I work with many business owners who are very often so focused on customer acquisition that they forget about how important and cost-effective customer retention is. According to the Harvard Business Review, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one. Research by Frederick Reichheld of Bain & Company shows that increasing customer retention rates by 5% increases profits by 25% to 95%.
One strategic business approach that I often recommend is to go deeper with the clients you have rather than invest the time to attain new ones. I’ve outlined below several tips to help you improve your customer retention rate:
Are your customers leaving you? If you want to improve your customer retention rate, you need to be aware of how many customers are leaving (the churn rate) and determine what is causing them to leave. Ask yourself what as a company you are doing that is causing your customers to leave.
Customers don’t buy from companies; they buy from people. 60% of all customers stop dealing with a company because of what they perceive as indifference on the part of salespeople (Peppers and Rogers Group). Have your salespeople become complacent? Are you making an effort to make your customers feel valued or do you take them for granted? Are you rewarding your loyal customers for their business?
Listen to your customers. Talk to your customers – after all, they chose you. Invest the time to ask them how they feel about your products/services. Understand what they are looking for and what their plans are for the future. Personal relationships are powerful and inspire loyalty. The customer experience is key to your success.
It’s not all about price. Companies are often totally focused on being the lowest cost provider. While being competitively priced is very important, there will always be someone who can come in at a lower price. Price alone won’t keep your customers; delivering the best value will. Value is a combination of price, trust, customer service, delivery, relationships and support.
Has your company lived up to expectations? It’s one thing to win the business; it’s another thing to keep it. Make sure your brand has delivered on its promise and your product/service meet or exceed expectations. Take a look at creating a great customer experience. Managing customer expectations is an important part of customer retention. Set realistic expectations. It’s better to under-promise and over-deliver.
Communicate! Communicate! Communicate! Communicating with your customers will keep you top of mind. Remember, there is always going to be someone lurking in the wings to swoop in and steal your business. Find out how often and by what channels your customers want to receive information. Always address your customers’ concerns immediately. If you make a mistake, own it and fix it. Your customers will appreciate your honesty and your efforts.
Do you prize deliverables over results? Every deliverable must be able to show a measurable result that will positively impact your customers’ business and help them achieve their goals and objectives.
Bonus Tip: Conduct an exit interview. There is no company in the world that retains 100% of their customers, no matter how good they are. If one of your customers is leaving, take it as an opportunity to improve. Conduct an exit interview to learn why they’re leaving. This information is extremely valuable and can help you to make changes in order to avoid a similar situation in the future.
Are your customers leaving you? Want more advice on customer retention, or general advice from other business owners like you? Find out if a TAB Board is right for you!
As I have discussed with many business owners over the years, a business plan is your blueprint for success. It can help you manage your business more effectively, help support growth and secure funding. There are “Static Business Plans” and “Lean Business Plans”.
Since your business isn’t static, it doesn’t make sense to have a static business plan, which is typically long, complicated and never changes. Lean business plans assume constant change. They’re streamlined documents with no extraneous information. Instead of bloated paragraphs, lean business plans are written concisely with bullet points, lists and tables – easy to read and easy to revise.
A lean business plan is more than just a plan; it’s an ongoing process designed to optimize your business. This powerful tool includes strategy, a financial plan, action plan, tactics, milestones, responsibilities, performance metrics and tracking.
A lean business plan is a dynamic document that must be reviewed regularly and revised as needed. It’s something that can benefit every business. I’ve outlined below four important points of every lean business plan here:
- The pitch tells your story. Who are you? What do you do? What is your value proposition? What problem are you solving for your customers? How are you solving that problem? Who is your customer? Who is your competition? How are you different from your competition?
- The financial plan explains how you’re going to make money. What is your business model? What are your revenue streams? What is your sales forecast? Cash flow forecast? What are your major expenses? What is your budget to cover expenses?
- The action plan is how you’re going to do it. Who are your key team members and what are their roles? Who is your target market? What are your sales channels – online, bricks and mortar, third party distribution? Pricing? How will you be attracting customers – marketing, advertising, promotions, social media, messaging, public relations? Do you have partners or additional resources? If so, list them.
- Performance tracking measures the success of your plan. It compares results with expectations. List all of the specifics that you can track – money generated, products/services sold, number of new clients, milestones reached, web traffic, foot traffic, social media followers, conversions…
A lean business plan evolves as your business evolves. It will never be finished; it’s a process of continuous improvement. The cycle is constant – plan, run, review, revise. Review and revise your plan regularly to ensure that your business is on course with meeting goals, sales targets and operational milestones. In my experience, this plan can keep your business on track, and help you determine its success.
Are you using a lean business plan? Want more advice on lean business plans, or general advice from other business owners like you? Find out if a TAB Board is right for you!
I can’t stress enough how important personal branding is for entrepreneurs. You may not realize it, but each one of us is a brand. Type your name into any search engine and the results will show you exactly what your online brand is. Did you make a conscious effort to create and promote your brand? Does it accurately represent you? Is it targeted towards a specific audience?
Although the words brand and branding are often used synonymously or confused with each other, they are separate and unique.
What exactly is a brand? A brand is your unique identifier, your market identity. It represents you in the marketplace – who you are, what you do, your reputation, trustworthiness, and the quality of your product or service. Your brand is how your customers perceive you and how they feel when they do business with you.
Sir Richard Branson is the perfect example of a personal brand. Although he’s the founder of the Virgin properties – Virgin Atlantic, Virgin Mobile and Virgin Records among others, Sir Richard Branson’s personal brand is the most powerful of all. People want to do business with the Virgin properties because of Sir Richard Branson. The personal brand drives the corporate brand.
Personal branding has become increasingly important. People trust people, not corporations. They want to do business with people, not corporations. Your personal brand is your differentiator. It creates an emotional connection between you and your customer. Ultimately, it defines the value of your business. In order to stay competitive in today’s marketplace, you must have a strong personal brand.
Branding is the active process that shapes your brand. It requires a strategy and targets your core audience. Branding can include the name of your company, logo, other visual assets, website, communications and media.
Entrepreneurs who are more influential pay more attention to their brand rather than just their branding. As an entrepreneur, how can you build your brand? Ask yourself:
- Who are you? What do you stand for? What do you offer? How are you perceived by others? How do you want to be perceived by others? Be authentic. Your brand should be reflective of who you are.
- What do you do? What product or service do you offer? What is your value proposition? What differentiates you from your competition?
- Why does it matter? Define your purpose. This will give you great direction.
Evaluate your brand. Your brand should tell people who you are, what you offer and differentiate you from your competition. Is your brand reaching your target audience? Are they responding positively? Are you delivering on your brand promise? If not, it’s time to reassess and make changes.
Is your personal brand and branding effort working for you? Want more advice on brands and branding, or general advice from other business owners like you? Find out if a TAB Board is right for you!
In today’s competitive landscape, it’s important for a business to be able to rapidly adapt to market and environmental changes. “Agile” is the buzzword associated with this ability to adapt quickly to changing situations; but what is “agile” and how can a business become an “agile business”?
Agile is a philosophy, not a process. Although originally used for software development, it’s now used by companies large and small in any industry. According to the Agile Manifesto, agile refers to:
- Individuals and interactions over processes and tools
- Working software over comprehensive documentation
- Customer collaboration over contract negotiation
- Responding to change over following a plan
Becoming an agile business is a process that constantly needs work. Is it worth it? According to PricewaterhouseCoopers, agile firms grow revenue 37% faster and generate 30% higher profits.
Here are some guidelines for becoming an agile business:
Create focus. Don’t be distracted. Get rid of a long list of priorities and instead replace it with a short, manageable list of three or four items that are “must dos”. As you complete one item, add another to your list. This will keep you focused.
Communicate your vision. Communication is the key to change and change-worthy behaviour. Communicate with employees often, be transparent and give them clear and compelling reasons to embrace agility and become agile champions.
Hire the right people. The success of your business rests on hiring the right people – employees who are aligned with your vision and your values. In order to be agile, the employees you hire must be results-oriented, not task-oriented. They must be able to work within an organization that gives them the freedom and the responsibility to accomplish their jobs without a step-by-step instruction manual on how to do it.
Create autonomy. You can’t maintain a stranglehold on your employees and micromanage every decision in an agile environment. Senior managers need to lessen their direct control over day-to-day activities and give their employees control over how they do their work. Give your employees the environment and support they need and have confidence that they’ll get the job done.
Be prepared for the unexpected. Although you can’t plan for the unexpected, you can be prepared for it. Agile businesses are flexible, adaptable and expect change. They are ready for all eventualities and can quickly pivot. Changing requirements are the name of the game.
Agile is motivating. An agile environment by nature is motivating. Instead of working on the same project month after month with little change, an agile environment empowers employees to respond to changes, giving them freedom to become more than their job descriptions.
How agile is your company? Want more advice on becoming an agile business, or general advice from other business owners like you? Find out if a TAB Board is right for you!
Although I am not a marketer, as a business advisor I am often asked what are the most effective ways to market a company. Business owners tend to ask me what tactics they should use to gain the ‘best’ and ‘fastest’ results. My advice is the same for business management: before you execute on a business initiative, you need a plan. Before you implement a marketing tactic, make sure you invest the time and resources in having a professional strategic marketing plan.
As a business owner, you know what you know, and what you don’t. Marketing, as an aspect of a business, is no different. Hiring a strategic marketing agency to develop your strategic plan is just good business sense.
A big part of any strategy is understanding how your customers value what you do for them. Depending on what data you may already have, a strategic marketing agency will conduct in-depth research on your customers and competitors to understand what brought them to you, and also why they stay.
As a result of the research analysis and the agency’s experience, they will be able to create an area of difference for you – something unique that differentiates your business from others in your industry. This brand identity is rooted in what your customers value.
This strategic marketing plan will now act as your roadmap and provide direction for all aspects of your marketing efforts and determine what tactics will be most effective in targeting specific customers. This is similar to how the strategy in a game of chess is needed to determine the moves made on the board.
Once your strategy is complete and you know what tactics are required, you can make an informed decision as to who will implement them. You’ll need to look at your internal resources and skill sets and compare them to external ones. If you choose to take them on in-house, think about who will manage them from a marketing perspective. You may choose to outsource only a portion of your tactics while taking on the rest internally. When it comes to implementation, you have a few options. Taking the time to plan can save your business thousands of dollars in needless tactics.
With the New Year now well underway, many business owners are just putting the final touches on their business plans. That doesn’t mean, however, that adjustments can’t be made to ensure your goals can be reached in 2017.
As a business advisor for many years, when it comes to planning, I tend to come across two types of approaches: the visionary and the executor. Both approaches have their pros and cons, but as I’ll explain, a combination is what you, as a business owner, should strive for, especially throughout the business planning process.
A visionary knows where they want to go. They have a “big picture” vision and are often concerned with growing the company by setting goals. However, they lack tactical deployment and detailed plan as to how to attain this vision. They tend to not pay much attention to the processes in which their goals are met.
On the other hand, an executor’s primary concern is detail-related. They set high performance standards but fail to align those tactics to the “big picture” of growing the business because they’re so focused on processes.
As a business owner, do these two approaches sound familiar? Whether you’re a visionary or executor, I recommend the following steps as a way to bring both visionary and executor together when developing your plan.
- Have a Vision
Think “big picture.” Have a solid idea of your current state of affairs, determine what changes you would like to make, and consider how much you want to grow and in what areas of the business. Some examples of this might be that you want to increase revenue in your X division by 10% , perhaps you want to acquire a smaller business this year to expand your national reach, or you want to offer an automated solution to your XX customers.
- Dig into the Details
Now that you know what goal you want to achieve, create a plan outlining in detail how you are going to get there. If your goal is to acquire a smaller company this year, then it makes sense that part of your plan will involve searching for available companies. The devil is in the details as they say, so capture as much detail here so the plan can be easily executed on.
At this point you’ll also need to allocate budgets accordingly and introduce the means or tactics in which the budget will apply to.
- Review your progress
As with anything in business, monitor your results. Regular progress meetings should be conducted to get an accurate picture of how your business is progressing. Most importantly, ensure you are consistently making modifications to ensure success.
A carefully thought-out plan that contains both a big picture vision and accompanying details required for implementation is crucial for success. Ensure you share the plan with your employees so they are aware of the role they play in its execution.
While your business plan is somewhat of a blueprint, having a vision of where you want to go and how you are going to get there will position your business for success.
It’s hard to believe, but we will soon be entering the final quarter of the year. It’s an important time to ensure your business is on track with achieving its goals, in addition to setting your goals for the year to come. But depending on what your anticipated goals are, you may want to set something a little more specific – key performance indicators. While similar, the two can greatly differ so knowing what these differences are can surely help move your business in the right direction.
What Are Key Performance Indicators (KPI)?
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. While goal setting illustrates a set of objectives you’d like to achieve, implementing a KPI will actually measure the success in achieving these targets. More importantly, however, is to know what type of KPI to implement, and this all depends on your type of business and what part of the business you’d like to track.
For example, if you’d like to see how your marketing efforts are assisting your sales objectives, setting an Incremental Sales KPI would prove highly beneficial. This specific KPI analyzes how your marketing efforts have increased your sales revenue during a specific campaign. The end result of a KPI will show you if the resources and budget you’ve allocated to a specific campaign, resource or individual have proven effective.
KPIs can fall under the following categories:
- Financial Metrics
- Customer Metrics
- Process Metrics
- People Metrics
How Do I Know The Right KPIs For My Business?
While setting KPIs are beneficial to your business, they can be just as detrimental to your time management if you do not set the correct ones. There are thousands of KPIs to choose from, and it can be overwhelming not knowing where to start. Here’s a tip – not only do you want to select KPIs that suit your industry, but ensure they also match your strategy. Additionally, ensure the targets or goals you are evaluating performance against are SMART (Specific, Measurable, Attainable, Relevant and Time-bound). By using this key formula you are ensuring both your goals and KPIs are achievable.
Where Do I Start?
Are you interested in incorporating KPIs into next year’s strategy? Start with these simple steps:
- Define what areas of the business you’d like to measure.
- Identify what questions the decision-makers, managers or external stakeholders need answers to.
- Select your KPIs. Consult your peers and business coach/advisor for input.
- Measure, measure, measure, don’t stop measuring when results are unsatisfactory.
Never hesitate to change or add KPIs throughout the year. After all, the main purpose of a KPI is to inform decision-making!