If you ask any of the 120 Million businesses in the world : “What is the purpose of business ?”
Undoubtedly many of the answers will include any one of the following themes
- make money
- maximize the profit
- create customers
- create jobs
- Put a dent in the universe
What is the real purpose of the business?
The purpose of business is to create and keep a customer.Peter Drucker
It is surprising how many businesses across the globe fail at keeping customers. In my book , Breakthrough Customer Growth: 15 Proven Ways to Help You Get and Retain Customers While Growing Sales Swiftly and Effectively, I provide practical solutions to help you to attract and retain customers.
One of the biggest success factors for businesses, is ensuring you focus on minimising your customer churn rate.
What is Customer Churn
Customer churn typically refers to when a customer decides to terminate their relationship with your company. Most businesses will treat a customer as churned after a period of time has elapsed since the customers last interaction with your company, be it visiting the website to make purchases or make use a service offering.
The basic problem stems from the fact that most sales & marketing processes and growth strategies implemented by businesses across the globe are only ever related to Customer Acquisition .
Surprisingly most businesses think that retaining and keeping customers is the job of the support or customer services teams or departments.
Customer Churn slowly kills your business
The only way to stop customer churn from slowly destroying your business, is establish good foundational business practices early on. Measure churn, understand the causes, and take steps to retain those customers.
Churn compounds with growth because it is a percentage of your total customer base. This can hurt you in many ways:
- A High churn rate , leads to more revenue you have to pour back into your company just to keep the bottom line flat.
- Customer growth objectives are going to be harder to reach and take longer.
- You’ll have to spend money on customer acquisistion and replace the ones you’ve lost that could have been spent on other things like product improvements or hiring.
Adding insult to injury, churn reflects poorly on the health of your company. High churn will hurt you whether you’re bootstrapped or venture-backed—but if you’re trying to raise money, poor retention metrics are a hard sell to investors.
Growth and retention are two major factors that Venture Capitalists use to determine valuations for your company. Churn sabotages both of these.
Pareto at Play
The irony is that the often over used Italian economist principle comes into play
80% of the effects come from 20% of the causes.Vilfredo Pareto
According to Technology, Research and Advisory Firm Gartner, 80% of a company’s future profits comes from 20% of its existing customers.
So why do most businesses focus their energy, time and resources on customer acquisition rather than customer retention ?
- what we are supposed to do
- Customer Acquisition is the key success criteria
- assume and fear losing customers, so gaining customers is critical
- take for granted existing customers will stay
Why it’s vital to focus on retaining customers?
Take classic example of a restaurant. In a midsize town, even if each and every resident dined at the restaurant just once and never visited again the restaurant would eventually be out of business. On the other hand, a restaurant with few but loyal and regular customers the restaurant will survive and thrive.
Another simple example of a leaking bucket. If you keep pouring water without plugging the leak then you won’t be able to store water in the bucket. So it’s critical to first plug the leak before putting water into a bucket.
In the same way, it’s very important, you have solid customer retention strategies in place before you focus all efforts getting new customers, because eventually you would lose more customers than gain. That’s a disaster for any business.
So it’s critical you focus on customer retention not just customer acquisition
Is the purpose of a customer to get a sale or is the purpose of a sale to get a customer?
You need to ask yourself to very important questions
Are you trying to get more customers to increase revenue & sales or are you selling because you want more customers?
The only profit center is the customer. Everything else is the cost in the businessPeter Drucker
Everything in the business costs money including Marketing, selling, operational, finance, HR, customer service. It is in no way shape or form an investment!
The only source of revenue is the customer!
The primary goals of business are :
- Acquire customers
- Retain customers
- Generate sales
Everything else is secondary. Every role in the business should be and must only focused on the above.
Generating sales for the business shouldn’t just be left to the Sales or Marketing Department, the entire company IS the sales department.
Irrespective of roles, every person in the company should be focused on the customer, and that focus should be on how to increase the potential of the customer buying more!
Your CRM system, should and must be the one and only point your staff turn to for customer information. Unfortunately this is not the case, in a vast majority of cases.
In our experience of working with a variety of customers across the globe, the CRM systems generally become static repositories even before a sale has been completed!
Even worse, we’ve found that many sales teams do not always record all customer information within CRM systems. Most vital customer information is often recorded within their own Excel or Evernote workbooks. Another key candidates are Outlook Diaries, Paper Diaries and the classic Rolodex system!
The problem is that even with advancements in CRM technology and companies like SalesForce, seemingly taking over the CRM space, CRM systems still aren’t the profit generating centres they need to be. In many companies they turn into yet another expensive IT system that needs to be maintained due to perceived value!
If we stick with the SalesForce analogy, but I must stress this problem isn’t only related to SalesForce, it materializes with any CRM system including other players like Microsoft CRM, X2CRM , SugarCRM and the like.
Your CRM system rapidly becomes the albatross around the neck of the organisation, you think you need a CRM—instead of a sales and marketing automation platform—you think you need “the best” so you pay for Salesforce.com for a year and by the time you upload your contacts your realize vital components are not included
- support is not included
- email is not included
- e-commerce is not included
- automation is not included
- templates are not included
- Integration plugins are not included
When you purchase a CRM system you inevitably get a blank slate, ready for you to mould and shape the system to your needs. You then realize you need to draft in extra staff to deal with the CRM system, often Technical Experts to start implementing the features your company actually needs.
This is also where the another problem creeps in, these Technical Experts are just exactly that, they’re great at the technical aspects i.e. coding, understanding API’s, integrating systems and creating workflows. However, they are not Sales & Marketing Experts, often they’re not really interested in either.
In God we Trust, all others bring dataW. Edwards Deming
Often the C-suite and Sales Management only use the CRM to generate reports, forecast sales to order raw components, set sales quotas for the next quarter or year and squeeze the sales team if they are not hitting their number!
The problem with this is that the data within CRM systems cannot be trusted due to incomplete data or unverified data cannot be trusted!
The truth is Sales Teams hate CRM Systems . Inputting and updating data in a CRM system is often an administrative chore and in some cases an additional burden.
Top 5 Reasons why your sales teams hate your CRM
- Big Brother
- Additional Admin
- Forecasting Inaccuracy
- Sharing of Contacts
Most Sales people and business development professionals will have already developed their own strategies, techniques and processes derived from any number of millions of sales & marketing books available. Many books provide software, workbooks, templates, Sales Decks etc. , which have been bent shaped and moulded to suit their particular style.
The fact is, for most sales people their data is gold and for the most part it is their data.
Inevitably what happens with most CRM implementations is that a lot of the data that can be found in them will and functionality utilized will be:
- Rudimentary contact management
- Opportunity Management (Leads)
- Territory Management
- Little bit of email
- Very light scheduling
This is hardly a recipe for building a complete picture and persona of your customer.
How you gather, manage and use information will determine whether you win or loseBill Gates
Why your marketing teams hate your CRM
Most marketing teams hate a companies CRM implementation for the following reasons
- Lack of real customer data
- lack of access and support as business users
- IT departments don’t always support CRM systems
- It’s hard or even slow to extract relevant marketing information
- Lack of integration to their prefered marketing tools
Marketing departments realise that co-innovation with customers and partners is key to success and that moving forward digital business models are a key trend which have a significant impact on their roles.
Selecting the right CRM
The truth is selecting the right CRM for your business is an extremely complex and difficult task. Your decision cannot just be based on which provider has a Cloud option and which is the cheapest!
buy cheap, buy twice
The long and the short of it, there is whole lot more to consider when it comes down to implementing an effective CRM strategy within an organization. Your choice isn’t about which of the many cloud vendors have the cheapest price model or most features.
threenine.co.uk can help you to choose and implement the right CRM system for your needs and devise strategies to ensure your organisation derives the most value possible. Contact Us today , to start turning your CRM into a Cash Earner
Alternatively if you would like to have a go at doing this yourself, why not check out Breakthrough Customer Growth :15 Proven Ways to Help You Get and Retain Customers While Growing Sales Swiftly and Effectively and the associated Breakthrough Customer Growth Workbook: 15 Workshops to help you get and retain customers while growing sales swiftly and effectively