ASTRSK founder and regular Uber user Elliot Tomaeno (who is, in fact, Uber’s most frequent rider) last year wrote to the ride-share giant an open letter detailing his disappointment at the lack of appreciation he said the company shows loyal customers.
In his communique, Tomaeno pointed out that the company hadn’t once thanked him – no postcards, no emails, no recognition of his “undying loyalty.”
He wasn’t just being nitpicky. According to L2 Research, 90 percent of customers surveyed, who participate in loyalty programs, said they wanted those companies to communicate with them regularly. As Tomaeno touched on in his letter, the message here is that a little personalised outreach helps turn regular clients into dedicated brand advocates who will actively spread the good word.
So consider: If you take your most devoted customers for granted, you’re losing an enormous opportunity. When it comes to driving sales, few things are more important than building loyalty.
Rewarding the regulars
Loyal clients keep coming back, providing steady revenue for a company. But what is the best approach to creating that loyalty?
Think about credit card companies. They offer reward points for signing up and more points if you spend a certain amount. Yet it’s not loyalty that keeps customers from closing their accounts. They know their credit scores will drop if they do, so an artificial block is in place that helps credit card companies retain customers. Points don’t instill a sense of loyalty in them, but negative consequences do.
On the flip side of the same coin, you have companies that seem to almost intentionally gouge their longtime clients. Is it any wonder that people seem to universally loathe their cable providers? Some major American cable companies are notorious for offering better packages at lower price points to new customers while forcing existing customers to pay more for less.
Obviously, neither approach is going to build real loyalty. Here are three steps to strategically reward and retain your most loyal customers.
1Understand the complex value of each customer
One of my clients’ sales teams told me about a special factor they take into account before deciding how much to charge a particular client. It’s called the PIA, or “Pain in the Ass,” index. Basically, they’re making a value judgment about how much emotional distress certain clients are worth in the long run.
With the PIA index in mind, consider how longtime customers are likely already pretty satisfied and are therefore more enjoyable to work with. That’s what I’m talking about when I say you need to understand a customer’s true value, and not just in terms of dollars.
Sound simple? Many of the business leaders I know actually don’t understand what their best customers are really worth. Knowing the value of repeat customers versus that of new customers would help those leaders better tailor offers and loyalty initiatives for each. To assess this, yourself, keep metrics for every client, to see not only how much bottom-line revenue you make off each one, but also how many referrals each client sends your way.
At our company, we also measure the efficiency of our clients, in respect to time spent, and how they’ve treated our people in the past. The amount of emotional energy you have to sink into certain accounts may not make them worth your time, ultimately. As for the others: Let those who provide the greatest value know how much you appreciate them.
2Give them more than a punch card
Repeat-customer perks have long been part of the loyalty-building game. Historically, though, these benefits have been somewhat uninspired and generic. Is it such a prize to earn a free sandwich after purchasing 10?
To win your customers’ dollars and their hearts, get more creative with your incentives. Starbucks, for example, developed a highly personalised rewards programme. By partnering with outside companies, such as Lyft and Spotify, it provides frequent latte-sippers with unique perks beyond what its stores provide.
Most companies are missing out on this lucrative opportunity, as 89 percent of brands fail to tailor rewards to their customer base, according to Capgemini Consulting. Old-school discounts simply don’t work anymore. These days, only 47 percent of customers say that they’ll exchange their personal contact information for discounts, according to 352 Inc.’s Geoff Wilson; and that number can be expected to continue to drop.
So, segment your customers and build out a solid loyalty program that tailors rewards specifically to those individuals’ interests. Whether you allow them to earn points for each purchase or dollar spent, or offer exclusive promotions to clients who have been with you for a certain period of time, individualised rewards will make them feel great – and convince them to stick around.
3Show them the love – constantly
One of our clients, Build.com, sends regular emails to its customers that contain useful home-improvement tips. We see great engagement with this programme because when recipients see this content hit their inboxes they feel part of an exclusive club that shares insider information.
With the Rockefeller Corp. finding that 68 percent of customers leave because they feel companies don’t care about them, that kind of ongoing attention can have a huge impact.
When you provide valuable information in an episodic fashion, your customers will come to expect and anticipate the friendly correspondence. And the continuous stream of content will lead them back for more.
The truth is, people today are so bombarded with emails, text messages and targeted advertisements that it’s easy for yours to get lost in the noise. You have to make sure customers understand exactly what you’re offering and know that you’re aware of their allegiance to your product or service.
The formula is really pretty simple: Loyal customers translate into dependable revenue and future growth, but loyalty doesn’t develop magically. To earn it, you have to dig into the data and listen to your gut instincts to figure out the true value of each customer.
Then, to prove to your best customers that you understand their desires and interests, provide them with intriguing content and special personalized offers. Once you have their attention, continue to shower those loyal customers with appreciation.
I promise, they’ll pay it back with interest.
This article was originally posted here on Entrepreneur.com.
Sasfin Is Gearing Your Company For Growth
How trade and debtor finance solutions can enable business growth beyond self-imposed ceilings created by cash flow restraints.
When an entrepreneur running a manufacturing business approached Sasfin for Trade and Debtor Finance, he had four things going for him: Experience, reliable customers, orders and a relationship with Sasfin. When other banks let him know via email that his financing had not been approved, he approached Sasfin, knowing the organisation would take a deeper look at his company than a spreadsheet analysis.
“He approached us because we had a working relationship with the business and they were looking for a facility that would enable them to purchase the stock they needed to fulfil their orders,” says Linda Fröhlich, Head of Business Banking, Sasfin.
“They didn’t have any assets, but they did have those orders, which meant they could bring their debtors to us and we could advance cash against them, getting them started.”
Solutions to enable growth
Today, Sasfin offers a full suite of inter-connected products designed for entrepreneurs and SME owners, but the bank, which operates under the slogan, ‘Beyond a bank’, was built off a base that began with trade and debtor finance.
“Sasfin’s founder, Sydney Sassoon, went into trade finance in the 1960s because as a textile importer he recognised the need for trade finance amongst SMEs and importers,” says Linda. “It takes an entrepreneur to understand entrepreneurs. This business has never been about products — it’s about the best solutions to enable our clients to grow their businesses.”
When Sasfin first launched trade finance it was because of the challenges around importing goods: The time it took for the shipment of raw materials to arrive, manufacturing to take place, the finished article to be sold and then a further 60 days for payment was crippling for SMEs.
Not only were no facilities available that understood that time frame, but traditional overdrafts require security and are not designed for specific needs. Trade and debtor finance on the other hand work hand-in-hand and provide SMEs with the most valuable commodity: Cash.
Cash is King
“Through trade and debtor finance, we can finance the purchasing of your goods and I can give you terms that fit your cash flow cycle,” says Linda. “Now that’s meaningful for the business owner. Yes, we charge for the facility and the risk we carry, but if you have to make a payment upfront to an exporter, you can also negotiate discounts and off-set a portion of the discount you will receive from the supplier to our fees, which is win-win.
“More importantly though, the biggest challenge that SMEs face is cash flow. Cash flow is king, and that’s where trade and debtor finance comes in. If you borrow money that enables the growth of your business, the finance cost is part of the cost of your sales. The upside is that you have access to cash, enabling growth.”
Many SME owners are familiar with the challenges of growth: You work hard, build your client base, get traction in the market, and suddenly you’ve signed a large order or client whom you can’t service without assistance, because your own cash flow doesn’t cover the raw material costs of the order.
“This is true across all product-based industries,” says Linda. “Instead of slowly building cash reserves to grow the business organically, or waiting between 30 days and 60 days for clients to pay, we advance our clients up to 80% of the value of fulfilled invoices, enabling business owners to grow beyond a self-imposed ceiling created by cash flow restraints.”
Related: Think Beyond The Box
Over the years, Sasfin has watched its clients grow from strength to strength.
“One of our SMEs started out with a R5 million facility. Today they’re operating a R50 million facility and continue to grow. That’s the power of cash flow,” says Linda.
“There’s always a good time to gear-up the growth of your business, where it will enhance the growth and profitability of your company. If the time is right, a financing solution that suits your needs can make all the difference.”
The benefits of trade and debtor finance
- Converts sales with proof of delivery into cash for day-to-day expenses
- Extended terms of repayment, with up to 120 days for local purchases and 150 days for imported goods
- A fully disclosed factoring facility or a confidential invoice discounting facility
- Match sales to repayments, enabling cash flow management.
My Business Is Growing… What Now?
Unplanned growth can be disastrous for a business, particularly a start-up where most of the departments consist of one person – the founder – or where the business has been based in one city or town or focusses around one service or product for some time.
It is a known fact that most growth and change are uncomfortable – especially in business. However, when your business grows, you grow with it and so will the business revenue, employment numbers and contribution to the country’s economy. Planning for growth is not only a good way to stay motivated through tough times in business, it will equip you for when the moment of growth arrives– to take your business to the next level.
Make the mind shift
James Cash Penney, founder of JC Penney, said:
“No company can afford not to move forward. It may be at the top of the heap today, but at the bottom of the heap tomorrow, if it doesn’t.”
Business growth should be actively pursued and be a constant part of your business planning acumen. Frequently ask yourself and your staff members: Where do we want to go to next, and what will we do to get there?
Take time out to plan
Research and planning lead to informed decisions which will be critical for your business growth. Consult all stakeholders – external and internal – through meetings or Strat sessions. Whether you bill by the hour, or bake by the truckload, it is critical to remove yourself from operations at least twice a year to take figurative stock of your business growth. This process requires you to be quiet and give it the importance it demands.
Reasons for growth
Studies have shown that the top five reasons for growth include:
- To increase the business’ market position
- To increase profitability
- To improve the use of company resources, better economies of scale
- To increase frequency of use or number of users
- To remain in business.
Know your obstacles
Know what challenges you may face on your journey to growth and be ready for them. Listing the obstacles will bring reality home and help you prepare for how to tackle these obstacles. Think of creative ways to sidestep these barriers to growth by being flexible.
Continuously look for planned, achievable and sustainable growth opportunities. Calculate the risk, be mindful of the pitfalls, but do take up new growth opportunities in your business. See growth as the opportunity – that big break – you have been waiting for in your business, and it just could be that. Start slow or small but do continue to grow your business. In the words of Virgin’s Richard Branson: “There are people in this world who choose to see the glass half empty instead of half full… Personally, I see any glass half full as an opportunity to top it up, start a conversation and perhaps spark a great new idea.”
Growing Globally – Supporting SMEs On The International Stage
Successful internationalisation is often recognised as generating considerable business benefits, which can include increased efficiency, innovation and productivity, whilst also generating growth for the wider economy. However, recent reports have indicated that SMEs in South Africa are not growing and expanding as expected when compared to its international peers.
Internationalisation refers to the increasing participation of businesses in international markets. Commonly associated with exporting, internalisation is far broader than just this activity alone. Importing, supply chain participation, establishing business partnerships and foreign direct investment are all notable examples of relevant activities.
Evidence from ACCA SME members revealed some of the following insights:
- Just under half (45%) of SMEs said the main benefit of internationalisation was access to new customers in foreign markets. Increased profitability (35%), faster business growth (33%) and access to new business networks (30%) followed.
- Both SMEs and Small Sized Accounting Practises (SMPs) considered ease of doing business and high growth potential as the most important factors when choosing an export destination. Geography was seen as less important, which may be a result of new technologies reducing its significance as a perceived barrier.
- Both SMEs and SMPs recognised foreign regulations as the most significant barrier to internationalisation. For SMEs, the second most important was competition (27%) whilst for SMPs it was foreign customs duties.
- In terms of the future, SMEs’ international ambitions are focused on building the capacity of their business (45%), building networks in foreign markets (45%) and introducing or developing more products and services to market (44%).
Small businesses’ call to action
SMEs see the capacity of their business as the most significant internal barrier towards internationalisation and expansion. This may be linked to a limitation in resources, often associated to either the ability of employees to respond to the workload or access to financial capital.
Accordingly, 45% of SMEs also planned to increase their international activities by upscaling their business’s capacity. SMEs looking to successfully enter into the foreign markets should focus on development across the following areas:
1. Adopt cloud technologies from the start
Providing a valuable platform for future international expansion, appropriate applications will provide SMEs with a real-time flow of information, offering detailed measures across various workflows and complementing existing reporting processes. However, each business will need to adapt their business models and management processes to suit these applications, rather than the other way around.
2. Create a business strategy with global ambitions
Internationalising businesses should ensure relevant activities form part of a wider strategic plan and detailed in specific growth objectives. This could form the basis of agreed relevant working priorities and the investment needed to achieve international growth. Such an approach can facilitate a managerial mind set around international growth to be channelled across the business’s wider operations.
3. Develop the scalability of your finance function
An internationalising SME’s growth trajectory can often be unpredictable, often requiring the business to scale up their operations rapidly in order to meet the demands of suppliers, customers and partners. It is therefore crucial that SMEs develop a finance function which has the flexibility to withstand these challenges. Building the right finance function early on can provide greater operational agility allowing better management of future challenges.
4. Identify where external advice could support your international journey
It is important to consider where external advice may be able to support businesses international objectives, depending on the stage of international growth reached by the SME. This should be conducted as part of a business’s planning process, such as through an internal review programme or through regular meetings with senior management.
Technology enabled solutions
SMEs today have access to a wide variety of cloud-based technologies that enables businesses to develop their finance function rapidly when internationalising.
In particular, relevant software can help businesses to monitor operations in international markets. Activities such as processing payroll, compliance events and employee expenses can now be managed centrally with the use of innovative software solutions.
This technology also allows SMEs to understand the flows of data within their own systems as well as with business partners and suppliers. This becomes increasingly necessary with the added operational complexity of participating in global value chains.
Working with professional advisers, this data can be used to support the development of one’s finance function which in turn can cater for international growth. This allows for new business streams to develop as external professional insight with these new technologies is required.
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