Read time: 4 minutes
A few years ago, Proto was engaged by a large member association. They offered several parts to their membership, such as events, training, nominations, and advocacy on behalf of the industry.
The organisation's leadership believed that advocacy on behalf of the profession was the thing their members valued most from their membership. So, they spent most of their money and effort in that area.
The organisation also believed:
- they understood their members' needs
- they poured money and effort into areas that their members valued
- their members were satisfied
So why were they:
- not retaining members
- struggling to convince members to pay their annual dues
- not increasing their customer lifetime value
It turns out they were using a false set of assumptions to base their entire business strategy on.
Dangerous strategy. The scarier thing is they are far from being an isolated instance.
Our research from working with over 300 businesses over the past 15 years is that more than 9 out of every 10 organisations are operating using false assumptions. We see the following too often:
- Embarking on programs investing large amounts of financial resources and people's time
- The external environment in which companies operate has changed and continues to change, with no adaption to customer strategy
- Organisations working off false sets of assumptions that were shaky pre-covid and are even less reliable now
In the case of this project, after conducting detailed customer research, we found that what the organisation thought its members wanted was wildly different from what they actually wanted.
Their members craved a deeper level of engagement. They wanted more training and events so that they could connect more with fellow members. Choice modelling showed "Advocacy" representing just 6% of the total importance and value to the member value proposition.
So how can an organisation that thought it understood its members be so mistaken?
The truth is, sometimes members themselves don't know what is driving their behaviour. You may wonder, if they don't know, how am I meant to know?
I think the quote by the Scottish psychiatrist R.D. Laing rings particularly true in this case; "The range of what we think and do is limited by what we fail to notice. And because we fail to notice that we fail to notice, there is little we can do to change; until we notice how failing to notice shapes our thought and deeds."
Not addressing the needs of the customer is a lose-lose situation. You waste money and resources and customers don't receive the service they wanted.
You miss opportunities to capture additional value and improve the profitability of your business and the satisfaction of your customers.
Rest assured, in this ever-changing world, one thing is almost guaranteed to stay the same: people love the feeling of being in a relationship. We love feeling connected to others. This is great news for you and your business because if you can forge a meaningful relationship with your customers, you will add enormous value to your organisation.
So how do you form a meaningful relationship with your customers? And when we say "meaningful", it's not a low bar. It requires being thoughtful. And caring. And being supportive. It means being customer-centric.
Below are the four steps we use to build deeper more meaningful customer relationships and engagement.
Transactions are the lifeblood of any business, but if we want to build a meaningful relationship with our customers, we must focus on more than just the numbers. Relationship value is about so much more. It's about how your customers feel when interacting with you and your organisation.
Step #1 Measure the existing value of relationships
The first step is to create a process for collecting customer data. There are many ways to do this, but some popular methods include the following:
- Reviewing your survey data to listen for what your customers are telling you is and isn't working for them.
- Conducting interviews is the secret sauce to deepening any relationship. It's like being a fly on the wall to a therapy session.
- Measure your customer lifetime value (CLV). This measures the total revenue that your business will generate from a single customer throughout their relationship with you. Less than 5% of organisations that we have surveyed can calculate the lifetime value of their customers.
Failing to uncover the real drivers of customer behaviour and the resulting revenue for organisations too often leads to frequent levels of wasted resources and is one of the causes why many customer experience programmes fail to deliver tangible results. They never deliver what is most important to their customers.
They dabble in the superficial. They avoid the meaningful.
Step #2 Develop an actionable strategy to improve customer relationships
After you have measured the current value of customer relationships, it’s time to start thinking about how you can improve them. This is where a customer relationship management strategy comes in. Not the CRM you are thinking of, although that's important too, but a "relationship map". It should be tailored to your organisation's specific needs, but there are some key components that all strategies should include:
- A process for prioritising customer needs
- A method for segmenting your customer base, different segments will value different things
- An approach for engaging with customers - in a way they want to engage, not the way you think they should engage with you
- A system for measuring success - hard and soft customer measures
Step #3 Prioritise quick wins
In the business world, time is money. So, when it comes to building relationships, it is essential to focus on quick wins that will have a positive impact on your bottom line.
This can be done by allocating improvement initiatives into three groups:
- Brilliant Basics - These needs are typically unspoken expectations. If not fulfilled, customers will be highly dissatisfied
- Delivering on the promise – standard characteristics that increase or decrease satisfaction by degrees (ease-of-use, speed, response times etc.)
- Differentiated – unexpected features or characteristics provided to customers, giving the organisation a point of difference
Start with doing the basics brilliantly. Don't underestimate prioritisation!
And skip straight to No.2 at your peril.
Step #4 Develop a realistic engagement program
The benefits of building relationships with customers are not just limited to businesses. If you want to improve your customer relationships, it is essential to develop a strategy that considers both parties' needs.
A great way to start is by creating a customer profile. Most organisations currently have some understanding of the needs and wants of their target customer. They are less clear about exactly how their customers want to be engaged with, how often and in what way.
Some things to consider when developing your engagement strategy:
- Just because you can contact them doesn't mean you should, ensure you have something of relevance to communicate
- What channels will you use to reach them? - do you understand the ways in which they wish to be communicated with, not what's easiest for you
- What type of content will you share? Are you sure that what you share with your customers is exactly what they want to see and hear from you?
Building relationships with customers is not a one-time event. It is like trying to get to know a stranger. It takes asking and answering lots of questions for you to start getting a clearer picture of who they are. But even then, people are constantly changing, so there will always be more questions to ask. It is an ongoing process that requires regular effort and attention.
By following these four simple steps, the member organisation got a happy ending to their story. They saw:
- Increased member retention
- Increased member willingness to renew annual subscriptions
- deeper member engagement and satisfaction
- Increased revenue and increased CLV
I hope we've made understanding how to deepen your customer relationships a little easier.
Catch you next Saturday.
Whenever you are ready, there are three ways we can help you:
