When I ask CEOs where do you put most of your investment, when it comes to customer experience, the vast majority say, gaining new customers (lead generation). I then ask them, what would it be like if all your customers came back?
Brad Sugars, who runs the highly successful company Action Coach, teaches this model as the foundation for all business growth. Broadly, he is saying there are five levers that grow your revenue, I’ve reduced to four.
Lead generation: Getting more people through the door or more potential customers/ prospects know you exist.
Conversion rate: Turning more of the prospects into customers.
Transaction rate: Getting more repeat business from your existing customers, e.g., increasing the number of transactions they have with you.
Average dollar sale: Getting more money in each transaction.
As you can see, the first two points (1 and 2) relate to new customers and the other two (points 3 and 4) relate to business from existing customers.
Let’s look at the transaction rate, getting more repeat business from your existing customers e.g., increase the number of transactions they have with you.
How many of your customers are definitely returning?
And then of course, you want them to be telling other people, which drives lead generation.
We know that about 90% of customers across multiple industries said they would definitely return if they got a 10 out of 10 experience but that percentage drops to about 65%, if they rate their experience a nine out of 10 experience.
What type of experience do your customers need to want to come back?
One thing we know is you’ve got to stand out and one of the benefits of researching customers is to find out what is the experience they’re looking for, to understand your best practice and repeat it.
I was talking to a client guy the other day who owns a restaurant which has been open about five years and how tough it has been during this time to grow his business. So, I said to him, if you just looked at last year, and all the customers that came in, if every single one of them came back, what would it look like?
I am happy to say that he decided to have a bit of fun with my question and took some time to have a look and came back to me with his answer. He told me that he would need ten restaurants to actually cater for that level of volume if every customer came back.
Now, of course, we know that some customers do not come back for reasons like they are visiting the area.
But, my point here is, in my experience most companies don’t put enough effort into making sure the business stands out, compared to the amount of money they put into renovating, or the look of the venue or marketing and advertising.
I’ve done work in a lot of venues, like big hotel venues, who will spend millions and millions of dollars on the look of the hotel, they’ll think nothing of investing into an upgraded or renovation but then when it comes to working with their people, it’s hard to get a budget. To do a decent program will cost one hundred grand and yet they spend millions as an investment to make the place look attractive and then remarket.
These large companies will spend millions of dollars on their physical look, and then have diddly squat budgeted for training.
In one of my previous articles Don’t Forget The People Side Of The Experience I wrote about a local shopping center that had just spent millions and millions of dollars upgrading not just one or two stores but the entire shopping center. I had heard conversations from other people in our community that the end result was fabulous, and they were particularly delighted with the size and layout of the new stores including another supermarket.
These conversations got me thinking and tweaked my interest because what I noticed is that not one person spoke about the customer service they had received whilst either in the shopping center itself, or in the supermarket.
So, my point is whether you’re investing millions of dollars in your business or simply introducing a new way of operating, you have got to look at everything, including your team.
Bottom line is – new people will come but it’s the experience of 10 out of 10 customer service that will have both your new and existing customers return at a fraction of the spend in revenue, no matter the length of your customer life cycle.
Need more information? Have a look through my previous Blogs, located on The Loyalty Zone website or contact me, I look forward to hearing from you.
If you have enjoyed this article, feel free to share with someone else you know will find this helpful.
If someone has forwarded you this email, you are welcome to join The Loyalty Conversation, I appreciate your commitment to the conversation.
Warm Regards,
Craig Cherry