When we lose a single customer, we do not lose a single order but a lifetime opportunity of profitability with that individual. Do you know the average lifetime value of your customers?
To determine the average lifetime value of your customers, estimate how much they will spend with your business on a monthly or annual basis and multiply it by the number of years they could potentially use your products or services. For example, if an average supermarket customer purchases $200 worth of grocery products per week, 52 weeks a year, that equals $10,400 a year, every single year. Does your supermarket treat you like a $10,000 client?
Now don't stop there, next, factor in how much your customers could potentially increase their spending with you each year because they are thrilled with your product and service. There's more! Now start calculating the value of all of the new customers that your loyal customers will refer to your business.
Increasing customer retention by as little as 5% can translate into as much as a 100% increase in profitability. It’s generally accepted that it costs five to six times more to get a new customer than it does to keep an existing one. It is important for all employees within your business to understand the lifetime value of their customers. Then they can focus on building relationships with the very people who keep them employed in your business.
Today's businesses are losing both customers and employees in record numbers. Customer loyalty is on the decline, but many companies are treating the symptoms instead of the causes of their customer retention problems.
Customer loyalty is the responsibility of everyone within an organisation. It must start internally and be a "top-down" initiative. CEOs, business owners and senior management need to recognise that their employees are their primary customers. Employees deserve and expect the same caring service that is given to the external customers.
Customers leave a company for a whole lot of different reasons; they die, move away, develop other relationships or shop around for cheaper deals. We don't have any control over these reasons, but the really scary part of this is that these customers comprise only 18% of those who leave.
Over 14% of customers leave because they are dissatisfied with the product or service. Their dissatisfaction is often due to "over-promising and under-delivering." This can be product-related, or it can be as simple as telling a customer you'll call him at 9 am and not calling him until 10 am.
Now here's the real challenge! Sixty-eight percent of customers leave because of an attitude of indifference by a single employee! That employee could be the CEO or the apprentice because everyone in the organisation is part of a customer service chain. If anyone breaks his or her link in the chain, it ultimately hurts the quality of service provided to the external customers.
In other words, 82% of the customers who actively decide to stop doing business with us, do so for reasons we can control!
In the highly competitive, service-driven printing industry, day-to-day interaction with the client is not only necessary but in fact is key to favourably differentiating the printer from its competitors. Good customer service is accomplished only when people from all departments in a company—from sales to quoting to printing—have been trained to understand each other’s problems better, work together, and maintain a smooth workflow.
How do Macca’s get school children who only work part-time to always ask that, ‘Companion Sale’ question? The answer is that they train and train and then they train again, and then they review and reward or retrain as appropriate. They believe that their customers need to be reminded frequently of everything on offer.
In your printing business, does your entire team know all the services and print products you have on offer and equally important, do all of your customers know this as well? You see, according to Inky, the average print customer thinks purely in terms of immediate need, out of letterhead, better get some more, starting a new business, need letterheads, cards and with compliments, and so on. As professionals in your industry you know how to offer efficiencies in terms of yield from paper stock and production runs to offer your clients a great deal and that’s terrific, what else can you offer your customers that will both add real benefits to them and help you to build your business?
Many printers now offer ‘Bundled’ deals, letterhead, cards, with comps, invoices etc, etc, you know the sort of thing, this goes with that as the old slogan goes. One of the difficulties facing our industry nowadays is the unshakeable faith our customers have in their inkjet printers to do the job we live off, after all, they can print, ‘On Demand’ exactly what they need!
The truth is that the office printer has not been built yet that can offer the richness of colour, the consistency of quality or the range of substrates that professional print businesses such as yours can provide.
Sooner or later, you are going to have to decide whether you want keep on lowering your prices or investing in the one competitive advantage your competitors can’t or won’t replicate, your superior, motivated and trained team.
Where is the evidence for this strategy? It’s all around you, at a local level Bishop Manufacturing have created tooling to provide products for the automotive industry that are world leaders, yet if you talk to MD, David Robinson, he will sing the praises of his people. Betterbuilt furniture have invested hundreds of thousands of dollars in software development over the last 12 years, ask Brian and Mike Korremans and they’ll tell you that without the people to translate the systems into finished product, it would all be to no avail.
So, how do you invest in your team? It’s not always about spending money on training, it can be as simple as involving a cross section of your team in the planning process. Understand this, there are people in your business who know more about some parts of it than you, ask them for their input. Once you have agreed a strategy or strategies, communicate, communicate and then communicate some more.
Make sure that every member of the team is involved in the implementation, the great management guru, Peter Drucker once said, “Of all the decisions a manager makes, none are as important as the decisions about people. They alone determine the performance capacity of the organization”.
A final thought, you can have your IP stolen, your assets plundered and devalued but providing that you continue to innovate and to develop your people, you will always retain that competitive advantage.
Go From Desperate To Total Financial Success - To learn more about this author, visit Jack Fraenkel's Website.
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R.O.C(I): "They" All Work For Me!
