Start Managing Customers as an Asset

by Jeanne Bliss on April 27, 2012

in Metrics & Accountability

Organic customer growth drives long-term profitability.  So why isn’t it as important to you as quarterly sales goals? This is where the customer commitment falls apart, because what’s actively asked for, measured and rewarded doesn’t always line up with what’s good for customers.

Here are five questions for commanding customer accountability inside your organization.
They propel the organization into understanding the customer end-game and supply leaders with a platform to stand behind and reinforce.

1. What is the Volume and Value of Our New Customers?

Ask about the volume and value of your incoming customers and you may find that you are tracking incoming customers across a multitude of company areas – with conflicting definitions of what it means to be a new customer.

The wild card here is if you have achieved alignment in how customers are classified inside your system. The part that’s not likely tracked is the quality of incoming customers. This is especially important as the market becomes more saturated and new, profitable customers are harder to come by.

2. What is the Volume and Value of Our Lost Customers?
(And What Are the Reasons They Left Us?)

The volume and value of lost customers needs to be paired with the answer to the volume and value of new customers (Question 1) to layout the true situation for your company.

You must reconcile “Customers In” with “Customers Out” to know how well you are doing with managing customers as an asset of your company. In addition to knowing which customers left, you need to know the reasons why they don’t care to do business with you anymore so you can drive change across the business.  Without this information, the organization misses a massive opportunity to galvanize people into taking action.

3. What Customers Renewed? (At What Rate and Why?)

For this to have relevance for your company, you’ll need to define customer behaviors that constitute ‘renew’ or the commitment to continue doing business with you, according to your business model.

The key is to understand patterns that indicate loyalty based on continuous purchase habits. You must ask for reasons why customers are staying with you to ensure that you personally know what you are delivering to customers that they value – and to ensure that you are well aware when these reasons shift or begin to erode.

The “with reasons” part of these metrics are key to taking a leadership role in demanding focused actions to drive customer profitability rather than reacting to random pitches that come across your desk.

4. What is Our Revenue and Profitability by Customer Group?

Getting to this classification of customers is not a trivial project. You need to understand the movement of customers from one profitability group to another so you can strategically lead the customer agenda. Your goal should be driving efforts that cause your costliest customer groups to decline and those most profitable to grow.

If you are not demanding that the business be tracked this way and if you do not ask for accountability around these metrics in the regular language of meetings, it won’t happen.  Getting this data in line to achieve a regular pattern of accountability around customer profitability patterns will take some time, but stay the course. It will optimize your ability to manage customers as an asset of your business.

5. What is Our Referral Rate by Customer Segment?

If your customers are willing to stick their necks out vouching for you, they have become your marketers.  Keeping these customers, growing them and developing other customers like them are the key.

You need to know how far you are down this path of building a customer base that would refer you. Because if you can track the rate of referrals in general and by customer group, you’ll know the strength of your ongoing revenue stream before you even spend another dollar on marketing.  Companies completely focused on customer profitability will learn how referral rates differ by customer group and reasons for not referring.  They will rigorously apply this learning to constantly adjust and improve.

 

ACTION STEP:  Download Managing Customers as Assets
Reconcile “Customers In” with “Customers Out” to know how well you are doing with managing customers as an asset of your company.

{ 2 comments… read them below or add one }

Sam Klaidman April 27, 2012 at 6:50 pm

This is a great methodology to start calculating the ROI of Cx.

Thanks

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jeanne April 27, 2012 at 8:29 pm

Sam, so glad this added value. Stay tuned…much more to come!
Jeanne

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