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 a business owner, you dedicate much of your time to communicating with your clients. While this is crucial for your business, equally important is communicating with your employees. Internal communication touches every aspect of your business from announcing the onboarding of a new client, to introducing a new product to your business line. No matter the size, industry, or type of company you own, I recommend having an internal communications process embedded in everything you do.
An internal communications process allows for the exchange of information between all members of your organization, which will save you time and money. In fact, companies with effective internal communications processes experience 47% higher total returns than those that are not effective at communicating.
I’ve outlined below 3 key elements to help you establish an effective internal communications process.
- Have the Right Mechanisms in Place to Keep Employees Informed
Your internal communication mechanisms must be strategic, in order to be targeted and the most beneficial. Consider your company’s current mechanisms, from the methods of communication it uses, to the way your company engages with and seeks feedback from your staff, to the way it measures if the mechanism is successful and identifies any issues for future change.
Choosing what mechanisms to use depends on your size and budget. If your company has multiple locations, you may decide to invest in passive, large-scale communication options to disseminate information. Creating an intranet (a private network only available to a company’s staff) is one great option. If your business is smaller, consider using more conventional communication channels such as an internal newsletter, e-blast, Director’s blog, or notice board. I have even seen some companies benefit from using social networking sites as their primary means of internal communication. More directed options could include Breakfast Briefs for front-line staff, a monthly Director Communications Day, scheduled Director Q&A drop-ins, or Lunch & Learns.
No matter what mechanism(s) you choose, the bottom line is that employees have access to a platform where they can receive important company information so they stay abreast of the information they need to do their job.
- Creating a Two-Way Loop
Having great communication mechanisms in place is vital, but ensuring that they consistently generate engagement between management and employees is a key step. It is imperative that business owners and managers actively respond to feedback received and ensure a loop is created, as opposed to a top-down form of communication. By acting on the honest feedback reported by employees encourages more of the same – staff telling it “like it is”.
- Measuring the Mechanisms
To ensure that the communication mechanisms you choose are working effectively, incorporating measurement indicators, such as scheduled weekly face-to-face meetings with actionable items reported for follow-up, anonymous employee surveys offered at quarterly or annual company all-staff meetings, or through specific activity surveys through the intranet, could help identify gaps, what is or isn’t working, and what methods of communication work best for your employees.
Regardless of which avenues you choose, the main goal is to ensure employees have several effective paths available to them where they can communicate with senior management and feel heard.
Communicating with your employees is essential for the productivity of your business. Does your company have an internal communications process in place?
As a business owner, you know how important it is to keep things fresh and innovative in your workplace, but when making changes, you’ll need to consider how your plans might impact your employees.
If you are in the process of job redesign where employees are assigned new roles that play into their strengths and contribute to a more successful business, these changes can be stressful to your employees. If someone has been hired for a particular job and then he or she is suddenly expected to perform a different role in the organization, tension and stress can result.
A recent report found that 46% of 1,018 Canadian employees recently surveyed had taken time off work or noticed other employees taking sick leave following workplace changes, a common symptom of a stressed-out workplace.
I’ve outlined below a few tips on how you can shift roles in your organization without contributing to employee stress:
- Share your vision.
Why are you doing this? What is this change going to accomplish for your organization? Sharing this vision with employees will allow them to understand exactly why this is happening, and help them find their part in it.
- Keep the lines of communication open in regards to role change.
Ask employees how they feel they can contribute to a new role and encourage conversation. By doing this, you can evaluate each employee’s strengths and weaknesses, while giving them an opportunity to work in a new role they would truly enjoy.
Make sure employees stay up to date as things begin to shift. For example, when you have made some final role decisions, send out an email to all staff informing them of the new structure. Keeping everyone in the know will ensure a smooth transition process.
- When your employees begin their new role, make sure they feel supported.
Assuming a new role can be challenging, especially if the employee doesn’t have a lot of previous experience in the position. Positive reinforcement can go a long way, as employees are less likely to experience stress when they report a positive and supportive workplace culture.
In today’s workplace, you need to keep things fresh, but maintain a balance against a backdrop of inclusiveness and communication. Learning how to handle change effectively is what will keep your team on the right path to growing your business.
How have you successfully restructured your business?
Every day, thousands of millennials are entering the workforce for the first time. Now, many small business owners are considering hiring these individuals and asking what they need to consider before they opt to hire them.
There is no denying that the millennial generation is much different than the generation of workers that has come before them. This means that as a small business owner, you’ll need to make some changes to your business culture in order to accommodate the very unique needs of this particular group.
I’ve outlined a few key items you might want to consider before hiring millennial workers to ensure success for both your company and your potential millennial hire.
Millennial workers, unlike any other generation before them, are keen on the idea of having office hours that suit their personal needs. How flexible are you willing to be with your office hours? When interviewing potential millennial candidates, ask about their work schedule expectations. If you run a business that can only accommodate the hours of 9am to 5pm, then you can expect a millennial may not find your opening suitable to them.
- Millennials want to be valued
Millennials need a great deal of validation from and communication with their supervisor/manager to let them know how they are doing, and to give them praise (preferably in a group setting) when they have done a good job. In the workplace, this may require more of your time and attention. They want to be noticed for their work and you will need to be available to give them ongoing feedback. Do you have the time to provide them with ongoing feedback and praise? If not, a millennial may not feel valued in your office.
- Company Culture
Millennial workers are expecting an inclusive and exciting company culture that promotes social relationships and fosters innovation. If you have other millennial staff, or see your company hosting social nights or team-building activities, a millennial might fit in well. Their need to work and collaborate with a team is key to their success. Is your office made up of employees aged 45+? If so, a millennial worker might feel like an outsider and have trouble fitting in.
There is no doubt this new generation of workers are the future of business, and they have so much to offer, but we need to learn how to accommodate their needs if we are to add them to our workforce.
One of the biggest challenges I have seen many small business owners struggle with is that of delegation. Most owners started their businesses on their own being the person who does everything and so letting go or delegating can be difficult from many angles. Let’s face it, if you continue to do everything, then why do you have staff and how can you ever hope to grow your business?
Delegation means letting go of the day-to-day tasks associated with that responsibility, but by no means does it mean completely letting go of that responsibility. In other words, if you have hired a sales person to take on the responsibility of sales for your company, although you may not be making the sales calls, you do need to ensure that your sales person has the right sales processes, sales metrics and that they are in fact the right person for the role.
Without the right processes, metrics and people in place, it’s likely the onus will fall back on you to get things done. Sounds familiar? Letting go isn’t easy, but having a proper delegation structure in place will allow you to focus your energy and resources on building a successful business. Here are my recommendations for effective delegation:
1) Have the right processes
Ensure you have the right processes in place to ensure that the task or responsibility will be done correctly and in accordance with your standards. For example, if you are delegating writing you will need to ensure what type of writing, how much time the writing should take, what structure the writing must have, what approvals are required, what source materials, and how the writing must be started. The process needs to be written down, explained to the person who you are delegating it to, and followed up with by you to ensure the process is being followed.
2) Measure your success
The only way you can truly know if the process is working right is to measure its effectiveness and subsequent success. To measure the success of the objective, you may want to consider KPIs as they are an effective way of measuring key business objectives, as are analytics. There are numerous measurement tools available, so finding the one appropriate for your business is important. Whatever metric you choose should be spelled out and communicated to the person taking on the delegated task or project. They need to understand that they are being measured in their responsibilities.
3) Have the right people
In a previous blog, I discussed the importance of building a solid team. Ensuring you have the right people working for you means that you can delegate appropriate tasks with the confidence they will be completed accurately and efficiently. Trust and communication are two qualities that can make or break a business. In my many years as a business advisor, I’ve witnessed numerous business owners cycle through employees simply because they had the wrong person in the role who was not fully capable of handling the responsibilities despite having the right processes and metrics in place. Invest wisely in securing the right team. With the right team in place, you’ll experience no hesitation in delegating important tasks and responsibilities.
Delegating is what most business owners crave – you want someone or something to take the huge responsibility of doing it all yourself off your shoulders. Have no fear, by ensuring you have the right processes, metrics and people in place will mean you can lessen your load, and free up the much-needed time to do what you have always wanted to do: focus on building your business.
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!