Loyal customers do the most business with you because profitable and lasting relationships are two-way exchanges that involve mutual value.

Make it a priority to work smarter by creating “partnerships” with your customers, so they reward you with on-going business (Remember, in many cases repeat buyers provide 95% of a company’s revenues.)

The reason: Longtime clients know how to make hassle-free use of your services. They’re familiar with your operation and knowledgeable about what you provide. For many clients, the value of an established relationship may even make them willing to pay higher prices.

Here’s a seven-step action plan that will help you target your best clients, build a standout service operation and, in turn, produce a more profitable year:

Step #1: Review your client base and rank your customers.

To find your best clients, determine how long each has been with you, how much they’ve spent during the past year, how much hand-holding they’ve required in staff time and money, and what their potential revenues might be for the foreseeable future.

Study one to two years of records—incoming orders and payments as well as outgoing bills and services. Keep tabs on your customer tenure and defection rates, because no matter how many new customers you recruit, the older ones really affect your business.

And lowering your customer attrition rate by only 5% a year will significantly boost annual revenues. But remember, not every customer is worth keeping.

So let’s be blunt about it: Customers who are perpetually dissatisfied, always terribly demanding, abusive toward your staff and who don’t generate significant revenue are simply not worth coddling.

Step #2: Get rid of clients who don’t fit your customer profile.

You may find the notion of dropping clients hard to swallow, since it sounds counter-intuitive. After all, whoever heard of ditching paying customers?

Yet when a client’s needs do not fall within your firm’s so called service window—that is, the area on which you concentrate your business—you may need to part ways.

If you’re uncertain about a customer’s potential or unwilling to give up on him, try turning the relationship around.

Before dropping an unprofitable customer, set up a friendly meeting to review the relationship. Give the person a chance by discussing the volume, frequency, price points, or whatever, that would make keeping his business worthwhile to you.

Then wait a few months to see the results. Eventually, if you do jettison the client, make sure it’s a slow, steady and courteous dismissal. You don’t want any bad word of mouth.

Step #3: Listen to your customers and provide what they want.

The first rule of a successful partnership may be old-hat but is nonetheless key: Regularly keep in touch, and always listen carefully.

You should be as forthcoming as possible with your clients, too. Hold an open house, take clients on a tour of your facilities, allow them to tap into your computerized records of inventories or let them join your marketing meetings.

Forming an advisory council composed of your valued customers may also work. (You get a sounding board and they get a bird’s-eye view of how you operate.)

Bottomline: Unhappy clients rarely complain, at least to the source of their troubles. They simply vote with their wallets.

Step #4: Put yourself in your customer’s shoes.

The sure way to forge connections with customers is to understand their business so well that you can offer comprehensive solutions to their problems.

The goal is to show you care enough to work overtime to make your client look terrific in front of his own customers.

Step #5: Decide whether to offer tiered services.

Excellent overall service for all customers must be your mission. But you can still segment your market and charge a premium for special or more costly requests.

Although tiered-level service—with everyone clear on what’s available and what they’re getting for their money—may be new to your industry, the airlines have been at it for years.

They provide first-class and coach service and charge accordingly, but the plane still takes off and lands at the same time and place for both customers.

Step #6: Mobilize your entire team to work for the customer.

A well-trained, consistent core staff offers the highest level of customer care.

Make it clear to everyone at your company that the needs of the customer are always first and foremost. And don’t skimp when giving your employees the knowledge and training to do what it takes to make customers happy.

Step #7: Own your problems; own your customers.

There’s nothing worse than losing your customer’s confidence.
Yet, as you well know, some missions really are impossible. And no company’s perfect.

So what do you do when you make a mistake? First, own up to it. Then, make up for it.

Finally, draw lessons from the experience because the most useful and instructive learning grows from the recognition and analysis of failure. (Unfortunately, most entrepreneurs prefer not to look back.)

However, if you move quickly and effectively to fix a customer problem, you may even turn mistakes into bonding opportunities. Then, after the error, your reputation and profile might actually be enhanced in the customer’s eyes.

To sum up, the real key to success is to win your customers’ loyalty by anticipating their needs—and then delivering exactly what they want, perhaps before they ask.

That way, when they demand that your product or service walks, talks and sings, you will know from experience that it also needs to dance!!

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This entry was posted on Friday, June 6th, 2008 at 6:14 am and is filed under From the Desk of Bob Meyer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.