The beginning of the New Year is a good time to identify the future that has already happened, but whose real impact has yet to be felt, and adjust our business strategies to be in attune with what’s happening.
Here are three questions to answer in evaluating your strategies to manage customer relationships, productivity and profits in 2013:
1. What unexpected events -- surprises, whether good or bad – occurred in 2012 that could make or break your business?
We're talking here about really big surprises -- like discovering that one of your products is selling much better than expected -- and you don't know why ...or... discovering that you are selling to the wrong customers ...or... your product or service needs to be revamped from top to bottom ...or... even discovering you are in the wrong business.
For example, you may have started your company to be in the software product business, but month after month your computer consulting service revenue far outpaces your software sales. This is a clue that you should rethink your business strategy.
You may not need to switch businesses, but, clearly, you should change your resource allocation and operations in recognition that the company is now consulting-services driven. With this altered strategy, your software development efforts might better be redirected toward providing a stronger competitive edge for securing and maintaining consulting-service customers.
2. How can you protect your customer franchise?
We know that it costs 8 to 10 times more to get a new customer as it does to keep a current customer. Yet, the average business loses 10% to 30% of their customers every year. The reason for this is customer satisfaction does not equal customer loyalty. Of the customers who defect, 80% are actually satisfied with the company's service.
So, how does a company build customer loyalty?
Single out your best customers and create a strategy to serve them better in the New Year. The old "80/20 Rule" applies: In an established business, 80% of your sales come from 20% of your customers. These are the customers to focus on. If you don't know who they are -- if you can't list them in order of decreasing sales -- find out. Analyze your sales and make a list -- and hang that list where you can see it every day. And every day, ask yourself, "How can I build my sales with these customers? How can I strengthen my relationship with them?"
3. What ways build customer loyalty and expand your reach?
Gone are the days of the geographically captive customer when merchants and service providers had the advantage of being the only place within driving distance.
With the impact of the Internet, there is now a shift of choice and power to customers. Think about how you can use the Internet to more effectively communicate with your niche markets and special interest groups. How can you refocus your efforts on being the best company competing within these well-defined market segments—to become a dominant factor in 2013?
Here are some suggestions:
- Look for ways of maintaining an on-going flow of information with customers through on-site visits, websites, email newsletters and personal telephone calls. Think of them -- and try to get them to think of you -- as a "business partner."
- Make the effort to learn their business so thoroughly that you can initiate new areas of business activity between you and them to generate more profit for both of you.
- Add additional services – preferably focused on your customer's needs -- that demonstrate your attention to the small but important details.
- Think about adding "loyalty" programs where you can reward your customers' loyalty in ways that your competitors can't easily copy.
Local businesses are expanding their market presence and reach by connecting with customers through the Internet. Even in cyberspace, the velvet-glove treatment is what your customers expect...or...they will shop elsewhere. Consider shifting your limited resources to spend 70% devoted to creating greater customer loyalty and only 30% on marketing expenses.
John Agno: Ask the Coach (ebook at $2.99)
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