We recently had a meeting with an experienced senior executive for a large financial services company. She told us that every year they gained 150,000 new customers and within that same 12 month period, they also lost 150,000 customers.
We hear similar stories across lots of different businesses. Organisations focus on acquiring new customers, committing large amounts of dollars and resources. And yet, despite all that effort, they often appear to accept that they will lose those very same customers they just recently spent a lot of money acquiring.
When we reflected after the meeting on those churn numbers, we couldn't help but calculate the "lost financial opportunity”.
150,000 customers x $200 revenue per customer in this category = $30,000,000 in Year 1.
150,000 customers x $1,000 (Average lifetime value) = $150,000,000 over 5 years.
Whether your business loses 150,000 or 1,500 customers, what would it take to have your customers want to stay rather than leave? What impact would holding onto that margin and profit have on your growth targets? And how much effort would it take to achieve?
Less effort than you might think.
One of the things we have found after working for over a decade with complex organisations, is that customer understanding can be broken down into three quite distinctive levels.
"We sort of know what needs to be fixed"
“We have a greater sense of confidence of what is and isn’t working and why"
“We have absolute confidence in the decisions we need to take now, next and later to grow our business”
Click the image below to download the worksheet.
For most organisations, there are often several customer problems that are immediately visible. These challenges are well known by many in the organisation and can be readily articulated. However in a strange twist, when we ask why haven’t these problems have not been addressed, the answer often centres around disagreement on what to actually do, the lack of resources to fix the problem or just the overwhelm of BAU and other projects.
The truth is that it’s is harder than it looks to effect change and do it in a way that remains true to your customers.
Below the water line of any iceberg is not immediately visible. Challenges that sit in this layer, are either not well known or if they are, there is little grasp of how bad the situation actually is. There can be little appreciation of the scale and depth of the negative impact these issues are having on customers, staff and the business.
Even if some organisations do have a better appreciation of the detail around the issues, they find it hard to prioritise what is needed and then to action change.
When you decide to build a house, most of us can imagine what our finished house will look and feel like. But nobody seriously embarks on any house build without first undertaking research, developing plans and ensuring a rigourous and proven approach to design and construction. It’s the same with Customer Understanding.
If you really want to outperform your competition you need to truly understand your customers to give you and your business the absolute confidence of knowing you are making the right decisions. The improvements can be transformational for your customers, your people and your business.
When our clients use Customer Thinking and they apply some of the deep and profound shifts in understanding that they’ve uncovered from the experiences of 2020, customer understanding becomes a superpower.
When you harness the power of structured customer understanding, your business decisions become super-charged outcomes that allow you to carry the rest of the organisation with you through the process. You achieve success by moving from customer understanding to realising deep and profound business outcomes.
Using a Customer Thinking approach is pandemic proof and it will set up your potential to triumph in 2021.
Reaching a level of absolute confidence rarely takes place unless you either get lucky or you undertake a structured and rigourous process of customer understanding.
If this sounds like something you would like to be involved with, we are offering a Group Consulting Masterclass (max 10 to a group) where you bring real live business challenges and we walk you through how to solve your most pressing business problem and help you achieve a meaningful business outcome in 4 weeks.
Along with the other 9 members from different industries, you will also gain their insights and processes as to how they have solved similar problems. Just click here and send me an email with Growth in the subject header and I will send you the information on our Masterclass.
It will help you gain clarity on what it is your customers truly value ...and don’t.
It will give you the confidence to start solving what we call the 4 P’s - People, Policy, Processes and Procedures.
Then you will have the opportunity to increase organisational commitment by hooking up your internal KPI's to support delivery - behaviour follows KPI's.