The Customer Cycle
“It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages.” Henry Ford
Whether you think of them as “Customers”, “Clients” or “Guests” they are the heart of your business. They pay your wages and generate your profits.
Your customers have a life cycle of relationship with you. They come in as new business and eventually remain as loyal advocate customers or leave because you can no longer fulfil their needs or you have disappointed them enough for them to sever the relationship (or occasionally because they no longer suit your business and you have chosen to let them go).
Customer relationship management should be a key part of your business strategy but too often organisations get hung up on a CRM software solution when they need to focus on where the critically important parts of the cycle for their particular business. Our approach is to analyse your business using a well developed set of Customer Cycle models.
Acquire– winning new business & customers
When you start up your business, enter new markets or launch new products you spend most of your effort acquiring new customers…winning business. One of the key parts of your marketing and sales process to ensure is working at its best is the sales execution element. Once you are winning business, to focus too much on just winning the business without looking at the fulfilment processes, the brand position and your market communications can just build problems for the future. The best businesses ensure their sales activities are informed by the elements of the whole marketing and sales process. You must ensure customer expectations are understood and managed and customer qualification criteria looked at from both short and long term value to your business.
Serve – delivering on your promises
Real success comes from the next stage...delivering on your promise, serving your customers. Some of that promise is explicit, it was what you said in your sales documentation, in your sales presentation, in your advertising and promotional material, but a lot more of it is implicit, the expectations gained from the tone and style of your branding and the reputation you have built in your markets, good or bad. It also depends on the effectiveness of your post sales operations and services as well as the reliability and usability of your products and services in practice. Good “quality management” is vital but so is building and communicating your brand, good product development and launch which looks right along the customer cycle from the start together with effective market communications. If you fail to manage expectations then you will probably fail the customer.
Develop – growing the value of your customer base, treating your customers as a valuable business asset
Once you have built up a good customer base, managed expectations and fulfilled them excellently then those very customers become the market for further new products, product upgrades and service enhancements. You’ve already made a considerable investment through you costs of selling to acquire those customers. They know who you are, they know what you do and have experienced you doing it well. Selling more to them should be easier and, hence, more cost effective. Your customer base is now a valued asset to be managed to further enhance its value.
This stage is the development stage and a whole raft of marketing and sales elements of your total marketing and sales process need to be optimally tuned. Account management is a key competence at this stage, treating customers as partners and assets.
Retain – keeping the customers you want to keep
Customer loyalty and retention is now a big business sector in its own right: loyalty schemes, loyalty cards, analysing and segmenting customers to predict loyalty patterns. There may be some customers you may not want to keep but parting needs to be managed gracefully. The last thing you want is a dissatisfied customer undermining your hard earned reputation even if that customer turned out to be of no real value to you.
For example, one way to avoid this pitfall is to ensure that the dissatisfied have plenty of opportunity to express their frustration to you – if they can’t express their concerns to you and give you a chance to make amends then they will express their dissatisfactions to many others even more vigorously. It’s more than just listening; you need to take rapid and appropriate action. Too often we encounter poor, unempowered, “customer service” help desks. How often have you put down the phone even more frustrated than when you first called?
Start at the beginning with the end in mind
Andoften it is activity at the Acquire end that can trigger drops in customer loyalty. We all know of special introductory offers becoming prevalent in an industry (credit cards and mobile phone networks, for example) triggering a general rise in industry churn as the market works out the advantage of being a perpetual new customer. Even if your business is not one based on recurring revenues and longer term contracts loyalty might be the propensity to return and buy again from you or to ask you first when they want a different put possible related product or service: brand loyalty.
Who are you holding hostage and why?
A useful tool in understanding loyalty is the “Satisfaction v Loyalty” matrix developed by John Heskett of the Harvard Business School. Using this for analysing your customers can reveal unexpected risks and issues for your business. Knowing who your apostles and your terrorists are, who you are holding hostage and how many of your customers mercenaries will enable you to formulate and implement more compelling strategies for your business.
And the judges have decided the winner is ……
A further tool in your understanding your customer cycle is to map the decision making processes (DMP) your customers use to evaluate and compare you to the competition as they move through each stage of the cycle. As with all such models the key lies not so much with the analysis, but what you actively do to improve things for your business. How do you win over the terrorists or increase the number of apostles, for example? It would be wrong to stand idly by and watch all your defectors defect, though it may be the case that not all of them could be cost effectively satisfied and retained.
As with all such models the value lies not so much with the analysis, but what you actively do to improve things for your business. The analysis should deliver prioritized, feasible action plans with targeted and measurable areas for business improvement. Achieving the Difference LLP ® are a valuable resource to help you better understand and manage you Customer Cycle, develop more effective business strategies based on that understanding and support you in effectively implementing them.
You can contact Peter, Clive or Richard by emailing or phoning:
Peter Roberts
Clive Lewis
Richard Jefferies
Tel +44(0)1242 42 1000
