How to win and keep customers

So, the politicians, the press and the market commentary pundits will tell us that 2014 could be the UK's year for recovery and a much sought-after increase in company fortunes. This is the year for growth!

Developing the options for growth is quite straightforward even if we have to go back to base marketing principles. Using market analysis models, options can be presented of where growth could come from. Your decision is one of inorganic or organic growth, with or without some form of partner. For most small businesses it's about reaching further to find new customers.

Talking with a group of small businesses recently and taking them through business planning principles, I positioned the old concept of the 'leaky bucket'. In a traditional business environment this means that you fill up a bucket with new revenue but at the same time observe revenue leaks through customer attrition and price erosion. Murphy's Law will dictate events.

"Growth is good, but smart growth is better."

What really concerns me is when you go through the effort to win business and then lose it through the performance in your delivery and service to a customer. But before we point the finger of blame, everyone in a company is accountable for service excellence; it is just that some parts of your organisation are more responsible for it than others. The rhetorical question I have behind this challenge is why are we more competitive to win business than maintaining it?

The UK Customer Satisfaction Index, which monitors consumer feedback across multiple sectors in B2C markets tracked steady growth in satisfaction from 2008 up until 2012, then it plateaued. The average peak at this point was 78.2% Satisfaction. To January 2014 this had dropped back nationally to 77.1%. Most companies saw a drop in their rating over the year. Now, there is a high end (companies that perform well) to the result range and there is a low end, but if we are looking at a cross section of the economy, the potential effect of 23% dissatisfaction is quite harrowing.

As 'Service' is delivered by your organisation and is not impacted by your competitors, it's like taking a pick axe and making your own holes in the 'Bucket'.

The key linkage on satisfaction is whether a customer will retain its relationship with you for the longer term and will they advocate (recommend) buying from you next time. We can draw equal analogies for B2B markets, but if you are in these segments you may want to test your own Satisfaction and Leakage results to see what the extent of the challenge might be in comparison.

Small businesses and entrepreneurs starting out in their businesses have an advantage as they can design their company with excellence in mind. As you grow and become more complex, you can still fix things, but it may take time to make the change.

So, let's have a look at the case for growth again, where all your hard-found monies will be spent in stimulating the market. You get your team excited for the extra push, but forget to secure the revenue base in your existing model. Growth will usually come at a discount on your profit margin. Your existing base would usually be richer in profit. Add one final cost multiplier to the equation; the popular view across marketers across the Internet would suggest that the cost of winning a new customer is 6-7 times that of retaining an existing customer.

Growth is critical for economic recovery and history has proved that we are great at innovating and communicating. However, this time let's take a look at the complete end-to-end business model, define the changes to compete and drive the whole company in one direction to deliver to the expectation of your customer offers.

David Dugdale is founder of Dugdale Consulting and manages a practice focused on marketing, strategy, planning and change. David is on Twitter as @GrowthThinker and is a great advocate for the Growth Vouchers programme. Get in touch with David via his Marketplace profile.

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