leadership
Creating Customers for Life
The goal for any business, regardless of the products you sell or the services you provide, should be maintaining a satisfied customer base that is loyal to your business. The idea is to create a mutually beneficial relationship that motivates people to keep working with you, even when competitive products or incentives are available (e.g., those pushing for a “Corporate Standard” involving another product).
The best part is that this concept applies to all companies and all Product Life Cycle stages. Whether your company is on a rapid growth trajectory towards ‘Unicorn status,’ or your offerings are mature and viewed as ‘less exciting.’ The approach will also help if your products decline and you seek the ‘longest tail’ possible. At each phase, credible threats from competitors seek to grow by eroding your business.
Several years ago, I was responsible for two product lines in two major geographic regions (Americas and APAC/Japan). Our attrition rate (“churn”) was traditionally slightly below the industry average, and our net revenue rate (NRR), which reflects overall growth by factoring in churn, was around 100, indicating the business was flat. We began seeing an increase in churn and a corresponding decrease in organic growth. Both were indicators that something needed to change.
After discussing tactical approaches, our small leadership team agreed this was a strategic issue we needed to address. The result was an understanding that we needed to create ‘Customers for Life.’
Everyone agreed with the concept, but due to various differences (culture, who our customer was – end customer vs. channel partner, buying patterns, etc.), we agreed to try what was best for each of our regional businesses and share the results and lessons learned.
My approach focused on developing strong relationships that fostered collaboration and ultimately led to growth and success for both parties. The basic premise was simple:
- People tend to buy from people they like, respect, and trust. Become one of those people for your customers.
- Helping companies achieve better business outcomes leads to greater success for our customers and us.
How did we do it? It was a systematic process that my team used that included the following:
- Develop simple profiles for each customer (e.g., products used, date of first purchase, footprint size, usage and payment trends, industry).
- Estimate their overall impact based on product footprint size, annual spend with us, company size, engagement and interactions, and growth potential. Companies and organizations with the most at stake or the most to gain became our Tier 1 priority. These are the customers that we invested even more time and effort with.
- Make contact multiple times yearly, not just when you want money.
- These “out of cycle” contacts became very important for maintaining and growing the relationship.
- When issues or concerns came up, we often learned about them earlier and addressed them before renewal, which helped expedite the process.
- Ask questions about key initiatives, milestones, and concerns.
- We documented the responses, which helped seed following conversations and demonstrate a genuine interest in what they were doing.
- If we noticed changes in their industry or region, we asked about them and probed whether we could help.
- Follow-up!
- Lack of follow-through is the fastest way to lose your customer’s trust and respect. Being reliable and helpful increases your value.
- Request meetings to understand how they use our products and get a brief update on what our company has been doing.
- Face-to-face meetings are always preferred, as you tend to learn much more than in remote meetings.
- Learning more about their business, systems, goals, and challenges creates opportunities to add value and become more of a partner in that customer’s success.
- Ask “What would it look and feel like when you successfully overcame those challenges and achieved your goals?” and “What is a realistic timeframe for making that happen?” to get the customer emotionally focused on that better future state, and then look for ways to “Weave your value proposition into the fabric of their dreams and goals.“
- We looked at how they used our products and offered suggestions to do more, do something better or more efficiently, call out potential problems, and discuss best practices. Often, we had a technical expert follow up and provide an hour or two of free assistance to explore those suggestions. We invested in their ongoing success.
- Look for opportunities to congratulate them.
- It demonstrates that they are important enough that you are paying attention. Google Alerts made this easy.
- Regularly ask our customers if there is anything that we could do to help them.
- They would often reciprocate, leading to increased references and referrals.
- Helping our install base customers, even if it wasn’t directly related to our products, was good business.
- Continuous Improvement – Analyze the results and refine the process as needed.
Before the meeting, we would spend an hour or two researching the company, its history, and significant events for it and within its industry, and identify its top 2-3 competitors. My consulting background came in handy as I “looked between the lines” to better understand the situation as we planned the meeting, focusing on what we wanted to walk away with and what we wanted the customer to walk away with. Preparation matters.
As we met with our Customers and Channel Partners, we would explain what ‘Customer for Life’ meant to us and the potential benefits to them. Before the meeting, we would check whether we had (or they wanted) an NDA so they could speak freely and with confidence. Trust was important. The information disclosed helped us understand their situation, and we mapped it against other customers to identify actionable trends. Showing interest and understanding created credibility. Asking relevant questions helped conversations move to substantive issues faster. From there, we focused on specific points that would positively impact that customer.
Over the course of two years, my team and I helped our customers innovate by providing different perspectives and ideas, modernizing (e.g., moving to spatial analytics to get a more granular understanding of their own business, cloud-enabling their systems to increase responsiveness to their business and control costs), improving their systems and growing their businesses, and more. We became their trusted advisors and advocates within our company.
We also received feedback that helped us improve our products and a variety of processes – something that benefited all customers. Occasionally, we learned about problems they were having. We took ownership of the issue, brought in the right people, and helped the customer find a resolution. Collaboration and success created stronger relationships – especially with the largest customers and companies.
The results: Customer churn decreased by 50%, organic growth increased by slightly more than 20%, and NRR increased by over 5%. This program made a several-million-dollar positive impact with relatively little effort. We had achieved our objectives, improved our bottom line, and shared our lessons learned with the other two teams.
The concepts behind Strategic Account Management, Voice of the Customer, Customer Experience, Customer Loyalty, and Customer Success blended into a manageable, practical approach and delivered strong ROI. My biggest lesson learned was that adopting this mindset and creating a repeatable process should be started sooner rather than later – before problems arise.
Every day you are not creating your own ‘Customers for Life,’ there is a good chance that your competition is. Don’t let that happen to your business.
Are you Visionary or Insightful?
Having great ideas that go misunderstood or unvalidated is pointless, just as being great at “filling in the gaps” does little if what you are building achieves little toward your needs and goals. This post is about Dreaming Big and turning those dreams into actionable plans.
Let me preface this post by stating that both are important and complementary roles. But if you don’t recognize the difference between the two, it becomes much more challenging to execute and realize value/gain a competitive advantage.
The Visionary has great ideas but doesn’t always create plans or follow through on developing the idea. There are many reasons why this happens (distractions, new interests, frustration, lack of time), so it is good to be aware of that, as this type of person can benefit by being paired with people willing and able to understand a new idea or approach, and then take the next steps to flesh out a high-level plan to present that idea and potential benefits to key stakeholders. People may view them as aloof or unfocused.
The Insightful sees the potential in an idea, helps others understand the benefits and gain their support, and often creates and executes a plan to prototype and validate the idea – killing it off early if the anticipated goals are unachievable. They document these experiences, learn from them, and become increasingly proficient at validating the idea or approach and quantifying the potential benefits. They are usually very pragmatic.
Neither of these types of people is affected by loss aversion bias.
I find it amazing how often you hear someone referred to as a visionary, only to see that person could eliminate some of the noise and “see further down the road” than most people. While this skill is valuable, it is more akin to analytics and science than art. Insight usually comes from focus, understanding, intelligence, and being open-minded. Those qualities matter in both business and personal settings.
On the other hand, someone truly visionary looks beyond what is already illuminated and can, therefore, be detected or analyzed. It’s like a game of chess, where the visionary person thinks six or seven moves ahead. They connect the dots across various future possibilities while their competitor is still thinking about their next move.
Interestingly, this can be frustrating for everyone.
- The Visionary with an excellent idea may become frustrated because they feel an unmet need for understanding.
- The people around that visionary person become frustrated, wondering why that person can’t focus on what is important or why they fail to see/understand the big picture.
- Others view the visionary ideas and suggestions as tangential or irrelevant. It is only over time that the others understand what the visionary was trying to show them – often after a competitor has already begun implementing a similar idea.
- The Insightful, wanting to make a difference, can feel constrained in static environments, which offer little opportunity for change and improvement.
Both Insightful and Visionary people view themselves as strategic. Both believe they are doing the right thing. Both have similar goals. What’s truly ironic is that they may view each other as competitors rather than seeing the potential for collaboration.
A strong management team can boost creativity by fostering a culture of innovation and bringing these people together to work toward a common goal. Providing little time and resources to explore an idea can lead to remarkable outcomes. When I had my consulting company, I sometimes joked, “What would Google do?” to describe how amazing things were possible and waiting to be done.
The insightful person may see a payoff from their ideas sooner than the visionary person, because they focus on what is already in front of them. It may be a year or more before what the visionary person has described shifts to the mainstream and into the realm of insight – hopefully before it reaches the realm of common sense (or worse yet, is entirely passed by).
I recommend that people create a system to gather ideas, along with a description of the purpose, goals, and advantages of those ideas. Foster creativity and innovation by rewarding people for participation, regardless of what becomes of the idea. Review those ideas regularly and document your commentary. You will find good ideas with luck – some insightful and possibly even visionary.
Look for commonalities and trends to identify the people who can cut through the noise or see beyond the periphery and the areas having the greatest innovation potential. This approach will help drive your business to the next level.
You never know where the next good idea will come from. Efforts like these provide growth opportunities for people, products, and profits.
Investing in Others – Becoming a Mentor
I have been very fortunate throughout my career. There have been incredible opportunities, risks with big rewards, and lessons learned from mistakes and failures (e.g., one of the biggest early lessons is that most mistakes will not kill you, so you can find a way to recover from them). In hindsight, the people who saw something in me and invested in my career – my mentors – have been most valuable in shaping my career.
None of these people had to help me. It’s possible that they did so for their own benefit (i.e., the better I do my job, the easier it is for them), but I believe they were passing along a valuable gift. I was lucky to have received these gifts early in my career, as they have been invaluable both personally and professionally.
As a mentee, you may not recognize either the value of what you are receiving or the effort that has gone into providing that gift to you. You fully appreciate what others have done for you only years later.
In my first programming job, my manager (Jim) assigned me to work with various key people and would follow up to ask what I had learned. One day, he gave me my first project – something that was far above what a new programmer was tasked with. I was excited but anxious because I did not want to let my mentor down.
I only had six months of experience, and this was a big project for an important automotive customer (Subaru), the first fully customized customer loyalty coupon system for a major auto manufacturer in the late 1980s. It was a stretch for me, and the system had to be production-ready in six months.
Jim let me build it, checked daily at first to see if I had questions, and provided feedback and direction if I asked. Aside from that, he pretty much left me alone. He seemed more confident in my ability to succeed than I was at the time.
After two months, I thought I was finished. We reviewed everything, and Jim constructively picked apart my system, pointing out various flaws and discussing the logic and reasoning behind my decisions. We spent half a day on this exercise, and only years later did I realize he was helping me learn more than just validating the system design.
After another two months, we reviewed this system’s second iteration. He told me that while this version would work and would be acceptable from anyone else, I still had time remaining, and he was confident that I could do even better next time. He provided a couple of tips about high-level areas he focused on while designing and developing systems and left it at that.
When I returned with the third iteration of the system, he reviewed it, smiled, and said he could not have done it better himself. At first, I was proud to have completed my first independent project, but later I realized how much I had learned over those six months. This experience provided me with a lifelong benefit and the motivation to help others in a similar manner. My mentor was (and still is) a great leader!
As a manager, he had so many reasons not to give me the project, to just tell me what to do, and to not let me redo it (twice). From a short-term management perspective, what he did was wasteful. But, from a big-picture perspective, he was doing things that helped me create more value for the company for the 3-4 years I continued working there. The benefits outweighed the cost; Jim was wise enough to see that.
Several years ago, a young woman in Australia contacted me via LinkedIn, asking for suggestions on improving her skills to advance her career. I gave her many assignments over the course of a year, and she did amazing work. She advanced in her company, later relocated to another country, and then switched industries. She currently holds a high-level position and has been very successful. It made me feel good knowing that my efforts played a small part in her advancement.
From my perspective, it all comes down to how you view people and relationships. Are they like commodities that are used and replaced as needed, or are they assets that can grow in value? I like to think that I have helped several people’s “career portfolios,” which helps ensure that business is not a zero-sum game. Hopefully, those people will do the same, increasing leverage on the investments that started with Jim.
So, what do you think?
Profitability through Operational Efficiency
In my last post, I discussed the importance of proper pricing for profitability and success. As most people know, you increase profitability by increasing revenue and/or decreasing costs. However, cost reduction does not necessarily mean slashing headcount, wages, benefits, or other factors that often hurt morale and cascade into lower quality and customer satisfaction. There is often a better way.
The best businesses generally focus on repeatability and reliability, realizing that the more you do something, the better you get at doing it well. You develop a compelling selling story based on past successes, build a solid reference base, and identify the sweet spot from a pricing perspective. People keep buying what you are selling, and if your pricing is right, money is available at the end of the month to fund organic growth and operational efficiency efforts.
Finding ways to increase operational efficiency is the ideal way to reduce costs, but it takes time and effort. Sometimes this happens through increased experience and skill. But, often optimization occurs through standardization and automation. Develop a system that works well, apply it consistently, measure and analyze the results, and then make changes to improve the process. An added benefit is that this approach increases quality, making your offering even more attractive.
Metrics should be collected at a “work package” level or lower (e.g., task level), which means they are related tasks at the lowest level that produce a discrete deliverable. This project management concept works whether you are manufacturing something (although a Bill of Materials may be a better analogy in this segment), building something, or creating something. This allows you to accurately create and validate cost and time estimates. At this level of detail, it becomes easier to identify ways to simplify or automate the process.
When I ran my company, we used this approach to win more business with competitive fixed-price project bids that provided healthy profit margins while minimizing risk for our clients. Higher profit margins let us invest in our own growth and success by funding ongoing employee training and education, innovation efforts, and international expansion, as well as experimenting with new things (products, technology, methodology, etc.) that were fun and often taught us something valuable.
Those growth activities were only possible because we focused on doing everything as efficiently and effectively as possible, learning from everything we did – good and bad – and having a tangible way to measure and prove that we were constantly improving.
Think like a CEO, act like a COO, and measure like a CFO. Do this and make a real difference in your own business!
Diamonds or just Shiny Rocks?
During a candid review years ago, my boss at the time (the company’s CEO) made a surprising comment. During an executive meeting, he called a break and invited me to get a coffee with him. He said, “Good ideas can be like diamonds – drop them occasionally, and they have a lot of value. But sprinkle them everywhere you go, and they just become a bunch of shiny rocks.” This wasn’t the kind of feedback I expected, but it turned out to be both insightful and valuable.
For a long time, I have held the belief that there are four types of people at any company: 1) People who want to make things better; 2) People who are interested in improvement but only in a supporting role; 3) People who are mainly interested in themselves (they can do great things, but often at the expense of others); and 4) People that are just there and don’t care much about anything. This opinion is based on working and consulting at many companies over a few decades.
A recent Gallup Poll stated Worldwide only 13% of Employees are “engaged at work” (the rest are “not engaged” or “actively disengaged”). If true, this is a sad reflection of employees and work environments. Since it is a worldwide survey, it may be highly skewed by region or industry and, therefore, not indicative of what is typical across the board. Those results didn’t completely align with my thinking, but they were interesting nonetheless.
So, back to the story…
Before working at this company, I ran my own business for nearly a decade and consulted for 15 years, working with large corporations and startups. I am used to taking the best practices learned from other companies and engagements and incorporating them into our business practices to improve and foster growth. Efficiency was the key to growth and profitability.
I take a systemic view of business and see the importance of optimizing all components of “the business machine” to work harmoniously. Improvements in one area ultimately positively impact other areas of the business. From my naive perspective, I thought I was helping everyone by helping those with “easily solved problems.”
My perspective lacked one important thing. These were not easy problems to the other business leaders. They were struggling and asking for help. By providing an answer off the cuff, it made them look and feel bad in front of the rest of the team.
I learned that while trying to be helpful, I was insensitive to the fact that my “friendly suggestions based on past success” stepped on other people’s toes, creating frustration for those I intended to help. Providing simple solutions to their problems reflected poorly on my peers.
Suggestions and examples that were intended to be helpful had the opposite effect. Just as bad, it was probably just as frustrating for me to be ignored as it was for others to have me infringe on their part of the business. The resulting friction was very noticeable to my boss, which led to our unscheduled coffee break.
Those ideas (“diamonds”) may have been considered had I been an external consultant. But as part of the leadership team, I came across as someone only interested in myself (leaving “shiny rocks” lying around for people to ignore or possibly trip over).
Perception is reality, and my attempts to help were hurting me. Luckily, I received this honest and helpful feedback early in this position and was able to turn those perceptions around.
What are the morals of this story?
First, engaged people have the greatest potential to make a difference. Part of being a business leader is making sure you have the best possible team and creating an environment that challenges, motivates, and fosters growth and accountability.
Disengaged employees or people who are unwilling or unable to work with/collaborate with others may not be your best choices, regardless of their talent. They could actually be detrimental to the overall team dynamics. Understanding what drives someone from one category to another is a great first step in being sensitive while still staying effective.
Second, doing what you believe to be the right thing isn’t necessarily the best or right way to approach something. Being sensitive to the big picture and testing whether your input is being viewed as constructive was a big lesson for me. If you have good ideas but are ineffective, consider that your execution could be flawed. Self-awareness is very important.
Third, use your own examples as stories to help others understand potential solutions to problems in a non-threatening way. Let them connect the story to their own problems and find their own solutions. This helps them become more effective and allows them to save face. It is not a competition. And, if someone else has good ideas, help support them through collaboration. In the end, it should be more about effectiveness, growth, and achieving business goals than about who gets the credit.
While this seems like common sense now, my background and personal biases blinded me to that perspective.
My biggest lesson learned was about adaptation. There are many ways to be effective and make a difference. Focus on understanding the situation and its dynamics to employ the best techniques, which is ultimately critical to the team or organization’s success.
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