Connect with us

Increase Profitability

Get Your Customers to Buy More Stuff

Customer retention begins on the front lines.

Andrew Miller

Published

on

Get-customers-to-buy-more_increasing-profitability_Growing-a-business

As business owners and executives, we intuitively know there are significant growth opportunities through the retention of our existing customer base.

We try different strategies to engage our customers in the hopes of building loyalty and trust. We offer them discounts, access to exclusive events, even provide them with sneak previews of our new products. But it doesn’t always work. Why is that?

One of the things that many organisations fail to do is link employee engagement to their customer retention strategies, and then link that retention to the bottom line. The reason we want to retain our customers is to help grow our business.

So why don’t more organisations measure that link effectively? Of course we want customers to be happy and we want to provide quality products and services. That is just the means to an end. Ultimately we want our customers to buy more stuff from us and help to bring us new customers who will also buy more stuff from us.

There are three maxims that will help increase retention and ensure that retention directly impacts our bottom line.

Retention happens on the front lines. The most successful organisations recognise that customer retention doesn’t happen in the executive offices or on company retreats; it happens with the people who face customers every day.

This may mean a customer visiting your store, surfing your website, calling your customer service department, reading about you in the newspaper or even walking into your head office.

Empower front-line staff

The people who have the most influence over whether customers come back are the people who deal directly with those customers. What impression do you give to customers when they interact with you?

Employee empowerment fuels retention. Since retention happens on the front lines of your organisation, the best retention strategy is one that empowers your front-line employees to use good judgement that is in the best interest of the customer.

These front-line employees are the face of your organisation and need to be passionate about what they are doing and the organisation they are working for.

It’s very easy for customers to spot employees who are not passionate and engaged in their work because, more often than not, they ignore the customer and don’t ask about their needs. Few things are more frustrating for a customer than dealing with someone who is indifferent to their needs and wants.

Are you giving your employees the freedom to use their judgement in making decisions that are in the best interests of the customer?

Read Next: 4 Ways to Find More Work

Target customer retention

Measure retention, not satisfaction. When I suggest you need to measure retention, I don’t mean customer satisfaction surveys or focus groups. High customer satisfaction scores only mean that you are meeting customer expectations, but what if those expectations are too low?

We want customers to feel emotionally connected to our organisation and become an ambassador for it. We want them to tell their friends, family, peers and colleagues about the great experience they had with us.

We want customers who will keep coming back because they see the value of what our organisation can offer them. Are you measuring customer retention and linking that retention to bottom-line results, or merely reporting on how happy your customers are?

I often tell my clients the quickest way for them to grow is through their existing customer base. This might mean offering new products and services to those existing clients, or leveraging those clients for introductions to new prospective clients. Organisations that master these strategies will grow more quickly and easily and they will see customer retention increase.

Read Next: Time to Cash in On Loyal Customers

Expert tips on improving customer loyalty

Entrepreneur’s top international experts offer their insider insights.

Jayson-DeMers

Humanise your brand by interacting and engaging in social media channels. Behaving like a person rather than a corporation is what makes your customers feel a closer, more personal connection with your brand; and that will result in stronger brand loyalty. – Jayson DeMers, AudienceBloom

Jim-Joseph

Give them a heads up. Treat your best customers like insiders. Let them know what’s going on before you tell anyone else. Include them in your decisions, ask for their feedback. Let them have the inside track and then they will feel a vested interest in staying with you. As the old adage goes, ‘Treat your company like family and your family like company.’ Apply that thinking to your most loyal customers and they will stick with you. – Jim Joseph, Cohn & Wolfe

Lewis-Howes-2

Go above and beyond doing whatever it takes to show your customers how much you love them. Care about each person as a human, not a number. – Lewis Howes, LewisHowes.com

 

Ilise-Benun

Show that you care about their business as much as yours. Many clients aren’t good judges of the quality of your work, but they do know, appreciate and value a smooth and thoughtful working process, no matter what service is being rendered. Also, actual contact in real time greatly enhances the bonds between people — that includes client relationships — so don’t fall back on electronic communication by default. Ask in every situation what is the best way to communicate. – Ilise Benun, Marketing-Mentor.com

Karen-Leland

Improve your customer loyalty by measuring it. By regularly and consistently reaching out to your customers for feedback on what is working and what isn’t, you can stay on top of trends and adjust as needed. Far too many companies have a ‘don’t ask them, we don’t really want to know attitude’. And if you do ask, get back to your customers about what you heard and what you plan to do about it. Nothing will destroy loyalty faster than asking but not taking any action. – Karen Leland, Sterling Marketing Group

Rick-Mulready

Do something for your customers that they don’t expect. The phrase ‘be remarkable’ is often thrown around yet seldom taken to heart by businesses. Give your customers a reason to talk about you in a positive light. People don’t want to share average experiences with their friends. They want to talk about the remarkable ones. – Rick Mulready, RickMulready.com

adam_kleinberg

Give customers a great experience with your brand. Period. – Adam Kleinberg, Traction

Andrew Miller is the author of Redefining Operational Excellence: New Strategies for Maximising Performance and Profits Across the Organization.

Advertisement
Click to comment

You must be logged in to post a comment Login

Leave a Reply

Increase Profitability

5 Winning Ways To Strengthen Your Bottom Line This Year

Let’s get down to the nuts and bolts of your profitability.

Revel Africa

Published

on

bottom-line-business-profits

The beginning of the year is upon us, and the question everyone is asking is, “How are we going to make this year more profitable than 2018?” Break away sessions to strategies are always good, however, the most effective organisations know that the best ideas didn’t come from high-level planning, rather, they come from the field.

1. Your winning market

The saying goes, ‘The riches are in the niches.’ This year, stop spreading your sales focus thinly across several markets. Review your data on the which niche or subgroup of buyers make up your best customers. Then laser focus your best sales efforts and talent on these prospects this year. If you don’t have data on your buyers, then make a commitment to invest in your CRM software this year, so that next year your focus can be accurate.

Related: How Excellent Customer Service Affects Your Business’ Bottom Line

2. Your winning product or service

Don’t let chance dictate which sale you focus on, rather identify which of your products or services has the highest margins. Your data will tell you which products or services you should focus your sales efforts on this year, and which you should phase out, or simply terminate immediately.

3. Win more customers

You have a big budget for your lead generation, but invest more this year on optimising your lead conversion rate. No matter what industry you are in, or if you convert leads digitally or face to face, your ability to turn leads into sales is a potent leverage point to increase profits. For example, if you increase your conversion from 20% to 25%, that 5% increase in conversion will lead to a 20% or more increase in profitability (assuming your costs stay steady.)

Consider a sales coach to refresh your sales team’s conversion strategy, or review your digital data, landing pages, and automation strategy with a reputable digital marketing agency.

4. Whittle down waste

One immediate way to see your bottom line improve this year is to keep a tight rein on your sales team giving out discounts and freebies, and on your production team’s unregulated wastage. You’ll be surprised when you add it all up how much profit you’ve lost this way. Set boundaries over what is and isn’t okay for your sales team to do during the sales cycle.

Rather create bonuses or value adds that they can add in that have high perceived value but low cost of goods sold. For example, you might offer two free training classes to a new customer when they buy a year’s subscription to your software service.

A training class has a high value, but likely costs very little to add more seats to the room. As far as your production team goes, if you haven’t already, you should invest in business software that tracks productivity in your team, as well as in your machinery and equipment, to improve efficiency and reduce wastage. This alone is worth the investment costs of the software.

Related: Strong Company Culture Fattens The Bottom Line

5. Say ‘No’ to scope creep

Scope creep is when your customer alters the scope of your product or service after the initial agreement of work has been signed off, but with no alteration to the initial quote.  It is excessively common and can be very detrimental to a bottom line in service businesses.

This year, be clear about what is and isn’t on offer in the quote, and if there are any adjustments down the road, inform the client upfront of these additional costs. Wait for approval before starting the work. Be clear about prices for common extras that clients may want and let them know you’d be happy to provide these additional items for them at these pre-agreed prices. This could also be an opportunity for gentle upselling.

With this in mind, may 2019 see your bottom line grow from strength to strength.

Continue Reading

Increase Profitability

Are Your Scalable?

Here’s how you can assess if you’ll make it, or if you need to first make some fundamental adjustments before pursuing your growth goals.

Published

on

scaling-a-business

Pete is a classic entrepreneur. He spent 
15 years building his manufacturing firm to 
a R30 million outfit, before his big opportunity came to take on contracts worth R120 million, allowing him to scale to 
R150 million within five years. This was everything he’d worked towards. This was his retirement plan.

Five years later, instead of running a R150 million business, Pete is burnt out and broke. His company is closed and he’s lost everything. The crisis has even torn his family apart. How did this happen?

A common fate

Unfortunately, it’s a far more common story than most of us would like to admit. 70% of the top 1% of businesses (by growth potential) land up failing to scale. Sometimes, like Pete, they lose everything and close the doors. Other times, they land up bigger, but managing a chaotic hell of their own creation: A daily sprint to survive, a never-ending treadmill of frantic hustling to keep things together, with the horizon never coming closer.

The most common reasons? Either scaling something that fundamentally is not scalable, or scaling poorly; not making the right changes at the right time.

In this article, I’ll be focusing on the first reason: Attempting to scale a business that is fundamentally not scalable — because not every business can be scaled. If your ambitions are focused on high-level growth, step one is to determine if you have the 
right business model to do so. Because if 
you don’t, that’s the first change you need 
to make.

Scalability

Some companies scale easier than others. And some don’t scale at all. Let me illustrate with two extreme examples:

Very scalable: Dropbox makes an extra $10 for every user they add, while adding $1 of cost, and zero operational capacity. That is very scalable.

Not easily scalable: A start-up ad agency is soon faced with a growth ceiling created by the limits of the founder’s time and energy. This normally occurs somewhere between ten and 20 people. An ad agency is not a scalable business model because growth requires top, senior creative talent. Such individuals are rare, have attractive options, and usually prefer to either work for big multinationals, or run their own businesses. It’s therefore tough for smaller agencies to attract and retain talent without offering large chunks of equity, which can be a zero-sum game. It sometimes even works out net-negative. Unless you find a way of breaking that constraint, this is not a scalable business model.

Related: If You Want Scale, Fail Fast And Learn Quickly

So, what makes me scalable?

Building a scalable business is a bit like picking a spouse. There are a number of criteria to consider, the absence of any one of which is a deal killer, even if all other criteria are amply present. A suitor may exceed your fantasies in every regard (looks, smarts, fun, caring, etc), but if they are also prone to parallel relationships, that’s enough to pull the plug and look elsewhere.

Just as in relationships, a number of things must come together to make your business scalable. Here are the ten most fundamental drivers of scalability grouped into three core areas: Scalable market, scalable business and scalable team.

Scalable market

  1. Size (Total Addressable Market, or TAM): The market must be big enough to achieve your ambitions. As a rule of thumb for ambitious entrepreneurs, TAM must be at least 4X your business size goal. If you want 
to build a R500 million business, you need a R2 billion market.
  2. Economics: It’s expensive to scale. You need to invest in great management and top talent, plus spend on infrastructure ahead of actually seeing growth. To make that sensible, it must be very profitable serving your market.
  3. Growth: The market must be growing, and preferably faster than the rate of new competition. 

Scalable business

  1. Number one: Highly scalable businesses almost inevitably are number one, or will become number one in their market or niche. If you can’t lead the market, you must be able to lead a sizable niche.
  2. X-Factor: Every market has a bleak outlook: More competition, lower prices, lower margins. Unless you have some fundamental reason to continue to lead the market despite competitive intensity, such as proprietary tech. It must be good enough that you can be and stay number one in your market.
  3. Scalable channels to market: Some customers are just impossible to reach profitably. A scalable business has access to channels to effectively target, market to and sell to customers profitably.
  4. Scalable operating model: Scalable businesses have unconstrained access to all critical materials and talent, without breaking the economic model.
  5. Scalable economics: You can calculate the scalability of your economics with a simple formula: [Gross Profit per R10 million new revenue] / [new cost required to manage each R10 million new revenue (managers, systems, facilities, etc)]. Highly scalable businesses have a 2X or higher ratio. 1 to 1,2 is borderline and scaling will be like walking on glass. Most businesses have a ratio <1, which means they will lose money by scaling.

Scalable team

  1. Scalable founders: Statistically, most founders are not scalable. They lack the experience, skills and personality profile to make the required shifts as the business scales, and to develop the organisation through its various lifecycle stages. Scalable entrepreneurs are able to:
  • Build a great culture for >100 people
  • Attract and build an A-Team of truly impressive senior leaders, and delegate large parts of the business to them
  • Be ‘builders’ and ‘managers’ — that is, graduate from ‘entrepreneur’
  • Submit their interests to the best interests of the organisation, even when it’s painful — we see this when founders step down in favour of CEOs with corporate experience
  • Lead the transition of the business to a professionally managed company, introducing systems, processes and policies in a way that does not break the company’s culture.
  1. Leadership team: Particularly in the most painful scale up stage — going from ten to 100 staff — the key driver of scaling well is the quality of the top team. That’s why quality of early hires is a great predictor of scalability. Leaders who can adapt and be effective in a business of ten, then 20, then 50, then 100 staff are truly remarkable, and therefore exceptional. Not many manage this transition. These leaders can be effective in three completely different ‘modes of organisation’: The hustle (at ten people); The build (from ten to 100 people); The operate and grow modes. By implication, they are — or can grow into — executives. They can hustle. But they can also shift from a tactical focus (immediate fires and opportunities, action focus), to a strategic focus (future focus and system focus). They are able to run operations while transcending operations, bridging the long-term strategy, the short-term strategy, operations, culture, team, and finances, and they can do that in a company of ten people, or 100 people. Of course, you can bring in new leaders and you can replace leaders that are not scalable, but this dramatically slows the scale-up journey and can even derail it.

The result of having founders and leaders who are capable of scaling with the organisation will be the automatic development of the other key ingredients for a scalable team: Great talent, a highly engaged team, a great culture, and an effective organisation.

Related: What It Will Really Take For South Africa’s Businesses To Scale And Create Jobs

The key to growth

If you’re following the path to scale, or investing in a scale-up, it’s important to be aware of the causality amongst the above ten factors. Typically, the main factor that drives the speed at which a business can scale is how quickly founders can delegate major areas of responsibility, so that the business can continue to make rapid progress at scale.

This in turn is driven by the ‘next level’ (non-founding) leaders, as well as the leadership abilities of the founders. The problem is that early-stage companies struggle to attract top talent, unless they find people who want to be a part of the equity-incentivised leadership team pursuing an exciting opportunity. This type of career opportunity can usually attract top talent, despite the various reasons these individuals gravitate towards well-paid corporate roles and their own ventures.

But that sort of opportunity does not typically happen by accident: It’s the function of the founders getting points 1 to 9 right. In a nutshell, the first thing you need is an amazing team of founders who work smart to nail points 1 to 9, find and pursue an amazing opportunity, and then harness that to attract amazing talent in order to delegate effectively, so that you can scale beyond the limits of the founders’ time and energy.

scalability-self-assessment-tool

Click here to take your free self-assessment. 

Continue Reading

Increase Profitability

Leon Meyer GM At Westin Cape Town Shares 4 Experience-Driven Tips On How To Keep Your Team Productive

Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins.

Leon Meyer

Published

on

increasing-productivity

Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins. But what’s the best way to ensure employees remain productive, and happy in their day job?

The answer is simple and highly effective and I choose to sum it up with three short phrases – respect, trust and teamwork.

In partnership with my management team, which consists of about eight staffers across various disciplines, we strive to tick these boxes.

Related: 5 Surprising Elements That Boost Your Productivity (One of Them Is Colour)

In total we’re ultimately responsible for managing roughly 500 employees.

Five hundred employees across several departments is a mighty job. But with teamwork, good listening skills and the right attitude from the top to filter down, any business can run like a well-oiled machine.

I’d like share with you the essentials for building and maintaining a productive workforce, and these apply to all industries, not just the hospitality sector:

1. What’s your definition of a productive team and how do you achieve that?

We need to keep in mind that productivity is a result, one that CEOs and managing directors strive for with their teams. But what happens beforehand in order to achieve that result determines whether it will be achieved at all, and is equally important. I suggest the following to ensure a productive team:

Define roles and responsibilitiesDirection is incredibly important; everyone needs to know exactly where they’re going and how they need to get there, so KPIs are essential.

Often when roles and responsibilities are unclear, things go pear-shaped. I am an advocate for setting clear KPIs, it’s a good way to steer us in the right direction, and in turn helps to grow the business and the individual in his/her role.

Be flexible: Rigid environments are the worst kind, allow your employees some flexibility and the opportunity to be themselves in the workplace. We spend so much of our time at work, we need to be ourselves there.

Celebrate the team: When there are achievements, celebrate them, single out individuals who are excelling and living the company values. This builds morale and is indicative of appreciation, which is fundamental when running and building a business.

2. What has and continues to be your philosophy since managing a large team?

Know your strengths and weaknesses, as well as your team’s and leverage off that. Be prepared to learn from others, no one can operate in isolation, regardless of the level on which you operate. Accept criticism and don’t bulldoze someone’s ideas, that’s how you build trust.

3. What in your view are the top characteristics the team look for in a leader?

  • Be consistent – inconsistency screams bad leader
  • Provide guidance – this is key, don’t turn a blind eye, give input and council
  • Listen – always listen intently
  • Be impartial – always be fair
  • Give credit – it builds morale and shows you recognise good work
  • Be patient – Rome wasn’t built in a day, and remember not everyone thinks the same as you do

4. What’s your view on an open door policy and how does it assist with managing a team and ensuring everyone remains productive?

I believe in an open door policy. It’s essential to build and develop trust. I’m the first to admit that it takes a while to build that trust, but once the team (on all levels in all departments) know your door is always open, and that they can trust you implicitly, half the battle has been won.

I host a GM’s roundtable every two months, just to establish how everyone is feeling and where everyone is at. It gives staff the opportunity to bring their challenges to the table, and I deal with them the best I can.

It’s 100 percent confidential and line managers are not allowed to attend. During this meeting we try reach common ground, and I commit to addressing and ultimately solving the problem(s).

Related: 10 Ways To Make Your Employees 10x More Productive

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending