Improve Customer Retention With Proper Resource Allocation

How many customers do you have? Are they all the same, are they all equal? So many places I visit have a mantra that “we treat everyone with our very best service.” That’s a good thing. But when it comes to establishing priorities and resource allocation, you may take a different view. The $1-million-a-year customer that has work every week should be looked at differently than the customer that does two jobs a year for a grand total of $1,500. They probably are treated the same way, with respect and dignity and attention to every detail. Maybe the difference isn’t how they are treated, but in how and when their work gets processed and by whom.

Here’s my dumb analogy. Every hotel, airline, and rental car company has a loyalty program. The members of those programs pay the same price for services as the non-members. But the services they get—the “fast lane” and expedited customer service, etc.—are some of the differentiators. So back to your company. Do you have expedited customer service and a fast lane for your best customers or do they sometimes wait in line behind the guy struggling to find his license and credit card to get the rental car. Think about all the processes in the shop, particularly in the front end with how estimates and orders are processed, and phone calls and emails are responded to. Is your current system making it easy for your customers to board the plane or are they stuck in line waiting to board. What would improving the way you deal with your top customers do to your customer retention, and could it help with the attrition that happens each year?

Recently, at a client of mine, we reviewed a cross section of their customers. What we found was the fuel for this idea. We found that 97 percent of their sales came from the top 50 percent of their customers. The second 50 percent of their customers represented 3 percent of their sales. That lower 3 percent of sales (50 percent of the customer list) can sometimes take up as much time as the top half because “we treat everyone the same.” I’m not advocating that you start up your own loyalty program or that you fire the lower 3 percent of your business. I am saying that you need to properly allocate your resources, properly use the applications and technology you currently have to help reduce “touches,” so that you can deliver a great experience to all that helps with retention, but at the proper cost per customer transaction.

So back to that loyalty program … if you were to do it, what would it include, what benefit would the customer get from it, and what might be the thresholds you set for membership? Think about it—when you’ve come up with your list, why don’t you just start implementing these for your top customers. A great exercise to do in gauging your soft costs of handling the many customers you probably have, give it a try.

Please share any thoughts or ideas you have on this. Good luck and remember, doing nothing is not an option.

Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to owners and CEOs in the Graphic Communications Industry by providing direct and realistic assessments, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at mphilie@philiegroup.com.