Great business owners and sales reps know you lose about 10% of your customers every year. Customer churn should be part of your sales planning and marketing strategy.
When you don’t plan for this, you won’t make your revenue goals even if you hire the best sales reps. A bad plan is still a bad plan. Now every month will be a scramble to close their quota gap most likely by heavily discounting.
Marketing can’t help you because they don’t have the data to figure out why you’re losing customers.
If only there was only a way of doing business that saves you when plans go all to hell – oh wait they did!
Process improvement is critical when things get rough. With process improvement, we can build a plan to close the gap before it’s too late.
WHY DO YOU NEED NEW CUSTOMERS
As an entrepreneur or executive, you want more sales, profit and positive cash flow. Getting all these things would mean Christmas came early. Effective change management means finding a way to inspire change.
Inspiration starts with a great corporate vision. A great vision is the greater purpose for change.
People feel like they’re working towards a legacy. But we have to break down the legacy into manageable pieces and projects.
To get alignment faster we need to turn problem statements into a language everyone speaks – math.
We do this by:
Defining the process
Setting the target key performance indicator (KPI)
Measuring the actual KPI
Defining the Sales Funnel and Marketing Process
KPIs measure if your process is breaking down or going strong. They don’t measure people because people are just one tool in a set that helps a process run. I think we can both agree we’ve come across plenty of tools in our corporate careers.
Since we’re talking about customers this means we look at how we get customers. This is through strategic marketing and sales strategy.
Whether you’re running a B2B or B2C sales cycles it doesn’t matter because you’re selling to people. Great processes always start with your ideal customer and design for what they pay for.
We start process design by figuring out the first and last step.
Setting the Right KPI
The right target KPI drives actionable insight. This means once you see it and stop cursing profusely, you come up with a plan to improve it.
The right goal also triggers the right behavior. If you set a goal for sales revenue, don’t be surprised if the profit per customer sucks. If you set a goal for expense reduction, don’t be surprised when your product or service quality tanks.
In our case, we want more of the right customers so we need to look at how well we’re converting leads to customers. And you need a tool to help you find leads with the highest potential customer lifetime value.
HOW DO YOU KNOW A GOOD FROM A BAD CUSTOMER
You know a couple Lean Six Sigma process improvement tools like templates and checklists. We use templates because we don’t want to reinvent the wheel when we figure out what works. We use checklists to make sure we don’t miss anything.
Since you can’t build a customer centric process without knowing your customer, we create an ideal customer profile. An ideal customer profile is like a template for the ideal customer.
If you aren’t using the profile like a checklist while qualifying sales prospects or during cold calls, you’re wasting your time.
Your profile is going to tell you who the decision makers are and how to sell them. It should tell you where to find them and how to speak to them. Most important, it tells you how to empathically listen to gain their trust.
Your Ideal Customer Profile and Customer Journey Map is Wrong
When’s the last time you went through your wins and losses, analyzing the gap between target win rate and actual? When’s the last time you reviewed this data to perform a rigorous gap analysis with Marketing?
I haven’t come across a company that’s doing this enough to keep their buyer personas and customer journey maps up to date. You can include Guerrilla Analytics in this. No one is perfect but we can help each other make more progress.
The rule for continuous improvement is 99% of problems are because:
- We don’t have a standard
- The standard is wrong
- We aren’t using the standard
If you have a customer persona and journey map, you need a set schedule for updating it based on every lost lead, churned and won customer.
You have a treasure trove of data but you need to slow down and focus on quality instead of just growing. A loss per customer isn’t going to be any more profitable at 1,000 customers vs 10,000.
HOW DO YOU FIND YOUR IDEAL CUSTOMERS
I see a lot of chatter about “Should I be marketing on social media – is Twitter better or LinkedIn?” The simple answer is to advertise and prospect where your customers live.
Sales and Business Development Teams
Scalable processes mean you build it once for X and get 2X+. Whether you’re a lean startup or business development rep with a huge budget, it doesn’t matter. Building a business means tracking and analyzing channel sources to figure out what’s getting you closer to your target win rate.
This helps you build your sales playbook (template!) so every salesperson knows the right sandboxes to play in.
Strategic Marketing Partners
The marketing team can use your source data to refine their website traffic sources so help get you better leads.
WHEN DO YOU NEED TO LOOK FOR NEW CUSTOMERS
Timing is everything in business – and life – but I’m not a life coach so I’ll stick with business process. In lean process improvement, we focus on takt time. Since we only build for what the customer pays for, we set when we deliver it by using takt time.
Takt time applies to every department because it’s the rhythm your corporate band plays to. It makes things predictable. You can set up a rhythm to tell you when to source new leads based on what sales conversion rate, customer churn and revenue goals.
TODAY IS A NEW DAY, IMPROVE ACCORDINGLY
Building a business takes time and many iterations. There are a lot of the same solutions online when you search for how to get more customers: go network, give free trials, simply clean up your awful website already. I love a good experiment but these things only work if you set up targets for your expected results.
Business development is a science so treat it like a scientific hypothesis that needs to be proved wrong by customer data. Great entrepreneurs know you fall in love with the problem because it frees you to truly innovate.
Make your company’s differentiation strategy how well and fast you innovate.
At 26, she was asked to create a new department to grow their Fortune 300 company using Lean Six Sigma continuous improvement.
While working with consultants and experts, she saw a common thread among their challenges and failures.
With this insight, she created a custom process to create a high-performance company.
As the only CPA and business architect in the US, she helps others use creativity instead of cash to efficiently build their businesses.