How to Choose
and Keep Customers
1. Do you
know who your customers are?
It may sound automatic, but
many businesses simply don't keep track of who actually
buys their products. And, those that do, rarely analyze
buying behavior. A customer database is essential. If you
don't have one, create one. Start by capturing the basics:
customer contact information, product preference and
2. Have you
ranked your customers?
Not all customers are
created equal, yet most businesses treat them exactly the
same. That's why you need a customer ranking system. Look
at those variables that are most relevant to your business
-- purchase frequency, revenue, selling costs, referral
potential, and so on and score your customers accordingly.
Marketing research firm CRI, for example, ranked their 157
customers using a simple quadrant that bucketed customers
according to the kind of business they generated each
year, i.e. High Volume/Low Margin and Low Volume/High
3. Do you
know which customers are your most valuable?
The ranking exercise may
help explain puzzling disparities in company performance.
The 'Why aren't we growing/more profitable/gaining market
share when we have more customers than we ever have?'
dilemma can be crystal clear when you really look at how
each customer is contributing or subtracting from the
bottom line. CRI found that only 10 of its customers fell
into the preferred category-High/High.
4. Do you
have too many customers?
In CRI's case, they
concluded they were 'spending much too much time and
valuable employee resources on too many unprofitable
customers' -- in fact, 101 of them essentially contributed
nothing to the bottom line. Smart CEOs understand
precisely who their target customers are. And, they know
how to go after only the right customers. Is there room in
your business to be more customer-selective?
5. Which of
your customers may be worth firing?
Less can definitely be more
when it comes to unprofitable customers. Like CRI, who cut
its customer base in half, getting rid of some customers
may be your company's secret growth strategy. Also think
about the costs you would NOT incur if certain customers
went away. Are some draining the business? The process of
raising your customer standards and paring automatically
opens space to attract the flow of new, more profitable
6. When is
the last time you checked customer satisfaction?
If you're not regularly
taking the pulse of your customers, they may be
sacrificing, rather than being satisfied. 'Customer
sacrifice = What the customer wants EXACTLY minus what the
customer settles for' say B. Joseph Pine II and James H.
Gilmore, authors of The Experience Economy. Check to see
if you can shore up the areas of your product or service
that may be cracking or settling.
7. Are you
spending too much on finding new customers?
Determine all of the costs
(people, time and dollars) you incur to grab new
customers. Are more company resources focused on customer
acquisition vs. customer retention? Consider putting more
attention on holding on to the ones you already have. It
can have a profound impact on the bottom line -- current
customers are 5-10 times LESS expensive to sell to than
new customers. And, you can avoid nasty customer
defections due to neglect.
8. Are you
actively converting first-time buyers to long-term
In some businesses, such as
car or life insurance and credit cards, companies actually
lose money on first-year customers. Check to make sure you
don't have a 'leaky bucket' --- losing mature customers
and replacing them with new ones. It takes many new
customers to compensate for the loss of just one veteran,
according to Frederick Reichheld, author of The Loyalty
Effect. And, the bigger the leak, the harder you have to
work to keep it full.
9. Are you
fortifying relationships with your best customers?
There are 4 strategies to
keep great customers, say Don Peppers and Martha Rogers,
authors of The One-to-One Future: #1) Recognize your Most
Valuable Customers (MVCs) with special treatment (perks,
MVC Club, unique services), #2) Reward loyal buyers, i.e.
frequent buyer programs, #3) Deliver Consistent Product
Quality and Satisfaction, and #4) Customize
Product/Service For Individual Customers -- the ultimate
way to keep customers loyal longer is to spend more time
catering more to their individual tastes. What can you do
to better personalize each customer's experience with you?
10. Are you
earning customer loyalty?
Strategic CEOs treat
customers like assets and do everything they can to invest
and safe keep them. Customer loyalty standouts, such as
Lexus, State Farm and MBNA, engineer their entire company
(not just the customer service dept.) around customer
loyalty -- manufacturing, pricing, sales incentives, and
all operations inside and out are built for lifetime
have potential customers trust you enough to buy
Reduce fear by eliminating doubt.
Buyers buy when you've
reduced the threat of buying.
Be gracious and caring vs. hungry and uncouth.
Never let yourself be in
a situation in which you need business in order to
survive--buyers smell this and run.
Focus on what the buyer finds interesting about your
There may be 22 key
features of your service, but be sensitive enough to
notice which 1 or 2 that the buyer indicates -- even
subtly - interest in.
Ask questions which get you enough information to
understand the buyer, what they need and how you can help
Don't be bashful, but
don't be a machine gun, either-- take an interest in the
buyer and bring them out.
Be a walking example of the benefits of your product or
Credibility can be
instantly established when what you have and how you
relate exudes the quality and power of your product or
Help the buyer to identify and feel something they hadn't
felt before or for a while.
Most people buy on
emotion, then validate/justify this via
Point out what your product will do and won't do.
Always stress, highlight
and be excited about, the positive but do mention what
your product doesn't do or won't do for them.
Find a way to let the person know that you know who they
are and what they're looking for.
Have a well-phrased label
to describe their situation so that they get that you
get them and it.
Be an expert both in your product, and...
...also in who your
customers/user are, what they need, how they use the
product, what problems are solved by the product and how
a new buyer can flatten the learning curve to leverage
value from the product/service.
Don't make cold calls -- always get referred to
If you're not being
referred by your current clients, then you're probably
not doing as great a job as you need to be doing with
them, but that's fixable!