You’re sitting down with the team for your weekly Wednesday check-in.
The coffee’s hot, the sodas and teas are cold – and there’s a collective sense that things are on track, as you go through your standard list of metrics.
This company is definitely getting more efficient, more systematic about how it does things. The bottom line is improving.
But are these improvements going to last? and will the company grow over the long term?
Here are three top-line metrics that give everyone an instant view of the company’s long-term prospects. Because they show attitude and effort as much as ongoing performance.
- Customers retained.
- Leads generated.
- Sales growth.
Let’s take a look.
You probably know thqt it costs at least five times as much to get a new customer as it does to sell new things to a current customer. Or, put another way, every customer retained is 80% you can knock off your customer-acquisition budget.
So why do so many companies treat customer service as a cost to contain, instead of an investment to nurture?
If the company you’re checking in with is big enough to have a dedicated customer-service function, encourage management to evaluate its people by customers retained.
It’s more common to use operational metrics – calls completed, for example – but I think that’s a huge mistake.
So huge, in my view, that it’s helped send even giant corporations right into bankruptcy. (And they never even knew how this tiny change could have helped so much.)(And don’t get me started on the companies who think front-line sales labor is a cost.)
Let’s say the metric is calls completed.
In that scenario, service reps will do anything to get customers off the phone in the time allotted.
- It doesn’t matter whether the customer’s problems are solved or not.
- It doesn’t matter how mad the customer’s going to get.
- It doesn’t matter if that customer will ever buy from the company again.
- It just matters that the rep can check that box that the call ended in two minutes.
Is that worth squandering hundreds or thousands of dollars in potential repeat business over the next five years? From hundreds, or thousands, of customers?
(Remember the last time an online-support rep treated you like that?)
Change the metric. And change the outcome.
But think through what happens when the metric changes to customers retained. Now that same rep can work through the problem with the customer in as much time as it takes, and escalate the issue to a more knowledgeable technician if that’s what it takes to solve the problem.
In fact, let’s get a little crazy for a minute.
Imagine, if you will, that you’re the customer on the line. The customer-service rep not only solves your issue in an unhurried fashion, but is also authorized to give you a $5 gift card to Starbucks or Target. Maybe the rep gets to give everyone a gift card. Or maybe just every tenth caller, if the firm is worried about costs, and you happened to be the tenth caller.
Based on loyalty data from Maritz Inc., where I spent nearly two decades as both a creative director and an agency of record, you are now a more loyal customer than someone who never had a problem. And because you got a reward, you’re probably going to help create buzz, as you tell your friends what happened!
This is marketing’s chance to shine – or be on notice that it now has performance accountability too.
It’s also the reason a lot of finance and operations people don’t trust marketing people. (You probably don’t trust me yet. But you’re still reading . . .)
In fact, a lot of sales folks don’t trust marketing people. Because so many people, including the vast majority of marketing people, think of marketing as window dressing:
- Pretty brochures and a pretty website (derided among web developers as brochureware) that management can show friends and family, but that don’t produce any actual results.
- An emphasis on building awareness instead of making sales – a priority no business can actually afford. (Byproduct of success? Fine. But spend money only to make money.)
- An adversarial attitude towards sales and sales management that poisons what should be a mutually supportive relationship.
- An allergy to numbers and measurement,
- And in far too many cases, an allergy to online tools that would not only make their dollars go farther but turn standard corporate budgets into a king’s ransom. (Why do 46% of American businesses have no website at all?) (How many corporate marketing departments are paying as much as ten times what I do on the printing of a simple four-color brochure?)(If you suddenly pay reasonable prices for your production, then you can afford better strategy and people who know what they’re doing.)
At the end of 2011, I read an article in a print publication of the American Marketing Association that is, I believe, the source for the blog post that tells this story:
I heard a really scary story the other day. One year ago a company placed an order for a Yellow Pages print advertisement for a fee of $90,000 for the year after being persuaded by the account manager to place the order for the ad. The marketing managers comment to Yellow Pages was that he would keep count of the number of leads that it would produce and 12 months later the results are in and the grand total was “two leads”.
As blogger Jeff Bullas points out, that’s a cost per lead of $45,000.
You’ll find out as we get to know each other better that I’m all for spending a lot to get a customer, for a number of reasons. But 45 grand to get a lead is ridiculous.
Your sales/marketing management should be able to show you a pipeline of leads that will lead to consistent profit growth for that company’s industry.
Usually that means you need consistent sales growth, but not always. What’s the key variable?
The lifetime value of a customer.
The lifetime value of a customer will vary from company to company and industry to industry, depending on:
- Average price points.
- Average customer retention in the company and the industry.
- The company’s ability to upsell the customer over time, which I’ll call the lifetime customer trajectory. An upward trajectory is more valuable than a flat or declining one.
That’s why it’s so critical to define customer service as a marketing function instead of an operations function. It is the critical point at which a customer decides if the next sale is going to happen.
Define it as a cost center, and it will likely cost you:
It’s tempting to think that if you’re retaining customers and generating leads, sales growth will take care of itself.
That’s true if the sale is simple, frequent and low-ticket, and if you have a great distribution network.
Otherwise, it’s time for the sales force to step up.
It has two jobs:
- Nurture leads that aren’t ready to buy now, but will be in a definable future. (Leads in longer horizons can go into an automated keep-in-touch system.)
- Close leads that are.
A competent sales force should recognize those priorities and have relationship-building in its blood.
Ever listen to office staff complaining about sales folks?
“All they ever do is go out to lunch and play golf all day!”
Wow! Change the sport to tennis, and I’ll take that job.
But the really great reps are also working until midnight, many nights, doing research and getting ready to answer really tough questions between holes. (Or, if both parties are female, between spa treatments.)
And then there’s all that time reps devote to (or should be) following up on email and (the right) social-media platforms. Crafting drip campaigns. Setting up and delivering webinars. Blogging. Writing articles. Establishing expertise.
In a lot of ways, they need to become their own marketing machine, doing for themselves and their own ideas on how to help prospects work smarter what the company’s marketing function does for its products and services.
Closing the sale.
As loudly as I just yelled against pretty brochures that don’t do anything, reps in the field do need effective selling tools.
In today’s world, I’m thinking the ideal is a library of presentations they can run from a tablet. Some might be the kind they can stop and start, and even add prospect details to . . . some might be self-running videos.
I’m really intrigued with Apple’s new textbook product for sales presentations and for interactive product brochures, too.
About the only printed tool they need is a business card. But that card, or its equivalent, should be able to bench-press a Hemi®.
Managing the process.
I don’t necessarily think we all need to live and die by the 90-day review, where reps will promise anything to get an order on the books before the 32nd day of the month. (I do believe in compensation that lives and dies by commissions, not salaries. It makes a huge difference when it comes to curing cases of gluteus immobilis in repsis.)
But reps should be prepared to show management a full calendar of activity if their companies aren’t on salesforce.com – and the only reason I can think of for a sales organization not to be on that platform is that they’re a sole proprietor whose spouse hasn’t (yet) asked them for sales accountability.