Discover proven, accessible approaches to thinking strategically about your business in order to make more informed decisions, with a focus on the six business drivers that will put you in a position to succeed.
By Bryan E. Pearce
Director of Strategic Business Planning
Gray, Gray & Gray, LLP
“If you don’t have a customer, you don’t have a business” – Craig Heatley, Founder, Rainbow Corporation & SKY TV, New Zealand
Leaders of successful high-growth businesses fully understand and appreciate the importance of really understanding their customer relationships. They are able to clearly articulate the “Unique Value Proposition” that resonates with existing customers, which will also be attractive to prospective new customers.
How do you determine if you really understand your customers? You should be able to clearly answer these five questions about your existing customers. If not, you may wish to get to know them better!
- Have you “segmented” your customers recently? In many businesses, a relatively small percentage of customers account for a large percentage of revenue and margin. Yet business leaders seldom analyze customer activity and profitability to determine who their “best” customers really are, or pay them the attention that they deserve. For example, as a member of JetBlue’s Mosaic frequent-flyer program, I appreciate that everyone from Gate Agents to Flight Attendants recognizes my status and thanks me every flight for “being Mosaic.”A further refinement of customer segmentation is to consider the indirect costs of serving certain customers, such as excessive service requests, late payments, and negative interactions with your team.
- Do you know what your customers like (and don’t like) about working with you? There are many dimensions to this analysis, including:
- Why do customers choose to deal with you instead of the competition? Is it price, service, quality and reliability, ease of doing business with you, or your people?
- What can you improve upon and innovate that will further strengthen customer relationships? This might include developing new products and services, digital transformation of the way customers do business with you, sharing how to better use your products/services, and continuously focusing on cost reduction opportunities that can be shared with customers.
- Are you leveraging the power of technology, including data analytics and AI, for greater insight into customer buying behavior? With the technology available to you today there is no excuse for you not to have access (often in real-time) to information that can help you better understand how and why your customers act, what they want, and the trends they are exhibiting. But having additional insight is only the first step. Are you then using this knowledge to provide more responsive service to your customers?
- Do you routinely communicate with customers to determine their satisfaction levels and other valuable information? Leading companies use a variety of digital and in-person methods to regularly measure customer satisfaction levels, and act quickly on apparent deficiencies. These techniques might include:
- Customer satisfaction surveys – via email, phone or hard copy
- “Premium customer” visits by company management
- Net Promoter Scores (“NPS”) that determine the likelihood of a customer referring you to someone else
In addition to gauging customer satisfaction, these periodic interactions – especially those done face to face or by phone – can help you to better understand important matters such as:
- Competitive activities (discounted pricing, new offerings, digital capabilities, etc.)
- Customer needs for new products or services, or support in new locations
- Issues with specific people in your company who interact with customers
- Preferences for “how they buy,” including the role of your sales force (inside and outside vs. digital), channels, partners, and managed services vs. outright purchases
- How do you build out a 2×2 matrix for growing revenue? Equipped with such information, you can build out a simple matrix to define your revenue growth options, identifying what growth will come from new vs. existing customers and from new vs. existing products/services. If there are significant apparent opportunities from new customers or new products/services, you can explore your options for acquiring these through internal sales and product/service development initiatives or from M&A or other transactions.
Working through these questions is an essential start for any Strategic Business Planning process. Other key areas naturally follow, such as identifying the team you need around you and ensuring that you have sufficient financial resources to fund growth.
Our next article in this series will look at Strategic Business Planning issues around the team of people you need to take your business to the next level.
Get in touch with Bryan Pearce, our Director of Strategic Business Planning, at (781) 407-0300 or at bpearce@gggcpas.com to explore how we can help you define your own future.
