's right with the world who wants to deal with why all those customers are leaving out the back door!
Not even Alan Greenspan knows whether the market's current downward spiral is a foretelling of the end of the greatest bull market run in history. What we do know is that stock market gyrations have a major impact on customer spending. As uncertainty creeps into the customer psyche, they lock their pocketbooks. Our advice to every business is to take stock of customers now-before they end this big spending party.
Let's set the record straight. While increasing customer retention is great-real power of retention is a profit motive. The fundamental goal of retaining customers is to generate the 3 R's-repeat, reoccurring and referral sales.
The next leap every company must make is to realize that increasing customer retention is not just a job for sales or customer service. Instituting a customer relationship program for salespeople or providing customer service "excellence" training for service reps is corporate window-dressing. These programs have no long-term impact on keeping customers let alone reselling them.
Customer relationships transcend every business's departmental lines. Therefore the company's sales efforts must be integrated with its service delivery and execution. In other words, customers stay when a company's actions continually reinforce their original purchase decision.
Here are five things any company can do to devise a "self-insure" policy on its customers:
- Sell to the right customers. Salespeople want to sell; it's immaterial whether the prospective customer will be profitable. Track customer acquisition costs for security against closing deals with unprofitable ones.
- Communicate promises made during the sales process to the employees responsible for delivering them.
- Review how customers interact with your systems, procedures and paperwork through the customer's eyes and make things easier for them to do business with you.
- Turn customer complaints into sales opportunities. Chances are many other customers have the same problem-fixing it without asking (and without hesitation) is a powerful selling tool.
- Develop marketing plans targeted specifically on existing customers. The fact is reselling an existing customer is 5 to 10 times more profitable than bringing on a new one.
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There is no better insurance policy then using customer retention as a springboard to generate the 3 R's.
Mark Heisler and Suzanne Baldino Jones are the founding partners of the Competitive Business Strategy Group (CBSG), a management-consulting firm located in Mount Laurel, NJ. They are nationally recognized for their consulting, training and speaking on customer related issues. They can be contacted through their website at www.cbsg.com or by telephone at 888-411-5800.