What‘s Better Than Getting a New Customer?
Winning new customers is an incredible feeling that is viewed as the Holy Grail for businesses. Especially, for cash-starved startups. All businesses work tirelessly to win new customers though. So, what is better than getting a new customer?
Nope, the answer is not getting two new customers. The answer is retaining an existing customer. The beauty of the customer journey is that when done well, customer retention rises into the high ninety-percent range, depending upon your industry. It is more cost-effective to retain customers than spending more on customer acquisition cost (CAC) for new ones. Yet, businesses still must balance both new customer growth and customer retention rates. Spending time, resources, and money on mapping the customer journey does this. Building your Revenue Engine is critical too, however, I am going to focus on the customer journey here. Here is a link for your later reading on how to build a Revenue Engine using Renaissance Methodology.
Let’s define customer retention. It is the sequence of actions and interactions businesses execute to prevent customers from going elsewhere so they can retain them and grow them into loyal customers. A businesses’ ultimate goal is to turn customers into “raving fans.” These are the awesome people who think your business is awesome. They keep coming back, spending more and refer their friends and family. Ideally, they boast about your business online.
Retention matters immensely because according to Gartner, a five-percent increase in retention can increase profits by twenty-five to one hundred and twenty-five percent. Shazam, that is what 10X growth is all about! That does not even account for the profit increase due to referrals or online rave reviews.
How to measure customer retention; simply measure the percentage of your retained customers during a given time you feel is most appropriate for your business/industry. This is the opposite of your customer churn rate, which measures the percentage of customers leaving you in a time frame you choose.
Businesses typically use two different formulas to calculate customer retention: The first way is if they start with 100 customers in a month and end with 80 then they call their retention rate 80%; 100-20/100=0.80%. This does not use new customers gained in that month in the formula. The second way is if they start a month with 100 customers, loose thirty, but gain 50 new ones the use the 50 new ones in the formula; 100-30+50=120-30/100=0.90%. I recommend you use both.
Test your customer journey skills in 2-minute with 7 questions:
- Do you have an up to date customer journey map (Less than 1-year old)?
- What is your customer acquisition cost (CAC)?
- What is your customer retention rate?
- Is your customer retention rate (If you know it) good for your industry?
- What is the top reason people choose your competition over you?
- How many “special moments” do you have built into the customer journey?
- When does your customer turn into “raving fans?”
* How do you think you answered? What score do you give your company?
Growing 10X happens when you wow customers. You wow customers when you improve your customer retention by improving customer experience. Customer experience can be dramatically improved when you build a customer journey map and make concerted efforts to make each touchpoint with prospects and customers “amazing!” After all, you owe it to your market and your employees and stakeholders to create an amazing-wow experience. This must be created at every touchpoint from initial awareness of your business through the courtship to the sale, into the delivery/use of your offering, and beyond until the buying cycle repeats itself over and over again.
The customer journey map shows all the touchpoints that customers and your business have action/interactions. The customer journey map is a diagram illustrating the sequence your customers go through while engaging with your company. More touchpoints equal more complicated journeys. Mapping a timeline next to this journey is key. You can measure specific segments of the interactions or you can measure from start to sale to delivery/consumption to repeat business. Win/loss analysis is imperative to capture also.
Beginning the creation of the customer journey map. Use the framework I outline below to analyze what is happening at each interaction. Keep in mind the journey is non-linear as sometimes people go from awareness to purchase or jump forward or backward from various touchpoints. Begin creating the customer journey with these steps:
- Actions – Capture the details of what prospects and customers are doing during each interaction. Focus on what they are doing and not what your company or your channel partners are doing.
- Motivations – Why are prospects and customers compelled to continue the next interaction? Examine the emotions and why they care.
- Questions – List the reasons preventing them from going to the next interaction. Is it uncertainty, confusing information, fear, etc.? Find out.
- Barriers – Focus on the processes, structure, implementation, cost and other barriers slowing down or preventing people to continue to the nest interaction.
How you attain the details for the framework is key. Surveys and focus groups often fail to capture critical intrinsic details for understanding the experience. Direct your efforts on in-depth ethnographic-style interviews and use in-context observations. Get prospects and customers to do the work for you and have them map out their journey.
Building your customer journey map: There is no single way to build a journey map. Based on the niche, product or service you can use different best practices and design styles. I start with six steps explained below. You can customize along the way based on your type of business and market conditions.
Before looking at six these journey map-building steps, consider this. There are positives and negatives for the journey map, just as with any market research. Focus on two objectives, identifying the goal and purpose behind it and knowing how to use it to create and implement wow-amazing experiences at every touchpoint. This is best accomplished when you get your internal team philosophy obsessed with “Providing an experience to your target market that is connected and seamless to your brand.” Your market expects you to know who they are, remember who they are, and what they want or need. They expect to be able to stop and reengage whenever they feel like it or have the time and can pick up where they left off, without repeating or clarifying their wants or needs. Making this happen and wowing them along the way accelerates your growth 10X. It takes a lot of dedicated hard work along with extremely clever work done by the right people.
Six steps to building your customer journey map:
- Buyer personas – Know thy customers! Get into their minds and walk in their shoes to understand how they think, behave, and why they do what they do. Despite the uniqueness of individuals, people can be grouped based on various demographics and psychographics. This data becomes your buyer personas. To complicate things, realize that people’s personas can change based on the touchpoint they are at in the journey. Sure, it is challenging, but powerful too. Using personas helps create a symbiotic relationship between buyers and your company. Knowing them allows you to wow them.
- Buyer goals – After discovering the personas you can progress to deeper analysis to understand what each persona seeks to accomplish as they go through the customer journey. Focus on their ultimate goals; I.E. making sure they get a good price, receive desired features, review options, or gain knowledge. Remember they can jump back and forth in the journey, so keep the focus on meeting the goals and answering questions at each touchpoint. You can best understand their goals by getting intelligence such as user test feedback, studying customer support live discussions, service transcripts, call recordings, or emails. Investigate the questions customers ask, web presence analytics, surveys, net promoter scores, and interviews. This data is a goldmine and like any mine, you have to work to get to the gold.
- Buyer touchpoints – Any contact with your brand before, during or after a sale is a customer touchpoint. They can be online, in person, over the phone, video, or anything that constitutes an interaction. Some are more important than others. List every possible touchpoint. Avoid feeling discouraged by such an open-ended pursuit, because the touchpoints are finite. Follow the path of “Where do people go and how do they get there when they: A. Have a problem/want/need that your product or service solves B. Look for information about the product or service C. Find the product or service that solves their problem/want/need D. Make a purchase decision E. Engage the business again after the purchase. Answering these questions by, asking people directly about their experience with your company, probe competitors, talk to sellers and marketers, and analyzing web analytics, reveals all the touchpoints. Once you accomplish these initial three steps then, congratulations, you are ready to start mapping your first draft of the customer journey map. I suggest you use colored sticky notes on a whiteboard and draw arrows to indicate the possible flows forward and backward. Keep this complexity as simple as possible. Especially, since a lot of changes will be made along the way.
- Buyer pain points – Now it is time to assemble all the quantitative and qualitative data gathered so far. Take a high-level perspective to pinpoint barriers that challenge, slow down or stop the buying process. These are the pain points in the journey. Ask your, staff, channel partners, prospects, customers, former customers, and yourself questions to reveal pain points. Be candid and direct. Ask open-ended questions and then shut up and listen. Look for answers to; A. Do people get what they want from your web presence, not just your website B. What are the issues causing dissatisfaction or friction C. What would people want to see added or taken away D. What would people do differently if they owned your business E. Where and why are people deciding not to choose your product or service? Seek out the pain points, be empathetic, sincere, and solve them so your new sales skyrocket while your retention rates grow in parallel. 10X growth is the result.
- Identifying, prioritizing and correcting – Fixing people, process, systems, tools and other types of barriers in the customer journey is critical. Of course, you cannot fix what is not identified. In the previous steps identifying barriers was key so now it is time to list them, prioritize them and begin correcting them. Get answers to these questions; A. What must be fixed, designed or built B. Can your business recalibrate a single or just a few steps, change a process or is restructuring necessary C. What simple changes make the biggest impact D. How much time, people, resources, and money can you dedicate to the barrier list E. What order of importance versus available capabilities exists to drive your prioritization? To guide this daunting process, stay true to not just maximizing each touchpoint’s experience, but to the main purpose, which is to progress people through the journey to purchase. Then you can work more on delivery and usage experiences of the journey and go back and calibrate individual touchpoints. Take one bite of the elephant at a time while keeping a high-level overview of the customer journey design and building process.
- Evolving via metrics – Most businesses don’t have a true customer journey map and those that do have outdated maps. 10X growth means building the customer journey mapping into the everyday strategy, tactics, and operational grind. Meaning, making this a transparent focal point for everyone involved. Creating KPIs and dashboards that measure results daily and comprehensively is vital. Broadcast these metrics to all the internal stakeholders and when they are great enough you can broadcast them to the market too. Use the Theory of Accelerance to build this model. This will zero in on opportunities based on qualitative data of your market’s perceptions and experiences. Test, calibrate, and retest the journey map quarterly, or at least every other quarter. Do this right and the customer journey mapping of every touchpoint will be the guiding light for how to staff, structure, manage, and incentivize all your people and the market. The way to grow 10X is to simultaneously build your custom Revenue Engine to sell more and continually strive to improve your customer journey map. This will bolster customer retention along with word of mouth. The result is having an Amazing Brand! Totally worth it.
Conclusion: You owe it to the people in your target audience, your employees, and to all the stakeholders involved to provide an Amazing-Wow Customer Experience! Being average at best is what makes the saying, “All products and services are a commodity,” true. Being the company that provides Wow-Amazing Customer Experiences at all touchpoints possible is how you reach the next paradigm level. Distinguish your company’s offering by endeavoring to design and build a constantly evolving customer journey mapping process. The complicated answers to how to hire, fire, research & develop and manage your business can be dictated from the capability, resource, tools, capacity, and time constraints defined in the customer journey.
Now, think about the score you need on the test I asked you to take earlier; the 7-question test for you and your businesses’ skills in the customer journey. What score do you need to be great in business? If there is a gap between your current score and where you want to score, then decide what to do about it. Do you have what it takes to shake up your people, processes, and tools to build a business that the market describes as providing consistent Wow-Amazing Customer Experience?
C-Level Global can discuss how to build your custom Revenue Engine and your customer retention business model focused on the customer journey mapping. Contact us for a consultation.