There’s nothing more comfortable than something that fits perfectly. Whether it is great fitting shoe. A right fit job. Or the right fitting customer. Finding customers, acquiring customers, and retaining right fit customers is the focus on this episode of What’s Your Edge.
A right fitting customer is essential to realizing customer lifetime value – an excellent KPI for every organization. This means you need to know what constitutes a right fit customer. Because the clearer you are on what a right fit customer is for your business, the more successful you will be at customer acquisition, retention and advocacy.
Here are three well-accepted statistics about finding, keeping and growing the right customers:
- Businesses miss out on $1.6 trillion from losing customers to a competitor.
- It costs 16 times more to build a long-term relationship with a new customer, compared to keeping an existing customer.
- Acquiring new customers costs 5 times as much as retaining existing ones.
There’s more than comfort at stake when something doesn’t fit well. Poor fitting shoes are not only uncomfortable but they can cause bodily damage ranging from blisters, ingrown toenails and bunions or something worse.
And there are serious downsides when a company invests in acquiring and retaining ill-fitting customers. Like poor fitting shoes, they can hurt your business with poor reviews, high service costs, internal fatigue, and cost you other better opportunities. And like poor fitting shoes that end up taking space on a shelf, passed over time and again for a more comfortable pair, companies tend to avoid poor fitting customers.
For many B2B industries the cost to acquire a new customer is in the hundreds of dollars. Therefore, it is good business to focus on the right fit customers. There are many upsides to having right fitting customers. They become staunch advocates, tend to be loyal in the face of competition, are the first to adopt your new products, etc.
How to Find, Acquire and Retain Customers that Fit
You agree. Wonderful. Then the next step is to know what represents a right fit customer and how to acquire and retain them. Use these 7 steps to help.
- Clarify what makes a right fit. Before you select a shoe, you determine what size you need and other important fitting parameters, such as what kind of arch support is required. The same applies for selecting customers. You need to know what industry, size, location and other factors will assure a proper fit. Establish 5-7 very specific criteria that indicate whether a company is or will be a good fit. It will depend on your organization, your market, and your offer.
- Nail the Why. Shoes can look very similar. Athletic shoes often look alike and serve the same function. Yet, all athletic shoes are not the same. Some are designed for the trails, others for road and track. Some are designed for flexibility, others for high impact. The same applies to customers. It may seem that anyone willing to buy is a good fit. This is a very opportunistic approach. And sometimes like a new shoe it turns out to be a good fit. But it’s definitely not a good fit to buy a dress shoe if what you need is a hiking boot. Be clear about why customers want/need your offer, why your offer and your company are better than the alternatives. Write a succinct customer value proposition and positioning statement that clearly expresses who are your best fitting customers and why they need/want your offer.
- Frame up your message map. Your message map is what brings your value proposition, positioning and differentiation to life. It guides content development, website navigation, customer conversations, and more. A quality message map ensures consistent messaging across your organization and across channels and touchpoints, supports your customer-facing teams and prevents them from being ambushed when they engage with prospects and existing customers. It is a powerful competitive tool.
- Develop your acquisition plan. Now that you’re armed with what comprises a right fitting customer, a clear value proposition and positioning platform, and a message map, it’s time to make your customer acquisition plan. Make sure your plan accounts for the customer buying journey regression of actions, activities, and the state of mind a customer goes through over a defined period of time in their relationship with your organization. Remember to include performance targets as well as a cost to acquire. If you haven’t mapped your customers’ journey and developed associated personas, take this step. If you aren’t sure how much you are willing to invest to acquire a customer, use a benchmark. Or work backwards. One approach is to identify all the costs (Marketing, Sales, people and expenses). Then divide this total by the number of new customers you expect to acquire (that is your customer acquisition performance target). This will give you a general target for your cost to acquire.
- Match internal processes to how your customer buy. We’ve found that many organizations define their Marketing and Sales processes to support what these functions need to do to deliver the acquisition plan and how these organizations align and work with each other. Our recommendation is to start with the customer journey and synchronize your Marketing and Sales processes to it. This will encourage an outside-in view rather than an inside-out view.
- Screen prospective customers sooner. It’s expensive to keep buying shoes that don’t fit. That’s why we’re encouraged to try them on and walk in them. We often think that we can make a poor fitting shoe work if we just break them in. Good salespeople advise against buying shoes that don’t feel right when you try them. Apply the same thinking to prospective customers. Craft 2-3 initial conversation questions to screen out unqualified customer candidates as quickly as possible. Use demos, trials, and discovery sessions as ways for you and your prospects to ascertain fit.
- Create a customer-centric culture. Customer-centricity entails placing the customer at the center of your business operating model where all aspects of the business are informed by, or designed to meet the needs of, the customer (the WHY). Implement activities, systems, processes, and touchpoints that will facilitate right fitting customers’ ability to have positive interactions and experiences with your organization. Address the entire customer lifecycle to support building a long-term relationship and positive customer experience.
When you have a perfectly fitting shoe, it’s #smartbusiness to take good care of it so it will last a long time. The same applies to right fit customers. Make the investment in bringing on people with a customer focus and empowering them to make business decisions that will have the greatest positive impact on finding, retaining and growing the value of your customers.