Two out of three

Recently I spent some time in the town where I went to college. One of the things that tends to happen when you meet old friends from those days is to check out your old haunts and see if how they fare against your (probably) inaccurate memory of them. From the business perspective, it speaks of consistency – but also of gaining return clients. Any college town that hosts a school with sports and other major events is likely to be judged like this on a regular basis.

Still holding their own

The first place is a rather old barbecue place, but not the one I mentioned last week. It was closed for a little bit, bought by a competitor some time later and has remained without significant changes for the last three decades.

It’s a unique place in some ways. You order your meal the same way you did over 30 years ago – via an old school wall phone in each booth. The current owner has a few other local BBQ places under different branding – and all of them are solid locations. More importantly, the current owner of this old BBQ place has kept the qualities that people remember from decades ago. They’ve kept most of the menu, the funky booth ordering phone system, and did so while keeping the food quality at the level of their other locations.

Recognizing and promoting the story of this old place and the memories people have for it wasn’t all that hard to do – but someone had to recognize the value of retaining these things and execute them well. Keeping all of that intact despite having a multi-location barbecue business with different branding is a good example of understanding what makes customer retention and return visits happen.

Fresh face, old place

This place is unrecognizable compared to the original. It’s on the same site, but the original building was torn down back in 2015. The new place is bigger, brighter and frankly – a serious improvement. I worked at this place back in the early ’80s while I was in school. The business has changed hands at least once since that time and there’s a lot of water under the bridge. However, this place also had a lot of long-time customers and, of all things, is “famous” (if not memorable) for the old building’s iconic blue metal roof.

Customers remembered it so much that when the new building went up with a silver metal roof, you might say they received “a little” feedback about it. So much feedback, in fact, that they changed the color of the roof on the newly constructed building and included a reference to the roof (and its color) in the new name of the business.

Best of all, when you walk in the door, you see a large photo of the original building on the wall, along with another large sign next to it that tells the story of the business. While all aspects of the business have moved forward and improved substantially, they’ve remembered their past and helped their customers do so as well.

No mas

Unfortunately, not all of the old haunts in my alma mater’s town are showing the life that the previous two displayed. Many are closed, replaced by new things and / or new buildings. While the loss of some of the more revered ones is sad, after 30 plus years, you have to expect it.

One of the old joints now has numerous new locations, but has closed the original location on the college’s main drag / hangout street.

Unfortunately, the resemblance ends there. While the menu is largely the same, not much else is. The food’s gone downhill, even from our last visit two years ago. The service? Missing. Locals now comment that it has become a BYOF (bring your own food) restaurant because the food and the service are so bad.

The lesson?

The lessons in all of this come down to a number of things:

  • Knowing why people love your place, even if it wasn’t (and still isn’t) perfect.
  • Knowing why they come back to a place you recently bought.
  • The importance of the story that existed before you were involved – so that you can respect & leverage it, even if you need to make big changes.

Talk to your customers. They’ll tell you what you need to know. Don’t make it harder than it really is.

Photo by greatdegree

Horseradish & the pursuit of perfect

Last week we talked about what it takes to be the perfect place. Not really “perfect”, but something that feels perfect. Thing is, perfect is quite often different for each person. That’s why it helps to decide who your ideal customer is and zoom in close to eliminate who they aren’t, AND more importantly, zoom in super close to determine who they are, what they do, who they do it with, and so on.

When you zoom in that close, you’re far more likely to notice the small things that are important to them. Whether you look through a telescope or a microscope, you have to pay very close attention to what’s in view in order to know what to do next, what decisions to make about what’s important and what’s not.

Under the microscope

When examining something under a microscope, you’re looking at tiny little things, but in the context of the viewing area, they’re still important despite their size. The same goes for little things that your ideal client cares about.

While the lack of those little “insignificant” things might be ignored by your ideal client, the situation changes when those insignificant little things exist. It might not make sense, but here’s what happens: That little insignificant thing isn’t expected in most situations, so it doesn’t count against the business that doesn’t provide whatever that little thing is.

However, those customers are always looking for those little things. They might not be disappointed when they don’t find them, but their sensitivity to their presence is always high. When that tiny item IS present, everything changes. The ideal customer is looking for it and the presence of that item, no matter what it is, is transformational.

It changes their opinion. It changes everything because it changes the lens they see that business through. Suddenly, that business “gets” them. It understands them. They know that this business understands the minute little things that “fussy customers” are looking for.

You don’t miss what you don’t care about

Like a rest area on the highway, people who aren’t looking for them don’t miss the ones that don’t exist. Even when one appears after many miles, they won’t necessarily appreciate it if they don’t use it. Likewise, those who have been waiting for that rest area are thrilled to encounter it, even though it’s only a rest area.

It’s a bathroom and maybe a place to have a picnic and walk the dog.

Even so, it’s what you want, when you want it. You can probably name a few examples of this kind of appreciation that you have in your world.

Horseradish

Here’s a simple example: horseradish. Years ago, I stopped into a barbecue place for the first time with a couple of friends. This place had a special take on things. All the walls in this place were lined with three rows of various hot sauces, barbecue sauces and the like. I had never heard of most of them, but I surely tried a few.

That, however, was not the thing that brings me back to this place. Their barbecue is excellent, but even that is common in the southern midwest.

What brings me back every time is the fact that in addition to their barbecue and vast array of sauces is, of all things, the cole slaw. While this is not uncommon given that you can get into downright religious arguments about cole slaw (acidic, on the sandwich, on the side, etc), what’s different about this place is that their cole slaw contains the perfect dose of horseradish.

Yes, horseradish. That’s it. I drove by this place today, as I happened to be in the same town for the first time in 16 months.

Of course, I haven’t quite perfected this touch on my own, as simple as it might seem, so that makes it even more of a draw. Anytime I’m in this town, I MUST visit that barbecue place (For those hankering for detail, it’s Buckingham Smokehouse in Springfield Missouri).

This is a perfect example of a trivial little detail that raises your business’s game above others every time. Do I have high expectations of them as I do every business I return to? Sure, but that detail is what pulls me back.

That is how a tiny insignificant thing can pay off.Photo by mbtphoto (away a lot)

This place is perfect.

Have you ever said “This place is perfect” after spending some time in a store, restaurant or other business? What made that place “perfect”? Many times, it’s little things.

Sometimes, it’s about the things you might normally forget. Other times, it’s about things you simply don’t expect. Or a lack of the things you’d normally expect. No matter which one creates the perfect experience, seek out these things.

Odors or fragrances?

At times, it’s about cleaning things that will never stay clean. I was walking down a New Orleans sidewalk a few blocks down from Bourbon Street on a recent Saturday morning. Across the narrow cobblestone street from me, a man in a waiter smock was mopping the sidewalk. Not sweeping it, MOPPING it. If you’ve been in any “party zone” area of town on the morning after, you know he was making sure today’s customers wouldn’t smell anything left by revelers who happened to pass by after his restaurant closed.

Strong, unpleasant odors have a way of making a sizable first impression. Mopping the sidewalk was one way to make sure that that morning’s customers didn’t get the wrong first impression as they entered the restaurant. Imagine if you were part of one of the groups entering the restaurant that morning and were accompanied by your best client, or someone who would be – if they said “Yes” at that lunch. Or perhaps you’re meeting someone to pop the question. Suddenly, a simple mopping job on a sidewalk takes on a different level of importance. Mopping the sidewalk has transformed from a chore into something much more important.

When did you last sweep and mop (or at least hose down) the sidewalk in front of your place? What could a “little” change to the experiences of entering your business mean to your customers? Maybe you should ask them. They might surprise you.

Surprising experiences

A couple of weeks ago, I stopped at a highway rest stop in eastern Idaho. A state facility, not a Federal one. Ever seen a spotless highway rest stop? During the summer? On any highway? I have. I was floored. It was perfectly clean and smelled like anything but a highway rest stop, particularly one along a busy highway. Spotless, yet not antiseptic, or smelling of mildew. Shockingly perfect. We’ve all been in heavily used rest stops that were nothing like that one.

Something as mundane as a highway rest stop is still memorable weeks later because someone who takes their job seriously has done more than simply clean the place.

What little improvement or consistently higher-level attention to detail in the mundane work around your place could produce that kind of surprising experience?

Mea culpas everywhere

The reverse of these little things that create perfect experiences often happen when we forget why we’re in business, who we’re serving, and why. You may have seen recent advertisements where Facebook, Uber, and Wells Fargo grovel for your forgiveness. Maybe they’re legitimate, maybe not. The trouble they have to overcome is that many people still aren’t sure if their apologies are real. Likewise, you still aren’t sure they’ve truly learned a lesson from their mistakes.

These are the questions you never want to create in the minds of your customers. It takes a great deal of time and effort to re-earn lost trust. When a woman no longer feels safe doing business with your company, you may never regain her trust. This isn’t solely an Uber issue, but their safety issues make an ideal example. You can create unsafe or uncomfortable situations in almost every business. Even woman-owned businesses have to reconsider situations they may not personally be concerned about, as customers have experienced things that they may not have had to deal with.

Finding what makes yours perfect

By now, you may be wondering what sort of little touches or improvements would make your business perfect. Look back at your customer service logs, complaints and suggestions received. Taking the perspective of a customer, review the ones that seemed petty, tiny, “little and unimportant”, or similar. More often than not, these situations tend to provide clues to finding angles to approaching “perfection”. They may not be the keys themselves, but they’ll often point you in the right direction. The key to creating so-called perfection is wanting to.

Growth, market size and renewal rate

Everyone I talk to wants to grow their business. Yet in the last ~20 years, I can’t recall a single growth conversation that included their renewal rate or the size of the market that remained, until I asked.

How big is your market?

It’s the question that often provokes people to look away and give a laser beam stare at a fluttering leaf on a distant elm tree as they think about what the number is and/or how they’ll figure it out.

For example… “So how many programmers, accountants, cities under 20,000 population, dog kennels, or whatever are there right now?

In other words, how big is your market? If everyone who actually should be your customer was your customer, how many customers would you have?

If your customers buy $30,000 industrial drills, you’d better know how many companies use a tool like that, how many each of those companies would typically need, and how many companies still need that kind of drill. You’d also better know who in China is making a knockoff to clone the one they bought from Samsung, who already knocked it off.

Renewals matter

The other troubling question affects some businesses and not others. That is, “What’s your renewal rate?” In other words, for a service you sell on a recurring basis (or a product that requires “refills”), what percentage of your customers buy their next purchase from you?

Lots of people know. Lots of people don’t. As you might imagine, I think you should know.

Imagine that you run a company that makes $200,000 a year. You’re in a recurring sale business model where your product or service requires “refilling” on a regular basis.

So, you want to have a conversation about growth. If you want to get to $600,000 by the end of 2025, a major impact item on getting to that number is “How many people want / need what you sell?”. The other is how many customers can you keep of the ones you get. Of course, we need to determine if your market will support that number, but there are always ways to deal with that – market expansion, reaching beyond the edges, looking for markets whose needs mimic your market’s needs, and many more.

It goes deeper than knowing the numbers. You need to know why they renew. Why they don’t. Growth depends on renewals in these businesses.

Are you part of the 92%?

Customer service is a good example of an area that can transform renewal rate. Most of us are in an alternate reality zone about how much our customers love us. The quote below speaks directly to that, even though customer service is only one place that causes you to lose renewals.

According to research by Bain & Company, when asked, 80 percent of companies say they deliver “superior” customer service.

The customers’ perception of the service level was very different.

Only 8 percent of customers felt the companies delivered “superior” customer service. – Joey Coleman, Never Lose A Customer Again

What do your customers think?

When leaving you is easy

Your highest chance of losing a customer is in the early going. The first 30, 60, 90 days.

Early on, they get their first exposure to your product, service, support, billing department, documentation, deployment team and so on. They haven’t yet developed a commitment to you. Your products & services haven’t become an integral part of what they do. As such, the friction to replace / discard your stuff is low.

At this point, the decision has low political cost, despite the embarrassment / reputation loss someone will take for approving the purchase. However, if their entire company is being on-boarded like they’ve never experienced before, the political cost increases substantially.

Given that knowledge, what can you do to make it incredibly easy (“frictionless”) to adopt your products / services in the first 30, 60, 90 days? What can you do in that timeframe to help new clients make your stuff such an integral part of their business that no one dares stop it?

That’s what good on-boarding does. It starts working on your renewal rate on day one, when most others think “sold = done”.

Most companies aren’t good at this.

There’s so much headroom available above the average that you have lots of room to play with. Competitors tend to not be exposed to these changes. Even if they find out about them, they frequently think they’re little more than frills and puffery.

Just what you want.

Unmet needs

A small group I belong to was recently asked by a member of the group to identify some “unmet needs”. The context was “any business” and his question related to a course on self-reliance that he and his wife are participating in. This friend and another in the group are in the fitness and weight loss industry.

My suggestion for him was the lack of effort most gyms make to get (and keep) members engaged and training at their gym. Most gyms scan a barcode membership card or have some sort of sign in process.

Despite this, if you don’t show up on the normal days you’ve showed up in the past, you’ll hear nothing from them. If you don’t show up for two weeks, you’ll hear nothing from them. If you don’t show up for three months, you’ll hear nothing from them. As long as you keep paying the bill, that is. So that was an example of an unmet need for his course.

To be sure, self-motivation is a lot of this, but a short text or email to say “Hey, are you still alive? We haven’t seen you in three months” might be the kick in the tail feathers that they need. Or maybe life has been hectic and they need a little push to get back in the habit. Regardless of the reason, none of this happens in most gyms.

So that prompted more thought on the subject, which is why we’re discussing unmet needs today. There are at least three kinds of unmet needs:

  • Those you know of and haven’t satisfied
  • Those you know of and refuse to address
  • Those you don’t know about

Unmet needs that you know of and don’t satisfy

Using the context of the gym, what does your gym to do set itself apart from the others? Does it miss you when you don’t show up for an unusually long time? If you’re a persistent daily user, does it miss you when you miss a single day?

These kinds of things don’t pertain solely to a gym. Does your oil change place miss you when you stop going there, or when you’re a month later than usual? Do they even notice? What about your dentist? Your dry cleaners? Your beer store?

These things aren’t limited to retail. They’re only limited by how much attention you’re paying to your customers. Are they “suddenly” spending twice as much or half as much as they have for the last five years? There’s a reason. Maybe it affects you, maybe it doesn’t.

Unmet needs hide in places like this.

Unmet needs that you refuse to address

Refusing to address certain needs is OK. Even when the need is there and legitimate, there may be any number of reasons why you’d want to avoid it. Maybe it’s none of your business, even though it’s in context with the products and services you provide to your clientele. Maybe this need is too costly to meet. Meeting it might require invading the privacy or “personal space” of your customers. Perhaps meeting this need might even annoy your customers, despite the fact that they know they need it.

Give yourself the latitude to say no, even if you’d rather say yes (to the income).

The ones you don’t know about

This one always reminds me of the famous Rumsfeld quote about unknown unknowns. In other words, there are things we don’t know that we don’t know about. Have you ever heard of the citric acid cycle? It’s also called the Krebs cycle. I suspect that for most people, it’s an unknown unknown. IE: It’s something we weren’t aware of the existence of, plus we don’t know anything about it now that we’ve been told it exists.

These are the things your customers will tell you if you listen closely. But… don’t wait until they tell you. Ask them. “Is there anything that we aren’t doing for you that you wish we would take care of?” Notice that I didn’t say “Is there anything we can sell you that you don’t already buy from us?” That’s a different question. It’s about you, mostly.

“Is there anything that we aren’t doing for you that you wish we would take care of?” is about them and their unmet needs – and probably unspoken ones at that. Ask questions that make it about them.

Photo by Joris_Louwes

What would they do to put you out of business?

When I asked “What would they do to put you out of business?“, you probably wondered who “they” are. “They” might be someone whose expertise in another market tells them yours is ripe for the taking. “They” might be a competitor you already have, or someone new to the market who doesn’t know any better. Remember when you didn’t know any better? You’re still here.

Who they are really doesn’t matter. What they do & why… that’s what matters. How would they price, market, sell, deliver, service, & communicate?

Pricing

You might expect that they’d come in with lower pricing. While it depends a good deal on your market, I wouldn’t be surprised to find them going higher and establishing a market segment above yours, leaving you with what remains.

The bitterness of poor quality remains long after the sweetness of low price is forgotten.” – Ben Franklin

Companies with plenty of margin can afford to spend more on marketing, delivery and service. If you were starting over today, would you price the same way, or differently? Why? Why not?

Marketing

Ultimately, marketing is about exchanging cash for a (hopefully predictable  and consistent) number of leads who turn into customers. If your marketing efforts spend $27.50 to get a lead, would you rather your leads turn into customers who spend $2750 or $27500 over their lifetime as your customer?

Thinking back to what you do now, can you make that choice? Can a new entrant to your market? (and if so, again… can you make that choice?)

Looking at it a different way…. If your new competitor can afford to pay two or three or ten times what you can afford for leads, who will likely end up with more leads and more ability to choose select the best leads?

If you were starting over, how would you market differently? Would you choose a different customer to focus on?

Selling

Thinking about how you and your market peers sell now, how would an upstart in your market do it differently… and better? What steps would they add, subtract, or embellish? Would they listen more and talk less? Would they speak of the needs, wants, concerns and worries of their prospects? Would they parrot features and speak in bullet points, while lamenting about the need to meet their quota?

If you were starting over, would you sell differently? How so? If not, why not?

Delivery

Do you deliver and/or deploy for your customers today? What would a noob to your market do? Would they prepare differently? Tool up differently? Deploy differently? Train the customer’s team differently, more, or less? Would they follow up more or differently than they do now after delivery and deployment is complete? What would someone do differently than you if they come from a high attention to details market?

If you were starting over, how would delivery and deployment look?

Service

Almost everyone brags about their service. It’s rarely as good, unique or unusual as they think. People talk about under-commit and over-deliver, but finding it in the wild is rare. Your service rarely feels like you’d want it to feel if you were in that client’s situation.

If you were starting over, how would your client’s service experience look and feel?

Communication

Through every step of sales, marketing, delivery and service, there are opportunities to set expectations and over-communicate. There are opportunities every day to take away the doubt, lack of clarity, wonder about what’s going to happen next. There are opportunities to pick up the phone instead of sending an email, or to drop by instead of picking up the phone.

If you were starting over, how would you communicate?

What would “they” do?

They’d do what you refuse to do. What you’re afraid to do or haven’t thought of. They’ll do what you don’t feel like doing or don’t think is necessary. They’d do what turns customers into clients who wouldn’t dream of going anywhere else.

More than likely, you know what these things are. Knowing isn’t enough. Answers are easy to come by. Execution of it is another thing entirely.

Will you wait until the new kid on the block forces you to mimic their behavior, or will your behavior set the bar so high that no one will dare enter your market? All those things you’d do if you were starting over can be started when you decide to do them.

The choice is yours.

Photo by MDGovpics

Discarding clients & the math of job security

How often are you discarding clients? When fussy, needy, and/or high-maintenance clients complain repeatedly, there’s significant temptation to simply toss them out with the garbage. Some business owners build “filters” into their marketing designed to repel such clients.

When an existing client provokes thoughts of “Life’s too short to deal with this“, who fires them? How is the decision reached? Is the process documented? How is the decision communicated to the client and to your team?

Hammers, nails & curmudgeons

I asked some friends how they describe people they’d fire as clients. Their responses included unreasonable, unrealistic, frustrated, afraid, disgruntled, troublesome, pedantic, rebarbative, cranky pants, curmudgeon, etc.

Are you teaching your team that getting rid of imperfect clients is the only acceptable solution? Owners know there are situations that don’t merit dropping a client. Owners discard clients based on their experience. Does your team have that experience to back up their decisions? Take care that your team doesn’t use this tactic like a hammer while seeing every complaining customer as a nail.

It’s essential to be careful using “You’re fired!” as too-frequent use can damage your reputation. Businesses learn to detect bad apples and few are surprised when these clients get fired. Taken too far, your business can get a reputation for arrogance. People will think you discard clients the first time there’s an objection or even a question. You don’t want your reputation to be “At the first hint of a problem or even a question, they tell people to leave and not come back.” Some prospects will hear that and decide not to show up.

The math of discarding clients

Discarding clients sometimes feels as easy as pulling a splinter. The pain and aggravation fades quickly, making you wonder why you ever tolerated them. Even so, every choice to discard a client impacts your bottom line. While getting rid of high-maintenance “time vampires” will probably improve your bottom line, you have to be careful not to let your team believe that’s the only solution available. That’s where the math kicks in.

If your team gets rid of one customer a month, what does that mean to your bottom line? You likely know the typical customer’s lifetime customer value (LCV). Owners usually know how often the typical customer buys from them. They also typically know how much customers spend on average per transaction. Combined with the rate at which you are adding new customers, you can determine what an improper “firing” costs you and how long it takes to recover from it.

Uninformed profitability math

Employees don’t usually know the financial impact of discarding clients. When you explain the financials of your business to your team, it helps them understand why you think the way you do. Tools like “The Great Game of Business” (start with the book) help employees understand how the business works financially (free resources) vs. how they think it works.

Learning how the business works from a financial perspective encourages employees think more like owners. It can alter “I’m working my tail off for $15 an hour while the owner gets rich.” to something closer to reality. Even if the owner IS getting rich due in part to the risks they took & the investments they made, “uninformed profitability math” isn’t healthy. This “uninformed profitability math” rarely create behaviors that are positive for the business.

Many employees have never had the opportunity to see how their work (and how they work) impacts company financials. Meanwhile, business owners regularly complain how their people don’t think like owners. Part of that thought process is understanding the financial impact of events that occur in the business each day. Knowing that what your work does for the bottom line carries substantial value.

A “We’re having a good (or bad) month” message to employees is rarely accompanied by data explaining why. Understanding what good and bad month means affects the security a team member feels about their job. This impacts their confidence in their ability to provide for their family – and certainly affects job performance and attitude.

What does “we’re having a good/bad month” mean at your business? What message does it send to your team?

Photo by Shinichi Haramizu

Is it better to keep a customer or replace them?

“$29 per month… NEW CUSTOMERS ONLY!” Most of us have seen something like this and thought less than pleasant things about a vendor who hangs these new customer offers out in public where existing customers can see them. That bargain basement deal that’s not available to existing customers doesn’t make you feel good about your decade-long relationship with that business. The loyal customers who have stuck through good times and bad with that vendor – including their mistakes (which we all make).

The thought?

“Where’s my screaming deal?”

It isn’t that these deals are inherently bad. The mistake is putting them out there in front of everyone – including your current customers. If you can find a way to avoid showing the “loss leader for new customers only” offer to existing customers – avoid it. In some media, you can’t avoid it – so don’t use that kind of offer there. It ticks off your loyal customers. Every. Single. Time. Your customer service team gets to take flak about this each time you run these promotions.

Meanwhile, a lack of communication to existing customers plants the thought in customers’ minds that their vendors take them for granted. We know you’re thinking of us when you outsource customer service to Jupiter to save $1.29 per hour, or when you discuss how to shrink receivables. What sort of effort do you invest to retain existing customers?

If you have convinced your customers that you aren’t thinking about them & that you’re more concerned about getting new customers – why should they feel differently about you? You’re advertising for new clients everywhere. While those ads are out there chasing down more new customers to fill the leaky customer bucket, are your long-time loyal customers (and the rest of your customers) being ignored?

All the single ladies

Look at it this way: If you’re someone’s steady “significant other” and they are constantly out chasing down new “others”, most of you wouldn’t take that so well.

Why should your customers feel any different when they aren’t being wooed, cared for, thanked, communicated with, or given any special attention? They only seem to get attention when they call to report (or complain) about a service, delivery, or product failure. Once the initial sale is concluded, is the only time you connect with your clients when they contact you, or something has broken or otherwise gone wrong?

“That’s what everyone else does.”

You might be thinking “That’s what everyone else does. Why should I behave differently?

You are, or have been, a customer of car dealers, cable companies, dry cleaners, restaurants, various repair shops, handyman services, plumbers, sewage tank pumpers, electricians, hair salons, clothing stores, hardware stores, quick lube shops, etc. Almost all of them are advertising for new customers this week. How many of them are ALSO communicating with you to keep you, to bring you back, to make you feel good about being a customer, and/or encourage you to refer them to someone you respect and/or care about?

Very few.

They’ll likely continue appearing to take you for granted for weeks, months, or years – all while chasing new customers, all while grumbling about churn as they slowly lose customers to someone else’s $29 new customer offer. Don’t be that business.

Doing only one of these (looking for new, caring for existing) is not sustainable. Yes, I know it’s more work to do both. Most places need to get new customers, but most of those same places spend a lot more money & effort to get a new customer than they do to keep and care for an existing customer. Doing both means making an effort to protect the asset you paid for – yes, customers are an asset. Perhaps not in accounting terms, but in the real world where customers don’t grow on trees, we’d all rather have more long-time customers and others begging to do business with us.

Don’t spend $12 to get a customer this month, only to ignore them hereafter and hope they stick around, and then go spend $12 to get another one. That assumes you know how much it costs to get a customer (and it’s always more than you think).

Recycling customers is expensive.

Take better care of your existing clientele. Well cared for clients tend to buy more, buy more often, & for a longer period of time. They refer their friends & colleagues because they finally found someone who gets it. Be that someone.

Photo by martin.mutch

Where is the friction in your business?

What do you repeatedly force your clients to do that they simply shouldn’t have to do? Put another way, how does your business frustrate your clients? When dealing with your business, what drives them crazy?

What’s friction?

Can’t open the package without a Jedi sword? Can’t read your boarding pass printed in that microscopic font? Have to do this and this and this and that to buy or pickup a purchase, only to have to start over again? Can’t find out when something will be delivered? Have an appointment window that stretches from sunrise to sundown? Press one because your call is important to us and will be answered by the next available agent?

Yes, those kinds of things. They aren’t the sole domain of the cable company or that big company that’s easy to despise. Small businesses do these things as well, so we have to be vigilant and chase these things out of the building.

Sometimes these things are simple and inexpensive to fix, yet failing to address them creates a point of aggravation between you and your customers. These points of aggravation are often the tiniest of things. Like a grain of sand in your shoe, they could be the start of something much worse if allowed to fester.

Should it fester, you may lose a customer. Losing even one customer to one of these little things will transform that friction-creating “little thing” from inexpensive to very expensive. Remember, losing a customer usually isn’t losing a single sale – it’s losing all future sales from that customer. Friction is expensive.

How do I find these aggravating things?

Ask.

But what to ask? No matter who you’re talking to, poke around in their experiences with you regarding installation, deployment, service, customization, billing, paperwork, repairs, upgrades, financing, returns, shipping, etc. Ask questions about these things using different terms. Repeat yourself until you get the details you need. Using different terms in your questions will provoke different reactions and prod different memories from your customers.

Ask your best customers.

They’re the ones you’d hate to lose. The ones you know by name when they walk in the door. The ones whose names are familiar to your bookkeeper – and not because they don’t pay their bills. They’ll tell you different things than your newest customers, but that’s OK. There isn’t one frustration that fits everyone. Your business has many components. If you sell a number of products and services, you’ll need to ask the best customers of each. You’ll likely get different answers for each product and service.

Ask your newest customers.

Because everything is new, they’re quite likely to be more sensitive to oddities and more observant about every little thing your company does. Listen carefully to these folks. They may mention things that you’re vested in. You might get defensive. Fight that urge. There may be a perfectly valid reason for doing whatever it is. Brainstorm with the customer how you could accomplish this result in some other way.

Ask lost customers.

Did you lose a customer to another vendor? Give them a call, or see if they’ll set a time to visit in person. Make sure they understand that you aren’t there to sell them, but instead, you want to know what went wrong. What could you have done better? How did you frustrate or annoy them? This lost customer probably isn’t alone. Follow up with them once you’ve addressed the things they mentioned. A handwritten card thanking them and briefly describing what you’ve done to correct these things will both thank them and tempt them.

Preventing the growth of friction

Bear in mind that these things aren’t often created intentionally. Most of the time, “they just happen” and we miss them long enough that they become systemic. Once they become systemic, they seem normal and we have to battle a little harder to identify and evict them from how we do things.

Create a culture of ownership for finding and fixing these things. When your team has the permission to fix these things on the spot and bring the situation to your next process improvement discussion (ie: lunch), fixes don’t have to wait. Set boundaries as needed, but be careful to encourage improvement without waiting for seven signatures and a wax seal.

Photo by theilr

This year, customer follow up will be different.

For many businesses, two things happen this time of year. One: You get a bunch of new customers. Two: Many of the new customers you acquired during this time last year “forget” to come back. The customers on the first list cost time and money to acquire. A fair amount of the people who “forget” to come back were never asked to. In other words, the business didnt invest the time / money for new customer follow up.

There is a problem with this concept. Being able to follow up requires having some contact info for your clients. These days, people are all too used to being nagged incessantly, mostly by mail and email. They’re also concerned about privacy and identity theft, which increases their reluctance to provide you with their contact info.

Why they think you’re a spammer

While it keeps the FCC and others “happy” to publish boilerplate privacy and security policies, most people either won’t read them or won’t care that you have them. Until given a reason to think otherwise, they will group your request with all the ones they’ve received before. This means that you will be thrown into the bucket with the companies who used their contact info inappropriately.

Inappropriate doesn’t necessarily mean illegal but the net impact on the business is roughly the same.

While many marketing people and business owners think otherwise, they don’t get to decide what is spam and what isn’t. The recipient does. The legal definition is irrelevant. No matter how good you think the message is, the recipient decides whether your messages are out of context, incessant, annoying or of no use. If your new customer follow up message matches any of those criteria, they will unsubscribe, opt out and might even stop doing business with you.

Even worse, they will group you with all the other spammers and be super hesitant to provide you with information in the future – even if you need it in order to serve them as they wish.

Poorly conceived customer follow up has a hard cost

Spammers are of the mind that they can send millions of emails for free. They have the luxury of not caring if they retain a “customer”. You do not. They have the luxury of not caring about the cost of a lead, much less the lifetime value of a customer. You do not.

When you send a message that feels to your customer like spam and it causes them to unsubscribe, there’s a hard cost associated with that. Think about what it cost to get that person to visit your store or website. We’re talking about labor, materials, time, consultants, employee salaries, service costs, etc. Every lead source has a cost and a ROI. The latter comes from the lifetime of that client relationship with your company.

When your message causes the client to unsubscribe, your lead cost rises and your ROI is likely to drop because the lifetime customer value of that person or business will probably stagnate.

Great, so how does my customer follow up avoid this?

Expectation management.

When they provide contact info these days, people have questions about the use of their contact info:

  • How it will be used.
  • How it will be shared (short answer: DON’T)
  • How it will be secured.

You have to be crystal clear (and succinct) when answering those questions. You have to adhere to what you said. Stepping outside the bounds of what you said you’d do, even once, breaks what little trust was granted when their contact info was shared.

Whether you feel it’s justified or not, people are hyper-sensitive to this. If you want to build a lifetime customer relationship with them, your behavior has to show it.

A suggestion

Everyone likes getting stuff on their birthday. It doesn’t have to be a (heaven forbid) 50% discount. You don’t need their birth date – which they will be protective of due to identity theft. You only need the month. During their birthday month, a simple offer or add-on that is special to them is all you need. Do you have any low cost, high perceived value services that could be given away with purchase during their birthday month? Make sure it’s clear to them that you will use this info to send them something of value during their birthday month – and stick to that.

The alternative is to keep paying more for leads. There are only so many people in your market. Nurture your clientele and show them you’re always thinking about how to help them. Win the long term game.