Enhancing Financial Stability by Creating a Balanced Customer Portfolio

Published with permission from Bart Schwartz, Swartz Consulting

About five years ago a new industrial manufacturing client of mine was proudly showing me its newly constructed segmentation model. It primarily sold into six different industries, but automotive accounted for roughly 40% of its revenue. When I asked what the company liked so much about selling into automotive, the answer I received was “Nothing”. In fact it had the worst price realization and consumed the most resources per revenue dollar of any industry served. But when I asked what the company was doing to de- emphasize its focus on automotive, I received blank stares. They had never considered the idea of shaping who their customers were. When the economy eventually slowed in ‘08/’09, company revenues dropped by 45% year over year. Had its exposure to automotive been less significant, the drop would have been less severe. The bottom line is that it isn’t enough to simply understand the segmentation of your customer base, you have to actively manage and shape your customer base in a way that mitigates your risk and fosters financial stability.

Creating a balanced customer portfolio requires a company address three critical questions:

1. What do we know about each segment’s prospects?Assessing a segment’s prospects requires both a macro and a micro-economic perspective. From a macro perspective it is important to understand what the major opportunities and risks are for the segment as a whole. For example, the birth of on-line shopping created an increased need for transportation and shipping services. These industries grew significantly in those years and many companies that served them benefited. Another example is the alternative energy industry which is highly dependent upon legislation for tax credits that affect its spending. A quick change in legislation can change fortunes quickly. From a micro-economic perspective the company must understand how well-positioned it is to serve the segment profitably in the future relative to the competition.
2. What does our ideal segment allocation look like? Once the company understands each segment’s prospects, it should determine the targeted amount of business it wants from each segment. Designing a customer portfolio is not all that different from designing a financial portfolio. No one knows what the future holds, but experience has shown that investors that strike the right balance of exposure to different instruments (e.g., stocks versus bonds), geographies (e.g., Europe versus Asia) and industries (e.g., energy versus transportation) tend to achieve better returns. The same holds true for a customer portfolio. The company should consider its goals and tolerance for risk in setting its desired segment mix.
3. How should we guide our investments to achieve the ideal allocation? Achieving the desired mix is typically a function of how the company uses its resources. If the company would like to increase the portion of its business coming from a particular segment it should direct activities like product development, marketing and sales targeted towards that segment. Segments that are less in-focus should receive relatively less investment.

Like any strategic objective, managing a balanced customer portfolio requires discipline and focus. Increasing emphasis on one segment often means not committing resources to a potentially promising opportunity in another segment that is targeted to be de-emphasized. The portfolio needs to managed and adjusted constantly, but the long-term benefits of stability and risk mitigation are well worth the effort.

Bart Schwartz, Managing Principal, Schwartz Consulting, Inc.

Schwartz Consulting is a boutique consultancy that focuses on strategy, marketing, sales and service for manufacturers and distributors.

For more information, visit www.schwartzconsult.com

The Right Way to Measure Your Customer Experience

Attempting to measure the customer experience with a single metric such as customer satisfaction or customer advocacy is overly simplistic and risky. Instead, companies should dig deeper and establish a portfolio of measures that can determine how each touch point contributes to the overall experience.

The Total Customer Experience is Greater Than the Sum of Its Parts

The customer experience is a complex process that can consist of multiple touch points; a process that can be broad, long-running, span multiple channels, and can be influenced by any combination of internal and external factors. Effectively measuring the total customer experience requires a more acute understanding of its individual parts.

The customer experience process does not begin and end at a store, sales representatives, web site or call center. It extends from the moment the customer becomes aware of your company and is comprised of multiple independent interactions, transactions, and contacts along the way.

Each customer experience is made up of any number of touch points and customer encounters, each of which should be measured independently to determine their contribution to the overall experience. An issue encountered at any one of these points can dramatically influence the overall experience.

For example, the quality of an automobile is an aggregate measurement of the quality of the individual parts combined with the integrity of the overall design and assembly process. If any one part fails to perform properly, the overall perception of quality is diminished. Likewise, even if every part is perfectly manufactured but isn’t arranged or assembled in a useable manner – the perception of quality will suffer. Only when quality manufacturing is guided by quality design will the experience truly be maximized.

Although overarching metrics such as customer satisfaction and customer advocacy are quickly becoming standard metrics in today’s companies, attempting to measure the customer experience with a single metric can be overly simplistic and risky. Effectively managing the customer experience requires effective measurement and management of a portfolio of metrics that will provide insights into what is - or is not - working.

Identify Your Touch Points

The customer experience is a collection of touch points encountered by the customer that includes the attraction, interaction, and cultivation of customer relationships. Touch points may include advertisements or promotions, online and in-store shopping experiences, transaction and bill processing, and post-purchase delivery, usage, and support.

The total number of touch points that the customer encounters goes well beyond the point of sale. Establishing an accurate inventory of all of your company’s touch points – both intentional and unintentional - can mean the difference between success and failure.

Defining when and where the customer experience begins and ends is perhaps the most difficult task facing any business. Too often, companies define the lifecycle and customer touch points too narrowly, leaving critical elements of the customer experience to chance.

A touch point is defined as any customer interaction or encounter that can influence the customer’s perception of your product, service, or brand. A touch point can be intentional (an advertisement) or unintentional (an unsolicited customer referral). In this era of broad customer skepticism, the unintentional touch points often matter the most. Which would you trust more: a company’s ad pitch or your best friend’s personal referral for a product? Both are touch points, but one carries much more value than the other.

When your business interacts with a customer, it’s often easy to overlook what is really going on; you are touching them in many, perhaps subtle, ways. When it comes to customer experience management, the right touch can make all the difference. To do it right, you must first identify all of your potential touch points and then work to measure and optimize each one.

Measure Individual Touch Point Effectiveness

Each customer touch point is typically designed for a specific operational purpose. An advertising touch point may be designed to build brand awareness or to identify prospects. A point of sale touch point may be designed to execute transactions. A call center touch point is designed to resolve customer issues. Each touch point is unique and contributes to the overall customer experience in different ways.

Effectively measuring each touch point requires a holistic approach to understand the contribution to both operational and customer relationship objectives. For example, the operational side of an advertising touch point may be measured in terms of a conversion rate. The customer relationship side of the same touch point may be intended to influence the customer’s perception or awareness of the company’s brand.

Measuring the effectiveness of each touch point should balance both operational and customer experience objectives. Operational metrics are typically easily identified, while customer relationship metrics can be elusive. Ideally, timely and recurring customer feedback is collected and compared to operational results to provide a more complete picture. In doing so, companies can obtain a better understanding of how each individual touch point is contributing to the overall experience.

For example, let’s say a business establishes a goal to achieve a 5% click-through-rate (CTR) with their pay-per-click campaign. If the actual campaign achieves 100% of that goal, they might consider it a success. However, customer perceptions might not be so rosy if the ad promised a product, promotion, or discount that isn’t readily available or is difficult to obtain. As a result of customer confusion and aggravation, the company may achieve only 50% of their revenue goals for the campaign.

Measure the Overall Customer Experience

In order to effectively measure the overall customer experience, companies must accurately measure the contribution of each individual touch point as well as the overall level of customer satisfaction and advocacy. At times, the results of one touch point may have an unanticipated affect on other aspects of the experience.

Consider how the individual touch points associated with a fictitious product launch might impact the experience at an electronics store:

1. Product Innovation: A key manufacturer is developing a leading-edge product that will be innovative in the marketplace. The media learns of these developments and publishes reports that an amazing new product is coming soon. Consumer excitement and anticipation is driven to extremely high levels, although actual ship dates remain unknown. (Score: 10/10)
2. Electronics Store: Employees at the store and call center are inundated with inquiries about the pending new product but are unable to provide any additional information regarding availability nor can they accept pre-orders. (Score: 3/10)
3. Marketing: The product launch date is set and marketing begins to actively promote the new product and its innovative features. Consumer anticipation is again driven to new highs as the launch date approaches. (Score: 10/10)
4. Product Purchase: On launch day, consumers flood the store and web site to get the new product. Those customers that are fortunate enough to purchase one are extremely satisfied. (Score: 10/10)
5. Out of Stock: Initial euphoria quickly turns sour as the store runs out of stock and thousands of customers are turned away without one of the highly coveted and heavily promoted products. Customers are told to check back again in a few weeks. (Score: 1/10)

For a handful of customers who were able to purchase the product, they are extremely satisfied with their experience and are willing to tell all of their friends about their latest purchase. Conversely, however, many other customers who were turned away empty-handed are now frustrated and highly dissatisfied with the experience.

Relying solely on customer satisfaction or customer advocacy measures may not illuminate how each touch point contributed to the overall experience. Simplistic customer satisfaction and advocacy scores may mask the underlying factors that either contribute to or detract from an exceptional customer experience.

Evaluating how each individual touch point contributes to the overall experience in this scenario can help to identify specific areas for improvement. While touch points 1, 3 and 4 scored high, touch points 2 and 5 clearly have room for improvement.

Focusing only on an aggregate metric without understanding or managing the contributing factors can yield unpredictable results. Companies seeking to improve their overall customer experience should establish customer experience measures that correlate individual touch point results to overall customer experience measures.

END NOTES:
“How Do I Touch Thee? Let Me Count the Ways.”, The Clear Brick Blog, April 16, 2008.

Find Your Torch Points

Without a doubt, Customer Relationship Management – or CRM – has become a mainstay in current day business vernacular. Business professionals now talk effortlessly about touch points, customer experience, customer segmentation, and cross-channel integration. CRM has come a long way since its early days, but there’s still a lot of room for improvement.

Despite the maturing of this once nascent business capability, companies continue to struggle to consistently deliver seamless, effective, and meaningful customer interactions. It’s no wonder that customer satisfaction can be elusive for so many companies.

Although most companies will proudly tout their CRM capabilities, the true measure of success is customer satisfaction. The stakes are indeed high; in a competitive market, the ability to build and nurture customer satisfaction can make the difference between success and failure.

Too often, however, even the best of CRM intentions can miss the mark; promotions can miss the mark, cross-channel experiences can be inconsistent, and call center navigation can be inconvenient. When issues arise, they create a torch point; a defect in the CRM process that can leave the customer wanting or frustrated. The severity of each torch point can diminish customer satisfaction or lead to outright defection.

Finding the torch points in your business requires an unrelenting focus on quality, a heavy dose of process discipline, and an industrial strength measurement capability.

Consider the automotive industry; manufacturers were taught a costly lesson that defects and lower quality led to rapid erosion of customer satisfaction, brand perception, revenues, and profits. Automotive manufacturers responded by developing an unrelenting focus on quality; they managed process quality, measured every minute detail, and developed robust product testing capabilities.

In our automobile example, defects are easy to spot; when the car won’t start, the transmission fails, or the air conditioning goes out – it’s pretty obvious that there is a problem. In the CRM world, however, the torch points aren’t so readily evident. Businesses have to look closer to see where their customer relationship capabilities might be breaking down.

CRM torch points can occur in a variety of situations or interactions. Here are just a few examples that seem to occur too often in today’s business environment:

1. Account number fumble: When a customer contacts a call center they are asked to enter their multi-digit account number. Yet when they get transferred to a live customer service agent, they are asked for this information again.
2. Promotion defect: A consumer products manufacturer or retailer runs a promotion on Father’s Day weekend for 20% off a particular item. Some customers snap up the deal but forget to bring their coupon or specific promotion code. If and when the customer returns with the coupon to collect the 20% discount, the store won’t honor it since it is now past the promotion period, even if the customer has the receipt to prove the date of purchase.
3. Sorry, wrong channel: A customer visits a web site only to find that they can’t find the product they were looking for unless they visit the store. Conversely, they visit the retail store only to find out that they are out of stock and are directed to the web site to see if it’s available online.
4. No card, no benefit: Many businesses utilize the ever-popular loyalty card to dispense rewards or discounts. An extremely loyal customer drops into their preferred store without their loyalty card. Despite being an extremely loyal customer, the store refuses to dispense any rewards or discounts without the physical loyalty card.
5. Feel the pressure: Cross-selling and up-selling can be lucrative for many businesses, but applying pressure sales to get customers to buy more can often have a negative impact on the customer experience. A customer that is ready to complete their shopping experience is confronted with a pressure sales environment trying to get them to ‘buy more.’

These are just a few simple examples of torch points that can occur anywhere in the customer experience lifecycle. Even the best of CRM intentions can sometimes miss the mark; promotion policies can create buyer’s remorse, cross-channel experiences can be inconsistent, and call center navigation can be inconvenient. When CRM torch points arise they can leave the customer wanting, frustrated, and unsatisfied.

If your business smells CRM smoke, it might be time to put out the torch point fires.

Do you know where your CRM torch points might be?

Inside Jobs, June 23, 2008

Got Blueprint?

Customer Experience: Fine Architecture or House of Horrors?

Imagine what would happen if you had dozens of architects and hundreds of contractors all working on your business. Now image if there was no master plan and each individual spoke his or her own unique language. It’s not hard to imagine that you would have something that would resemble the Winchester House - the now-famous 160-room house that was cobbled together over a 38-year span with no master plan. The house is notorious for stairs that go nowhere, doors that open to a 2-story drop, and a maze of rooms, hallways and doorways that can perplex even the most seasoned of navigators.

Losing site of the big picture can happen to even the best of businesses. When short-term business challenges inevitably arise, decisions can be made in haste to address them. Without a master plan, those seemingly innocent decisions can begin to create a burden for the company in the long run. Independent and uncoordinated business initiatives can result in processes that don’t connect, systems that don’t play well with others, and departments that develop their own unique business lingo that is not universally understood by others.

Like the Winchester house, each individual project may seem like the right solution at the time. However, the compound affect of numerous independent and uncoordinated projects and solutions can result in an Achilles heal for the company: True change becomes increasingly hard to accomplish; integration and sharing of key business data slows to a crawl; and enabling cross-functional processes (aka end-to-end processes) becomes nearly impossible to accomplish. Each function may seem content, but the business as a whole can begin to suffer due to inflexibility, knowledge hoarding, and turf wars.

Indicators that your business may suffer from the ‘Winchester House’ syndrome:

1. Process Indicators: Business processes are not well defined or understood and each function prides itself on simply doing whatever is necessary to ‘get the job done,’ even if it requires winging it now and then. Each functional area designs, develops, and manages its own unique processes with little or no sharing of best practices across functional areas.


2. Technology Indicators: Each functional area has its own set of business applications and data. Applications often don’t work well with others and data is not consistent across departments. Key business information is fragmented and stored in multiple locations and collecting data to conduct company-wide analysis is a long, difficult, and largely a manual process.


3. People Indicators: Individual functional areas have very specialized people, and it takes years to train new employees to ‘learn the ropes’ of the business. Employees care only about their functional area, have their own set of performance goals and metrics, and don’t understand how or why other functional areas get things done.

Unfortunately, when companies lose sight of the bigger picture and become a victim of the ‘Winchester House’ syndrome, the customer experience invariably suffers. Customers can be inconvenienced by inconsistencies between touch points, lack of integration between channels, and absence of a meaningful relationship between customer and company. The company’s internal processes, policies, and infrastructure often ‘get in the way’ of providing the customer with what they want; an emotional connection to the company powered by great service.


See the Forest Through the Trees

Businesses that want to avoid this fate can and should establish, adopt, and diligently adhere to an enterprise customer experience blueprint; a holistic model that defines how every component of the company should work together in a seamless and consistent manner to enable and optimize the customer experience. Furthermore, the enterprise blueprint can help a business to develop a detailed master plan for where the business is today and where it is going.

An enterprise blueprint can help any business to avoid the ‘Winchester House’ syndrome by serving as a detailed model for how the customer experience is influenced and enabled by the compilation of people, process, and technology assets. A comprehensive enterprise blueprint will consist of a detailed definition and model for each major component that comprise the business. This model can be invaluable for identifying any current deficiencies as well as charting a future course for the business.

A comprehensive enterprise customer experience blueprint includes several key dimensions:

1. Customer Experience Lifecycle (Customer): A formal definition of the customer experience lifecycle process from the customer’s perspective. The process includes a complete end-to-end view of how customers are attracted, acquired, facilitated, served, and cultivated well after the point of purchase.


2. Enterprise Business Process (Process): A formal and detailed enterprise process model that defines all major processes, sub-processes, and activities that comprise the enterprise. Ideally, the process model should be defined as a hierarchy to allow both low-level analysis and optimization as well as executive-level roll-up of detailed activities into larger process areas.


3. Enterprise Systems Architecture (Technology): A complete information technology model that identifies and defines key IT capabilities, applications, data, and infrastructure. Ideally, the components of the IT architecture model should be expressly linked to the customer, process, and people dimensions of the blueprint.


4. Enterprise Organization Chart (People): An enterprise-wide organization chart that includes an up-to-date definition of the reporting structure, roles, and responsibilities.


5. Enterprise Business Metrics (Value): A standardized definition of all key business metrics that includes a definition of how the metric is calculated and where key data is sourced from in the enterprise.


6. Corporate Strategy (Strategy): A clear and well-defined strategy that sets the long-term goals and directions for the company. The corporate strategy should include components to define specific strategies for areas such as the brand, market, product, service, price, promotion, channel, and customer experience.

Enterprise Blueprint – It Does Your Business Good

Businesses that are seeking clarity to their current and future business environment can develop their own enterprise customer experience blueprint by identifying and analyzing their key business assets:

1. Assemble available business artifacts: Gather all available customer experience processes, business processes, technology architectures, organization structures, business metrics, and strategies that are available for the business.


2. Identify gaps and inconsistencies: Evaluate the existing business artifacts to identify what is missing, where inconsistencies or duplications occur, or where additional detail is lacking for each of the major dimensions (customer, process, people, technology, value, and strategy).


3. Create standard definitions and assemble the blueprint: Create and agree to a common set of standards to accurately define and describe each dimension of the blueprint and close any gaps that are identified. Consolidate and summarize all artifacts into a comprehensive enterprise customer experience blueprint and keep them up to date. Use the blueprint as a management tool to guide the business going forward.

Developing and using a comprehensive blueprint has its benefits; businesses that define and maintain a comprehensive enterprise customer experience blueprint can improve their return on investments, increase productivity, and improve the customer experience:

• Improved ROI: Initiatives that are better aligned with the enterprise blueprint can result in fewer conflicts and duplication of efforts. Furthermore, short-term efforts can be better aligned with long-term goals so that all resources are rowing in the same direction.


• Increased Productivity: Business can run more smoothly and produce more for the same or less effort by leveraging common resources, speaking the same process and business metric language, and by using a common and consistent set of information. Furthermore, businesses can make better decisions based on a more holistic and consistent view of enterprise-wide capabilities, issues, risks, and opportunities.


• Improved Customer Experience: Businesses that have aligned their people, process, and technology components are better equipped to provide meaningful customer experiences. When aligned and consistent, the business infrastructure can serve as a true enabler – rather than a hindrance – to powerful customer experiences.

Executive Summary

Over the course of the lifetime of a business various business challenges, opportunities, and issues will arise and be solved by numerous and seemingly innocent business decisions; decisions that result in new processes, organizational structures, and systems. Without an overarching blueprint to guide these decisions, however, the legacy of various and uncoordinated initiatives can be crippling. As more and more independent decisions are made, the weight of inconsistent processes, duplication of duties, and incompatible systems can burden both the company and the customer.

Business that want to avoid this fate can and should establish, adopt, and diligently adhere to an enterprise customer experience blueprint; a holistic model that defines how every component of the company should work together in a seamless and consistent manner to enable and optimize the customer experience. A comprehensive enterprise customer experience blueprint includes several key dimensions including a 1) Customer Experience Lifecycle Process (Customer), 2) an Enterprise Business Process Model(Process), 3) an Enterprise Systems Architecture (Technology, 4) an Enterprise Organization Chart (People), 5) Enterprise Business Metrics (Value), and 6) a Corporate Strategy (Strategy).

If your business were a house or building, what would it look like to your employees and customers? Would it be structurally sound, open, and inviting? Or would it be cluttered, broken up and difficult to navigate?

Having the right blueprint can make all the difference.

Airlines Miss The Point Of Loyalty

If you’ve picked up any newspaper or business magazine over the past several years, then you know the pain and suffering that the airline industry has been experiencing. Rising fuel costs, aging fleets, employee strikes, price wars, and most recently - maintenance controversies – make for turbulent times. Just ask any of the airlines that have filed for bankruptcy recently.

In the midst of this ugly environment, airlines must do everything in their power to attract and retain customers. Their primary weapon in this never-ending battle for the customer is the embattled frequent flier rewards program. Every airline has one, and each has it’s own set of advantages and fatal flaws.

Apparently, airlines believe that the mere presence of a reward program is enough to get customers to stick around – even when the next price war wages around them. Certainly it works for some customers; there are those neurotic frequent fliers that will schedule their entire lives around their ability to keep their reward miles climbing with their favorite airline. However, I would argue that betting the health of your business on a group of neurotic customers is a shaky strategy.

Airlines simply miss the point of customer loyalty. They do a poor job of attracting the next generation of frequent fliers and do a poor job of catering to former frequent fliers.

New to our airline? Go to the back of the plane please.

First, most airline rewards programs penalize new fliers. If you are a young professional just joining the throngs of frequent fliers – then you have no preferred status with the airlines. That often means loading last, sitting in the back of the plane, and often being relegated to a middle seat that always seems to situated between two unpleasant individuals (feel free to use your imagination here).

“Just keep flying with us for about 25 more segments and you’ll get preferred status,” a smiling airline representative would say to these newbies. After surviving several experiences like that, it’s a wonder that people stick around to get their preferred status at all.

Haven’t flown with us for a while? Go to the back of the plane please.

Being on the other end of the frequent flier spectrum doesn’t work all that well either. I was a notorious frequent flier for nearly 20 years. During that time, I racked up miles and achieved preferred status on several of the major airlines. Specifically, I attained ‘Platinum’ status on American Airlines and was a proud card caring member for most of that time.

I learned recently, however, that my loyalty to American is not reciprocal.
Let me explain. I recently had to travel to Chicago on business and, as a loyal American Airlines customer, I booked a flight on American. But guess what? Despite being a great and loyal customer for years – I now have no preferred status. None. Apparently, since I quit traveling to start up ClearBrick over the past 2 years, I am no longer a loyal customer. American’s rewards program seems to be based on the ‘what have you done for me lately?’ principle. So it’s back to square one for me; back of the plane, last to load, middle seat misery.

“Just keep flying with us for about 25 more segments and you’ll get elite status,” a smiling airline representative would say to me.

Nurturing Commodity Behavior

What most airlines don’t realize is that the rewards programs that are intended to instill loyalty are having an unexpected side effect; they breed commodity behavior. Customers with no preferred status with any airline will tend to exhibit commodity behaviors; they’ll look for the lowest price or wait for the next promotion, then choose the lowest bidder.

As we’ve learned, attaining and retaining elite status with an airline can be difficult and fleeting. Take the rewards programs out of the picture and the customer is left to decide which airline to fly based on a number of very commodity-like attributes. Most airlines fly to and from the same cities, operate the same aircraft, and serve the same snacks and soft drinks. In addition, more and more airlines are merging to attain operating efficiencies, leaving the customer with fewer differentiated alternatives.

Why wouldn’t the customer simply choose the lowest cost option and continue to exhibit commodity behavior?

Breaking the Cycle

Certainly a few airlines have been able to break away from the crowd. Southwest tries to make flying ‘fun’, JetBlue adds amenities, and MidWest offers all first-class seats and a warm chocolate chip cookie. These few outliers seem to get the fact that they need a differentiated experience in order to compete for the ever-important customer.

A truly loyal customer base is not built on elaborate rewards programs or hard to attain preferred status. That’s a point that many airlines seem to miss. Rather, true customer loyalty is built over time – by delivering a unique customer experience.

With no preferred airline status anymore, I guess I’m free to choose any airline for my next flight.

First class seat and a warm chocolate chip cookie anyone?

Inside Jobs, February 6, 2008

Is Your Business World Flat?

Perhaps you’ve heard the term ‘360 degree view of your customer.’ It’s a business term to describe the ability to identify and understand all aspects of a customer’s attributes, wants, and needs regardless of the channel. So if there are indeed 360 degrees to every customer – we must assume that they are round (metaphorically speaking, of course.)

But how does the customer view your business? Is it round or flat?
The answer may depend on the laws of customer relationship physics.

Physics and the Customer Relationship

It took a simple apple falling from a tree for Sir Isaac Newton to recognize that some force was in action. Soon, he had proven that there was a force – called gravity – that constantly pulled on all things in our world. He eventually determined that if gravity were constant around our large round world that an object traveling at the right velocity could orbit the planet – much like the moon!

The next time you look up at the moon, covet her. For the earth is your business and the moon is your best customer. You may not know where she came from or how she got there, but she keeps coming back like clockwork. She is extremely loyal, doesn’t complain, and never ever asks for a refund. Every business should yearn for a few more moons.

Unfortunately, the typical customer relationship is a bit more complex than the moon. To expand our physics analogy, consider your customer; he or she is a body of mass sitting motionless out in space. As a physics refresher – that body of mass won’t move itself. It requires a force to get it moving. That’s where socioeconomic and other forces come into play. Hunger, for example, is a powerful force and will drive customers to the grocery store or restaurant. Socioeconomic factors can push customers into the market for homes, cars, appliances, health care, or other services. The force can be slight (‘Oh, I’m just browsing’) or it can be extreme (‘I’ve just gotta have that now at any price!’).

As a business, you are the earth that hopes it has enough gravitational pull to capture those customers that may be hurtling towards a purchase. The problem, or course, is that there are plenty of other businesses out there competing for the same customer. Typically, the business with the greatest pull will win the business.

Does your business have the right stuff?

The Customer’s Flight Path

So what does physics possibly have to do with your customers and your business? Plenty. A customer in motion is a customer with a want or need that could be fulfilled by your business. If your business world is flat, you’ll lack the pull to capture the customer and they’ll just continue on their path. Apply the right force, however, and you can begin to influence their purchase decision.

The difference, of course, is that gravity is a constant force – regardless of where you stand on the earth. Business forces are quite inconsistent; some touch-points work well while others may send your customers flying away into the market universe.

Apply the right amount of force consistently, however, and the customer may orbit the business for eternity (much like the moon orbits the earth). Miss your opportunity and the customer could behave like a meteor – flying by the business only once – never to be seen or heard from again.

The Fly By
A customer that is in the market for a product or service is a customer in motion. Likely, that customer will continue on her path until the want or need is fulfilled or expires. Often a business will only get one opportunity to capture her attention.

For example, a drop in interest rates may prompt a customer to consider refinancing her home mortgage. This force puts the customer in motion and she may start by researching interest rates online. During that process, she will be exposed to a dozens of potential home loan providers. She may utilize a few of their web sites to get information, but without the appropriate pull, she will simply fly by – never to be heard from again.

Many companies understand this fly-by dynamic and are increasingly requiring customers to enter basic identifying information prior to providing them with product information. By doing so, the business can establish a dialog with the customer to encourage them to come back for a closer look.

The One-and-Done Customer

Many businesses will work tirelessly just to get the customer in the proverbial door. They’ll work even harder to convert that customer into a sale. Unfortunately, many businesses spend all of their time and effort on the sale and neglect the potential that a repeat customer represents. As a result, they may spend all of their efforts trying to attract new customers, but then let them slip away out the back door. Their customer pull may be great up front but weak in the end. Using our analogy of customer physics, that means that the customer will often just keep moving on.

Consider a first-time prospect; they may linger a little longer and take in more than one perspective of your business. If you make the right impression, you just might influence their decision and even ultimately convert them into a sale. But businesses that don’t over deliver and cultivate the relationship can have a customer that is simply one-and-done. First impressions can be hard to overcome, so make sure that yours is a good one.

For example, the customer looking to refinance their mortgage already has an account with a mortgage firm. It may be a strong and reputable firm, but without an effective cultivation and differentiation strategy, the current mortgage firm may lose its existing customers when they look to refinance.

Businesses that understand this relationship dynamic will work to keep their current customers. They maintain an active dialog, create a sense of membership, and offer incentives for sticking around. Without applying an effective and consistent retention force, the customer relationship is vulnerable to the next competitor trying to lure your customers away. And that can lead to customer relationships that are like a meteor – they are one and done.

The Repeat Customer

The holy grail of any business is the repeat customer. Any customer that is willing to stick around can be worth their weight in gold. Keeping your customers around doesn’t happen by accident. Businesses must apply a constant force at every possible touch point. To be effective, businesses should understand two important dynamics of the repeat customer relationship.

First, customers in the pre-sale mode may orbit your business multiple times before deciding to buy. During this phase of the decision making process, business should realize that some customers may require up to 5-7 interactions before they make up their mind. There is a correlation between the type and complexity of the product or service you are selling and the number of pre-sales contacts that may be required.

In this pre-sales phase, many businesses make the mistake of believing that their world is flat; they make only one contact or impression. If there is no sale, they assume the customer either isn’t qualified or interested and they give up. However, this is where persistence can pay off. Continuing the dialog can keep the customer interested and improve your chances for winning the business.

The second dynamic that businesses need to understand is the cultivation cycle. Take a customer that hires a contractor to do some repairs on their house. The contractor does a good job and the customer pays promptly. Businesses that truly value their customers will work to cultivate the relationship. Perhaps the customer – or their friends and neighbors - will have other home improvement projects in the future. It is in the contractor’s best interest to maintain a relationship that could help to circumvent the entire pre-sales cycle altogether. Ideally, the customer will become a loyal customer – and will avoid looking at other contractors.

The cultivation cycle is perhaps the most overlooked element in the entire customer relationship. Many businesses continue to spend an inordinate amount of time and money trying to attract new customers, rather than maintaining their existing relationships. In order to maintain the customer relationship orbit, the force must be applied equally across the entire customer experience lifecycle.

Newton Had It Right

Sir Isaac Newton knew that there was something at play when the proverbial apple fell from the tree. His study of how the force of gravity affects other objects provides us with some insightful perspectives of how customers interact with businesses. Perhaps the law of physics does closely resemble our customer relationships.

Some businesses may indeed appear flat to their customers. The customer may encounter the business, see that there isn’t much to it, and disappear over the edge of the world never to be heard from again.

Businesses should know better.

Your business world is indeed round. Customers will look at your business from many different angles. They may even orbit a few times before they decide whether or not to buy your products or services. Or they may slingshot by – like a meteor - inquiring once but never to be heard from again.

What do you think; is your business world still flat?