Sam Walton famously said "There is only one boss, the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else."
If you really think about it, he’s right. But how many organisations or even managers of key and high-value customers think about this?
Businesses today are obsessed with generating new business. I definitely understand how important that is. Cash flow is vital and the numbers don’t lie. If more people buy from you, you’re likely to grow.
In the midst of this growth a dilemma exists: the condition of what I call‘negative positive growth’.
This is where new business growth covers up the churn of existing customers. While the company may grow by 20% you could be losing 20% in repeat business year on year. You’re actually experiencing 0% growth when it could be 40%.
This is a very different perspective, but an important one, to consider if we really want to understand what explosive customer growth could look like for your business.
I found it really interesting speaking with sales managers and some small business owners: many of them expect to lose 10-20% of their existing customers each year. They aren’t as concerned as they should be because they have promising new business streams. WHAT!
I admit the cause of customer churn is not black and white; however, it's no secret that some of the more frequent issues for customer churn are: poor customer service (being the biggest), not seeing value, product or service no longer relevant and no differentiation.
I don’t believe we need to fall prey to theses statistic or allow our customers to experience the above. (That’s for another post.)
All those results of customer churn come from somewhere and I wanted to know if there were practical ways to spot this. I conducted an informal survey including 100 Key Account Managers and managers of account management teams. I discovered 4 early stage triggers that came up in almost 87% of the b2b cases in which clients stopped spending with them or spent significantly less.
- Their client had gradually become more distant and had almost stopped replying to or answering emails for an extended period of time.
- Their main contacts left and there were no replacements or other persons to speak with.
- Their client started projects with other suppliers that they had the capability of delivering. But the client didn’t come to them first.
- Re-structuring took place and they were put into an RFP for consolidating suppliers.
This is not a definitive list, and I’m digging deeper into this as you read this. Nevertheless, this is definitely something to pay attention to. If you're seeing any of these symptoms with existing clients, action may be needed. The question is, “What do you do if you experience one or more of these 4 behaviours from your clients?”
Here are 4 actions you can take right now to prevent, or at least limit, the blow of customer churn or reduced spend on your pipeline or business.
- Get creative and honest in your communication. Where possible, speak with a team member of your contact, just in case something specific has happened. Be persistent and persevere.
- Start communicating with managers of the end users of your product and service. Understand their challenges or concerns. Compile this into a summary proposal you can share back with them and the potential new person. This demonstrates value and positions yourself as a partner to their business.
- It sucks if they’re using another provider. This may not be the easiest conversation to have but go in, be open and honest. You need to focus on strengthening your current position, while you working on what’s missing. Tell your client you recognise that there are other suppliers they’re working with. You’d like to explore ways in which they can benefit even more from your products and services. Then ask the questions, “Where are you seeing value?” and “Where aren’t you seeing value with… (your product or service?” Wait for the answer and prepare for a potential hard truth.
- This may sound crazy but it’s great news. This is the time to go in and shape this RFP by using the insight you know of your client’s business. If they’re consolidating, this is not just about price but about differentiated value and a demonstrated understanding of their business. Get prepared, start speaking with contacts in your client’s business. Go back with a set of specific questions and observations your client may have missed using personal business testimonials. This information may go out to other potential companies. The immediate result is you become instantly memorable. In many cases I’ve experienced clients of mine fast tracking me to the final stage of their RFP before working with them again.
Al of these are difficult conversations. But, no action means no result. In the end the best remedy always begins with relationships. We need to focus on building deep levels of trust with the right relationships in our clients businesses and deliver exceptional value and service always.
What are your thoughts on the early stage indications of clients leaving or customer churn?
Leave a comment below. I’m keen to hear the thoughts of others.