In our last blog, we explored the value of the loyal customer and the proof you need to invest more heavily in a loyalty program.
In part two, we dive deeper into how we nurture our loyal customers and create a plan for greater profitability.
- Classify your customers into the following specific segments so that specific actions can occur.
- Crafting a nurturing plan – where are the opportunities?
A loyalty program is an essential business ingredient that holds significant opportunities for every business. As with all great opportunities, specific actions must be undertaken to create outcomes.
Maximise the return on the effort you have made in establishing your loyal customer base with a simple segmentation process.
Segmentation is the starting point for strategies designed to deepen your relationships and knowledge of those customers who invest in your offering.
Establishing your critical areas for awareness will provide you with essential evaluation questions to ask regarding these customers.
This segmentation has a simple three colour classification – Blue, Amber and Red.
When it comes to customer loyalty, several factors impact the quality of the relationship.
Fig 2 represents how
For your KEY CUSTOMERS consider;
- What specific action have I undertaken to let these customers know they are highly valued?
- Have I met and or have transactions occurred within the past three months? If not, why?
- Have I spent specific time in reviewing the needs or issues these customers face?
- What opportunities or risks do these customers
Never become complacent about your relationship with key customers. The reality is – every current and new competitor will be working towards acquiring your customer.
Special events, customised solutions or one-on-one conversations designed to service and possibly uncover hidden needs are crucial to sustaining a highly satisfied customer.
The closer your relationship, the deeper your knowledge is of your customer, the more in touch you are with the core of your business, allowing you to be at the forefront of subtle trend changes.
This type of market and customer intelligence keeps the best businesses ahead of their competition and deeply entrenched with their loyal customers.
HIGH POTENTIAL CUSTOMERS provide the ideal base to create business and revenue growth.
In reality, most of the hard work in terms of relationship building has been done. These customers support your services; know and trust your products and/or services. The opportunity exists now to broaden the range of products used, or the volume of business they share with you.
The focus within this segment is to identify what customer needs you can get better service and what challenges your customers are facing.
While this sounds like a logical and simple solution, it is incredible how much time is lost servicing the customers who are in the review and red zones shown on the segmentation matrix.
When first undertaking a strategy to boost your business, the starting point is simple. Focus on customers with the highest probability of delivering the most significant success. In other words, look for the low hanging fruit!
ID SOLUTION CUSTOMERS previously had or still have high business volume, but the regularity of transactions and or quality of interactions have declined.
As with HIGH POTENTIAL customers, a significant investment to originally onboard the customer has been undertaken and often these relationships can be reinvigorated with a simple conversation.
The opportunity with this segment is to merely reach out to the customer and engage in discussions specifically designed to reconnect and understand their needs. The objective is to identify the specific reasons for the changes in previous business transaction patterns.
UNDERSTAND, REVIEW, PARK CUSTOMERS
Undertaking specific actions that create a focused set of undertakings is the most critical aspect of business life. Prioritising activities within particular parts of the customer loyalty segmentation, is an absolute must. Focused efforts to provide the best outcome for energy invested is the only way forward.
UNDERSTAND AND REVIEW CUSTOMERS require a limited, yet focused amount of time to extract learning opportunities. These learnings should be used to improve your offerings and deepen your understandings around customer concerns that can be resolved.
PARK CUSTOMERS is an area that must be watched and time invested only when it is readily available.
UNDERSTAND, REVIEW, PARK segments can be a significant drain on your business and resources.
These segments attract focus for a multitude of reasons. A lack of understanding and or poor customer knowledge means these customers may be seen as having more potential than would ever be possible.
On other occasions, some of these customers create significant drain due to unreasonable expectations. Some may only use a provider as a price checking mechanism, designed to keep their prefered provider on their toes.
No more than 10% of your time should be invested in the UNDERSTAND, REVIEW, PARK segments. Save the remaining 90% for the customers with the potential to provide profitability and sustainability.
Businesses often invest time and resources in the wrong customers. It is essential to focus on those with the most significant opportunity. These customers drive growth and ensure a sustainable and successful business.
Be fact-based and honest with your customer segmentation to truly identify opportunities for your business.
Loyal customers – worth their weight in gold?
To help answer this question, I have carved out some time to review recent research and data from active business loyalty programs.
What I’ve found is this….
A business without loyal customers IS heading towards extinction!
So, the three key points are; what is a loyal customer, why do we need them and how do we nurture them?
In this two-part blog, we will explore the nature of customer relationships and why loyalty is so important.
What is a loyal customer?
A loyal customer is someone who consistently and freely
Successful organisations recognise that customer loyalty is a journey with great opportunities and understand that to sustain a customer relationship; it must
When a customer’s relationship
Loyalty also provides a ‘forgiveness buffer’
Why do we need loyal customers?
1/ The financial reality of loyalty.
Studies show a range of financial benefits resulting from loyal customers, such
• Between 20-90% increase in profits
• Highly satisfied loyal customers targeted with focused marketing can deliver 80% more value than a satisfied loyal customer
• Reduction in new customer marketing expenditure (new customer acquisition can cost 5 to 25 times more than
• Just 5% increase in the retention rate of loyal customers can lead to a revenue increase between 25-95%
• Decreased operating costs
• Understanding the lifetime value created by loyal customers sharpens the focus and attention to building this base and their experience within your business
2/ Data confirms overarching benefits.
Sales data extracted from the loyalty programs I examined showed the positive relationship between loyalty-based clients to non-loyalty sales. Data analysed clearly showed the high value of loyalty program customers; sales volume was 12-58% higher than walk-in customers.
Sales outcomes greater than 58% have been excluded, as these cases traditionally involve one-off transactions that are not a part of an ongoing spending pattern.
Beyond the direct sales impact provided by loyal customers, other benefits include:
• Referral of new customers to the business from loyalty-based customers
• Loyal customers who come from referrals made by highly satisfied customers have a higher lifetime value
• Businesses with a referral-based loyalty program have experienced
3/ The 80-20 rule drives different
Loyalty programs are not the only source of information that a business can use to identify loyal customers.
Leveraging your relevant sales information sources (e.g. your invoice system) enables you to determine, “How loyal”, “How often” and “What are their buying preferences”?
Often, we discover that 20% or less of our customers can contribute up to 80% of our business volume and profits.
Studies have shown that highly satisfied customers can deliver 80% more value than a satisfied customer, and new customers referred from this group produce a higher lifetime business return than those we attract through marketing.
This information highlights the significant contribution to business sustainability made by the segment and that close attention must
Segmentation provides a highly focused lens, enabling a series of targeted solutions designed to deliver better business outcomes.
In part 2 I will share-
* ways to segment your customer base
* simple strategies to boost your business profitability through enhanced customer experiences.
Are you struggling to engage and energise your team?
Does the lion’s share of work always rest with you?
Do you feel constant pressure to deliver more?
You’re not alone.
Fifty-five percent of Australian business leaders say they often make up for the shortfall within their team.
I speak to many business leaders who admit they are compensating for skill gaps within their team, they then find themselves counting the personal cost – and the reduced opportunities for business growth.
The question I hear most often is, “How do I get a team that works well together and will consistently deliver positive outcomes, without me doing the lion’s share of work?”
Successful, high-performance organisations ensure that teams have full coverage in specific business areas. Unfortunately, very few businesses have every key role adequately covered and as a result, critical gaps can occur within the business, with
The common gaps
There are two areas that regularly appear as critical gaps in teams.
1. Amazing deal closers.
Unfortunately, too many people are ‘all talk’ and there is always an excuse when deals are not successful.
2. Advanced administrative support.
Key support workers who can provide live, up-to-date information regarding all operational issues and/or tasks you have going on in your business.
Item number 2 creates the greatest number of headaches and distractions for business leaders when the relevant support in not in place.
Key performance factors for a cohesive team
In today’s fast-paced, competitive business environment, a cohesive, well-designed team is critical.
Whether you have built your team from scratch or inherited it from a former leader, it’s critical to undertake a regular team review.
Do you have the essential ingredients for sustainable success?
By understanding the key performance factors and types of work functions that will energise your team members;
you can determine the most effective method to achieve optimal team performance.
Engage your team in this learning journey, and you’ll find team members brought closer together and working more effectively by exploring how they:
• relate to each other
• gather information
• make decisions• organise themselves
Optimal structure for elite-performance enterprises
The optimal team design has a combination of roles, ensuring coverage of critical business drivers.
These roles include those who:
• will seek out new business opportunities
• are innovators and provide out-of-the-box solutions
• review and develop opportunities, ensuring smooth business integration
• are proactive organisers
• have the drive to deliver measurable outcomes
• offer supervisory skills
• ensure all records are maintained• act as information controllers and provide reports
• are intra-team bridge builders who nurture collaboration and communication.
Time for a self-audit
1. Where are the gaps in my team?
2. What impact are these gaps having on my business outcomes?
3. What tasks and decision-making can I delegate?
4. How can I develop team members to become subject-matter experts in an area?
Successful leaders ensure coverage of all key roles, with the best resources operating as subject-matter experts supporting positive client outcomes.
This ensures sustainability in business, robust processes and best-in-class client service.
Better Business Solutions, Better Business Outcomes and A Better Life.
I don’t just promise measurable solutions, I deliver them.
I’d welcome the opportunity to discuss any team performance issues you might be facing.
Contact me – Craig O’Brien.
We’ve all heard about trying to make a distinction between need and want. It’s an age-old tussle that is effectively applied to committing to a coach relationship.
The new year is now well underway and full of potential – and it’s a time many of us ponder the future of our business.
Are you brimming with confidence and ready to go?
Or do you have doubts and not sure which way to turn?
Many clients contact me in February following a summer break, needing to make significant decisions about their future. But there are also decisions you’ll need to make before you embark on a coaching partnership.
No-one needs a coach. Successful coaching partnerships that create positive and sustainable outcomes happen when you want a coach. A coach will help to produce results beyond those achieved in your day-to-day pursuits, both in business and life.
Working with a business coach is not for everyone. You need to be open to feedback and ready to make changes – and not all of them are easy.
To help you decide if now is the time to begin working with a coach, I’ve developed two quick checklists.
Five reasons NOT to engage a coach;
- You know your business better than anyone else.
- Life is busy – you have no time to spare.
- You’re already stressed enough.
- You don’t want to be told what to do.
- Some issues are private and not for discussion.
If this sounds like you, coaching might not be for you right now. A coaching partnership is a deep dive not only into your business but for the business leader as well. There’s a need for honesty and real commitment to change.
Five reasons you SHOULD partner with a coach;
- You’re facing an increasing level of overwhelm, stress and complexity as you seek to sustain your business.
- You constantly read articles about improvement, try new things, but are unable to gain any headway.
- You are ready for a constructive challenge. A coach will help you change your way of thinking to impact outcomes positively.
- You yearn for a focus that provides clarity, passion, purpose and energy. A coach will guide you through a process of simplification to attain focus, then help you create an accountability plan and agreed steps for improvement and growth.
- You want to change your lifestyle. Better business solutions mean better business outcomes and in the process, a better life.
Without a trusted mentor or colleague who will actively listen, many businesses fail needlessly. Many business leaders face the crossroad decision of, “do I want to accept extinction, or stride purposefully towards evolution?”
Are you are ready to commit to change in 2019?
Better Business Solutions, Better Business Outcomes, A Better Life.
Contact me to discuss: email@example.com or call me +61 (0) 416155565