How Well Do You Really Know Your Customers?
All businesses go through 4 distinct stages of growth. In the early start-up days everyone is thinking on their feet, few formal processes are in place and sales funnels are still being constructed. Then the business enters the growth stage where things become more formalised and client relationships are maturing into the three to four-year mark. Staff are more secure, and turnover is decreasing.
Next is into the maturity phase, growing by about 5% annually with early employees entrenched with 8 – 10 years’ tenure. This is the stage where you feel most secure, with operations being predictable and revenue steady. But it is also the most critical period in your company’s life as this is when complacency may set in. This leads to the last growth stage for a business – renewal or decline.
Renewal equals customer growth
Your business’s final growth stage must start with identifying what customer value is still untapped in the business. The Pareto Principle or 80/20 Rule, says that 80% of your business wealth will come from 20% of your customer base. Since it costs 10 times more to acquire new clients than to sell to the ones you already have, focusing on existing clients should be a no-brainer.
To talk to and retain these all important existing clients, it is essential to provide value through the entire customer lifecycle; from when you acquire them to engaging them in meaningful conversations to retaining them by continually providing value – ultimately turning them into brand advocates.
Key relationships not just transactions
Engaging with your customers this way moves you away from a transactional approach to a more long-term partnership. But to do this your clients need to trust your company. Not just the sales team, but everyone at every touch-point. I have found this to be especially true for the B2B market. Clients want to do business with a business that continuously adds value to them – not taking their account for granted and making them feel that their business is important.
This more long-term approach means greater value to the right clients, in the right ways at the right times. Collectively, the long-term effect should result in greater customer retention, preventing churn and attrition, turning your clients into loyal advocates. So it is vital to have an ongoing and robust helicopter view of your clients’ sentiment. Don’t put your head in the sand. Be brave, ask the tough questions and then listen to the answers.
It’s not just up to Sales
Identifying who you regard as key clients must be done carefully with clear criteria, leaving you with a core group (your 20%) that is a manageable size. Implementing a more customer-focused approach is a different way of doing business and will require buy-in and advocacy from the highest levels within your organisation.
There will need to be acknowledgement and agreement to work differently with certain priority clients. If a key account is promised priority access to urgent products or service, Operations will need to provide it, not Sales.
Protecting your business against decline can most simply be done by growing value that is already in your business, both by investing in staff and by growing revenue from your key clients, renewing not only your business strategy but also your relationship with the people that enable you to do business.