04:30
Faizan
Gartner EXP recently published their worldwide survey findings for executive priorities for 2011. Attracting and retaining new customers is ranked number 2, just behind "Cloud computing" for top priorities. Attracting and retaining new customers is clearly a major concern among company executives.
This is not old news to many executives and sales people. The economic landscape for the past 5 years has been extremely challenging for the majority of companies and as result, the challenge of retaining existing customers, combined with increasing competition, has become a focal point for companies worldwide. In addressing the retention issue, there are three elements to be considered.
1) Your line of products must be aligned and up to date with latest technology. In essence, what works for you today may not work for you tomorrow. A good salesperson with vision will keep informed of current industry trends and technology innovations. Relying on old - or even existing - technology and products that have brought you past success is a sure recipe for failure. Years ago, I observed a Fortune 100 company who relied on its company name and brand loyalty to retain its existing customer base at the expense of technology investment. This action resulted in a heavy price, with the loss of approximately 250,000 customers per quarter, or 3% of its customer base, in one year. Subsequent actions by the company to align its product roadmap with current technology resulted in average net customer additions of nearly 50,000 per quarter.
2) There are times when you must sacrifice short term margins/profits in order to achieve the ultimate long term objective. In today's business climate, increasing pressure is being put upon companies to achieve short term profitability at the expense of the ultimate prize - long-term sustainability. There is something inherently valuable in a loss of revenue or margins in the short term, if the overall long term objective is not sacrificed and can be met. I remember one of my customers making the decision to heavily subsidize a product manufactured and launched by my company. In taking this step, the company was the first to the market with this product and was able to position it with the customer at minimal, or in some cases, no cost. The net result was the company was able to avoid a second consecutive yearly projected loss of nearly 300,000 customers, saving the company nearly $50M for the year in monthly recurring revenue.
3) Above all, you need to remain flexible. A profitable company, no matter what its size, needs to be able to modify a strategy or product in real time. Timing is crucial to survivability. Being able to modify a generic product or service at the customer's request and expense can garner additional good will and credibility, resulting in additional business opportunities. Changing technologies force organizations to work in real time environments where product strategies and requirements must have the ability to change rapidly. For some, there is a mindset that flexibility may hinder the chance of realizing your goals. However, it's just the opposite. Flexibility can be a powerful and underutilized tool. I worked for a company where I was able to modify a product roadmap at the customer request and expense, which required my company to change an existing product with some minor custom features. The result of that single act led to years of continued incremental business totaling well above the $100M range.
This is not old news to many executives and sales people. The economic landscape for the past 5 years has been extremely challenging for the majority of companies and as result, the challenge of retaining existing customers, combined with increasing competition, has become a focal point for companies worldwide. In addressing the retention issue, there are three elements to be considered.
1) Your line of products must be aligned and up to date with latest technology. In essence, what works for you today may not work for you tomorrow. A good salesperson with vision will keep informed of current industry trends and technology innovations. Relying on old - or even existing - technology and products that have brought you past success is a sure recipe for failure. Years ago, I observed a Fortune 100 company who relied on its company name and brand loyalty to retain its existing customer base at the expense of technology investment. This action resulted in a heavy price, with the loss of approximately 250,000 customers per quarter, or 3% of its customer base, in one year. Subsequent actions by the company to align its product roadmap with current technology resulted in average net customer additions of nearly 50,000 per quarter.
2) There are times when you must sacrifice short term margins/profits in order to achieve the ultimate long term objective. In today's business climate, increasing pressure is being put upon companies to achieve short term profitability at the expense of the ultimate prize - long-term sustainability. There is something inherently valuable in a loss of revenue or margins in the short term, if the overall long term objective is not sacrificed and can be met. I remember one of my customers making the decision to heavily subsidize a product manufactured and launched by my company. In taking this step, the company was the first to the market with this product and was able to position it with the customer at minimal, or in some cases, no cost. The net result was the company was able to avoid a second consecutive yearly projected loss of nearly 300,000 customers, saving the company nearly $50M for the year in monthly recurring revenue.
3) Above all, you need to remain flexible. A profitable company, no matter what its size, needs to be able to modify a strategy or product in real time. Timing is crucial to survivability. Being able to modify a generic product or service at the customer's request and expense can garner additional good will and credibility, resulting in additional business opportunities. Changing technologies force organizations to work in real time environments where product strategies and requirements must have the ability to change rapidly. For some, there is a mindset that flexibility may hinder the chance of realizing your goals. However, it's just the opposite. Flexibility can be a powerful and underutilized tool. I worked for a company where I was able to modify a product roadmap at the customer request and expense, which required my company to change an existing product with some minor custom features. The result of that single act led to years of continued incremental business totaling well above the $100M range.
Posted in: business
