by Wyn Lydecker
When Ed McLaughlin was growing his business, United Systems Integrators Inc. (USI), he realized that retaining his initial customers and serving them in new ways would help the company grow faster than just focusing on new customer acquisition. It turned out that his strategy paid multiple dividends. Experts estimate that new customer acquisition costs can be five to 25 times more expensive than retaining a current customer.
Your most valuable asset
Your customers are your most precious asset. Your goal is to build a customer base of repeat buyers who promote your business to other buyers. An effective customer-referral system is the business equivalent of obtaining the Golden Fleece.
If you expect to build a powerful customer-referral system, you should have solid answers to the following questions:
· Do you deliver on your value proposition?
· Do you maintain a clear competitive advantage?
· Do you provide superior customer service?
· Do you make doing business together a pleasurable and rewarding experience?
Listed below are 10 key ingredients you can provide to deliver superior customer service:
1. Make a cultural commitment to superior customer service from the outset.
2. Assess, manage, and satisfy the customer at every single interface point.
3. Provide a significant product performance guarantee.
4. Assign a dedicated account manager to each customer relationship.
5. Be available 24/7 to log and address customer concerns.
6. Provide a 24-hour-response-time commitment.
7. Schedule customer engagement forums for feedback.
8. Reward team members for providing superior customer service.
9. Make sure that senior team members get directly involved with customers and lead by example.
10. Develop customer-feedback systems to stay in touch with customers and ahead of the competition.
USI's commitment to customer service enabled USI to enjoy a 95 percent contract renewal rate, while growing the business at a compounded annual rate of 40 percent. And they never entered a courtroom to resolve disagreements.
The long-term relationships you build add tremendous value, as shown in an analysis by Josh Chapman, a finance expert at TOPTAL. His article, The Importance of Customer Retention — An Empirical Study, uses financial modeling to demonstrate the financial impact of customer retention when growing your business.
To build trust with your customers, take the following actions:
· Develop an advocate or coach within the customer organization.
· Ensure your product’s benefits align with your customers’ needs.
· Work together to formulate plans to solve problems.
· Jointly develop and sign contracts for trial work.
· Exceed customers’ expectations on every assignment.
· Jointly market your success within the C-Suite.
· Execute a master contract for an exclusive relationship.
ADAPT TO YOUR CUSTOMERS
When Ed was growing USI, he made listening to his customers and adapting his business model to meet their needs top priorities. This practice enabled the company to grow by adding product line extensions. During the early growth stage, USI had the good fortune to land an exclusive real estate service contract with the Olsten Corporation on Long Island. Olsten was a high-growth temporary service firm competing with the likes of Manpower and Kelly Services. Olsten had hundreds of offices throughout the United States. USI was tasked with the responsibility to find, negotiate, and open new Olsten office locations. We also built and managed Olsten’s real estate information database.
Olsten's needs opened up a path for a new hire Michael Casolo to leverage USI’s business model and relationship base to sell design and construction services to Olsten. Under Michael’s leadership, USI’s service lines expanded to include space programming, space planning, project management, furniture management, signage, and workplace consulting. Each service line was managed as a profit center, which rolled up into USI’s Design and Construction P&L. USI became the first real estate outsourcing firm to offer comprehensive design and construction services. Michael’s contribution played a significant role in USI’s profitability and penchant for expansion.
As you grow your business, invest the time to listen to your customers. Your customers will tell you about their problems and help you to figure out the best way to solve them. Then hire entrepreneurial people who will listen, observe, innovate, and execute. Once you have them on board, listen to their ideas, and let them lead and build in their areas of distinctive competence. Give your leadership the opportunity to challenge the status quo and create genuine change. They will take you to places you never thought possible.
Parts excerpted from The Purpose Is Profit: The Truth about Starting and Building Your Own Business (Greenleaf Book Group), coauthored by Ed McLaughlin, Wyn Lydecker, and Paul McLaughlin.