- Copyright 2000
by Jobs and Money. Reprinted by permission of the publisher.
Focus on the Customer
By: Mark Heisler and Suzanne Baldino Jones, Partners CBSG
Every business claims to "focus on the customer" yet most actions don't back that up. In fact, the average business loses 20 percent of its customer base each year. And seven of 10 of those leaving do so because they are ignored. E-commerce sites fare no better. According to a recent Forrester Report, successful sites should "get religion about satisfying customer goals" and focus on serving high-value customers and partners in order to thrive in their new competitive environment.
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Retention is one of those issues every company recognizes but few address until customers defect in such large numbers they have no other options. Retention pays off by increasing profits through the three R's: reoccurring, repeat and referral sales. But that is easier said than done. Try these five tips to increase profits:
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1. Measure customer impact by the bottom-not the top-line. Your highest-revenue producing customers may not be the most profitable on your client list. CBSG reports its clients generate 80 percent of profits from 20 percent of their customers-and more than half of their clients are unprofitable.
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2. Make someone accountable when existing customers fall through the cracks. Most companies focus on bringing new customers through the door and keeping the bureaucracy running smoothly. Make someone in your organization-regardless of the size of your operation-responsible for customer retention. It has to start somewhere.
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3. Reward all sales equally. Rising stars and new sales receive the biggest rewards at most companies. If there is no incentive to retain or resell existing customers, why should your sales force bother?
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4. Avoid dumb policies. Just because something happened back in 1989 doesn't mean it has to stay that way. Customers' change, and so do businesses. Change with the times and avoid unintended, negative consequences of ill thought out policies.
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5. Listen to customers with your eyes. How often does sales information arrive incompletely filled out? How about automated phone systems that are so complex customers abandon them? Design your forms and intake procedures for the customer-not the employee.
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Mark Heisler and Suzanne Baldino Jones are principals and founders of Competitive Business Strategy Group, a sales and customer retention firm located in Mount Laurel, NJ. For more information, contact them at (888) 411-5800.