Proven Business Building Success Formula for Building Customer Loyalty
Proven Business Building Success Formula for Building Customer Loyalty
Yet, this ultimate question and the accompanying formula, as good as they are, fail to reach that next level where action is taken. And action that being a sale is what businesses need to stay in business. With this knowledge, the question now becomes when was the last time the person you recommended my products or services actually came in and made a purchase?
Customer loyalty needs to be directly connected to these 3 business results:
1. Increase Sale
2. Improve Profits
3. Decrease Costs
A proven formula should reflect how many actual referrals are received from each customer whether active, inactive or even lost, center of influence or a passer by. Then this formula should also determine the value of those referrals by the actual dollars delivered (increase sales) and potential future dollars to be received. From these statistics, the business can improve profits and decrease costs.
To adopt this proven formula does require tracking of all new customers and tying those new customers to a referral source be it a person or even an advertisement. Then the company can determine the measurable results from its marketing activities. Sales Coaching Tip: Marketing results can be measured and tied directly to new business.
For example, recently I had a meeting at a new coffee shop in Northwest Indiana called Evelyn Bay. Since that time, I have been there a couple of additional times and have made recommendations to several people because it is an exceptional place for coffee, a breakfast wrap or homemade soup. The WIFI, comfy chairs and general atmosphere are great for a quick business meeting to having some down time. Additionally, I have scheduled a lunch meeting there with someone who has never been there.
All of this business can be traced directly back to the person who initially invited me. His referrals and actions place him at the highest end of the customer loyalty formula.
However a company constructs this formula is up to them. These criteria probably should be part of that formula.
* Number of referrals made
* Number of new customers from those referrals
* Dollars generated
* Potential dollars generated (future business)
For example if a customer delivers one referral, then it might look like this: 2/1. The numerator two represents the new customer and the customer who made the referral and the denominator represents the current client who made the referral. When you do the math, this means that the customer loyalty factor for this customer is 2. As the existing patron continues to bring in new clients, the numerator increases. For this local coffee shop, the gentleman who introduced me is probably somewhere around a 20 if not higher due to his active business networking activities.
The second part of the equation would require assigning an average value to each visit. This would require the establishment to know the average purchase per customer.
Using the example of the coffee shop, possibly the average purchase is $5.00. Now the formula looks like this 2/1 x 5 = 10.
Finally, the last part of this equation is knowing the average number of visits per month or year. Continuing with the example of the coffee shop and using a monthly time frame, maybe the average visits are 4 or one a week. This completes the formula as: (2/1 x 5 ) x 4 = 40. The existing customer is not a $20 a month client, but in actually is really a $40 a month patron. As to the person who initially brought me, his value is probably double to triple due to his active business building skills.
Customer loyalty is truly not about how likely a current client will recommend your products or services, but rather have they taken action to do so and how do those actions translate into actual dollars? By using this approach to determining your loyal customers, you can quickly see where you should place those precious marketing dollars and more importantly how to leverage word of mouth advertising.
Proven Business Building Success Formula for Building Customer Loyalty - To learn more about this author, visit Leanne Hoagland-Smith's Website.
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Building customer loyalty is one of the smartest strategies to increasing sales, decreasing costs and improving profitability. In the book, Ultimate Question: Driving Good Profits and True Growth by Fred Reichheld provides one question to separate loyal customers from satisfied and dissatisfied ones along with a formula to help businesses build loyal customers to increase sales.
Yet, this ultimate question and the accompanying formula, as good as they are, fail to reach that next level where action is taken. And action that being a sale is what businesses need to stay in business. With this knowledge, the question now becomes when was the last time the person you recommended my products or services actually came in and made a purchase?
Customer loyalty needs to be directly connected to these 3 business results:
1. Increase Sale
2. Improve Profits
3. Decrease Costs
A proven formula should reflect how many actual referrals are received from each customer whether active, inactive or even lost, center of influence or a passer by. Then this formula should also determine the value of those referrals by the actual dollars delivered (increase sales) and potential future dollars to be received. From these statistics, the business can improve profits and decrease costs.
To adopt this proven formula does require tracking of all new customers and tying those new customers to a referral source be it a person or even an advertisement. Then the company can determine the measurable results from its marketing activities. Sales Coaching Tip: Marketing results can be measured and tied directly to new business.
For example, recently I had a meeting at a new coffee shop in Northwest Indiana called Evelyn Bay. Since that time, I have been there a couple of additional times and have made recommendations to several people because it is an exceptional place for coffee, a breakfast wrap or homemade soup. The WIFI, comfy chairs and general atmosphere are great for a quick business meeting to having some down time. Additionally, I have scheduled a lunch meeting there with someone who has never been there.
All of this business can be traced directly back to the person who initially invited me. His referrals and actions place him at the highest end of the customer loyalty formula.
However a company constructs this formula is up to them. These criteria probably should be part of that formula.
* Number of referrals made
* Number of new customers from those referrals
* Dollars generated
* Potential dollars generated (future business)
For example if a customer delivers one referral, then it might look like this: 2/1. The numerator two represents the new customer and the customer who made the referral and the denominator represents the current client who made the referral. When you do the math, this means that the customer loyalty factor for this customer is 2. As the existing patron continues to bring in new clients, the numerator increases. For this local coffee shop, the gentleman who introduced me is probably somewhere around a 20 if not higher due to his active business networking activities.
The second part of the equation would require assigning an average value to each visit. This would require the establishment to know the average purchase per customer.
Using the example of the coffee shop, possibly the average purchase is $5.00. Now the formula looks like this 2/1 x 5 = 10.
Finally, the last part of this equation is knowing the average number of visits per month or year. Continuing with the example of the coffee shop and using a monthly time frame, maybe the average visits are 4 or one a week. This completes the formula as: (2/1 x 5 ) x 4 = 40. The existing customer is not a $20 a month client, but in actually is really a $40 a month patron. As to the person who initially brought me, his value is probably double to triple due to his active business building skills.
Customer loyalty is truly not about how likely a current client will recommend your products or services, but rather have they taken action to do so and how do those actions translate into actual dollars? By using this approach to determining your loyal customers, you can quickly see where you should place those precious marketing dollars and more importantly how to leverage word of mouth advertising.
Proven Business Building Success Formula for Building Customer Loyalty - To learn more about this author, visit Leanne Hoagland-Smith's Website.
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Dianne CramptonDianne Crampton is an executive leadership coach, team culture consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. Dianne's contribution to the 2010 Pfeiffer Consulting Journal (an imprint of John Wiley and Sons Publishers) entitled TIGERS Hearted Teams is available in November 2009. Her new book TIGERS Among Us: 5 Winning Business Team Cultures And Why, Three Creeks Publishing will release in March 2010. To receive publishing discounts, subscribe to the free TigerTracks Newsletter here. - Visit Dianne Crampton's Website |
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
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Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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