If you want a sustainable business, predictable revenue, less costly acquisition engine, and shortened sales cycle and lead times, create a business that lives by the customer-for-life philosophy.
According to a study conducted by Marketing Metrics, the success rate of selling to an existing customer is 60-70% while the probability of selling to a new customer stays between 5-20%. This data shows how existing customers are much more valuable than new prospects.
Creating and maintaining a customer-for-life philosophy in business entails more than focusing on customer experience on the frontline. Here’s how you can successfully and sustainably run a business with a customer-for-life philosophy:
1. Start with the customer lifecycle.
Every business has to do pre-sales in a customer lifecycle, from the point of awareness to contract signing. Then, each business must deliver what it is they sold (what we call post-sales, from contract signing to product/service delivered).
Not every business goes through the second half of the customer lifecycle, which is follow-up and repurchase. But if you want customers for life, you must close the loop by following-up and repurchasing in order to maintain your customers.
The customer lifecycle is how we started every Toyota initiative in any dealership around the world because if you don’t believe in customers for life, there is no reason for process improvement.
Layered on top of process improvement is the belief that if we incrementally improve the processes across the customer lifecycle, then over time we will create customers for life.
2. Create a process-based culture.
Most companies do not see the value of improving their processes unless something bad happens. In a process-based culture like Toyota, instead of waiting until the ball drops, you make small changes to improve your processes across the entire customer lifecycle. This is why Toyota leads their industry instead of reacting to it.
In a process-based culture, instead of making band-aid solutions, you invest more time at the front end to understand the problem and identify its root cause to come up with a permanent solution.
You should also deliberately and thoughtfully think through what makes sense for the customer in terms of design and operation. For instance, if you are going to automate some of your processes, such as using a chatbot, you have to think about the right time for it to pop up when the customer is using your site for it to be actually helpful for the user. Then, you must decide when it’s no longer appropriate because the customer is fine on their own or needs to interact with a human.
You have to create processes that occur in the right place at the right time. You have the power to create a culture and environment that always delivers the right process the right way and at the right time.
3. Humanize your business.
If you want to build your business around a customer-for-life philosophy, you must put your people first. Unlearn the “customer is always right” mindset. To win the loyalty of your customers, you have to win your employees’ trust and morale first.
Based on Gallup’s employee engagement report, companies with a highly engaged workforce have 21% higher profitability and 17% higher productivity than companies whose employees aren’t as engaged.
Your people are the reason you get to promote and sell your products and/or services to consumers. The success of your business processes depends on the humans behind them. Invest in your people and cultivate a caring culture in your organization, your employees will reward you with their loyalty and, in turn, take care of your customers.
In love and respect,