Business Coach Mystic Statistic: Attracting new customers will cost your company five times more than keeping an existing customer.
“The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The links in the chain (which should be regarded as propositions) are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers.” – James L Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr. and Leonard A. Schlesinger, “Putting the Service-Profit Chain to Work” –– Harvard Business Review – July-August 2008 Issue
Unless your business is a funeral home, a wedding entertainment service (like the business I originally founded, www.DJConnection.com), or a business that is completely focused on the “buy from us once” business model, it is very important for you to schedule three hours per month to analyze how effectively your business retains new customers. After you have completed this analysis, you will then want to look at your workflow map (the diagram of your entire service and product delivery process) to determine how you can systematically improve your systems to retain a higher number of your ideal and likely buyers. Since it’s important to know what you are going to need to measure before you begin, here is the list.
A Harvard Business School professor by the name of Frederick F. Reichheld developed a system called the Net Promoter Score, which many top business owners believe is truly the “one number you need to grow.” Reichheld states:
“Loyalty is the willingness of someone—a customer, an employee, a friend—to make an investment or personal sacrifice in order to strengthen a relationship. For a customer, that can mean sticking with a supplier who treats him well and gives him good value in the long term even if the supplier does not offer the best price in a particular transaction. Consequently, customer loyalty is about much more than repeat purchases… True loyalty clearly affects profitability. While regular customers aren’t always profitable, their choice to stick with a product or service typically reduces a company’s customer acquisition costs. Loyalty also drives top-line growth.”
– James L Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr. and Leonard A. Schlesinger, “Putting the Service-Profit Chain to Work” –Harvard Business Review – July-August 2008 Issue
Calculate your Net Promoter Score using our calculator found at: www.Thrive15.com/NetPromoterScore. For you pencil and pen types, here is the formula:
Business Coach Provides Customer Wow Systems
My friend, don’t get overwhelmed with this concept of retaining and wowing your customers. To begin wowing your customers now, you simply must begin implementing the following proven quality control systems:
The business coach says to hire mystery shoppers. Pay people who are ideal and likely buyers to act as customers and make sure that the rest of your team is completely clueless about their involvement in the mystery shopper program. Ask these mystery shoppers to provide you with the brutally honest feedback that you need. How long did they have to wait on hold? How many days did they have to wait for a returned call? Was the service or product delivered on time? Was the pricing transparent and honest? How does your website stack up against the competition? Make a list of 10 questions that you want your mystery shoppers to answer each time that they shop your business and BOOM, you are off to the races!
The business coach says to survey your existing customers. Make sure that you ask your ideal and likely buyers on a scale of 1 to 10 with 10 being the highest, how likely they are to refer another client to your business. If the customer does not give you a 9 or 10 rating, ask them why they didn’t. Ask them to be candid in their reply.
The business coach says to install a merit-based pay system. When you pay people based on the quality of results they generate and not just based upon the number of hours they work, your entire culture will begin to change. Top companies such as Southwest Airlines, UPS, QuikTrip, and Starbucks have installed merit-based pay programs within their cultures to hold people accountable. What is the reward for members of your staff who successfully do their work and complete their daily tasks and checklists? What is the penalty for members of your staff who choose not to do their work and complete their daily tasks on time? How do you know who is doing their work correctly and who is not?
The business coach says to install a wow moment into the workflow design of your company. Although this may sound difficult to do, it is really not. Once I discovered the importance of this, I began implementing this wow moment into the workflow of every business that will allow me to. Let me give you an example. Years ago, I managed the cold calling campaigns for several universities to help them bring in donations from alumni. Working with the athletic departments of a couple of these schools, we were able to send surprise gifts of t-shirts, sweatshirts, and various pieces of athletic apparel to donors who chose to donate more than $150. We donated items that were currently in stock in the athletic department so there was no additional outlay of cash, but as the gifts began arriving to the homes of our unsuspecting donors, the “thank you calls” began flooding in to the university. People who had already donated $150 to the school were now creating a “positive buzz” by telling other alumni about how nice their unexpected gift was and about how professional our team was. This created a very positive word of mouth buzz and it only cost us the shipping and handling costs involved in sending out the unsold inventory that the school truly wasn’t sure what to do with any way.