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.
BUILD TRUST
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.
