Now, in a competitive market where multiple providers are chasing the same people – who in turn are more demanding than ever – a structured, systematic and sustainable business growth strategy is more important than ever. And devising ways to retain customers is a must.
You may say “but what about reducing costs, surely that will increase my profits and therefore help me grow my business?” Again, this is true, but what I want to focus on is unlocking the untapped potential of unlimited growth. Reducing costs is finite; you can only ever cut back so far before arriving at a base cost to serve and deliver your customer proposition. It’s never a long-term strategy or sustained growth.
Buying other businesses can be another way of driving growth, but with that comes additional cost and usually a significant amount of change to manage.
What I’m focused on is accelerated, sustained and profitable organic, year-on-year growth underpinned by your acquisition, maximisation and retention (AMR) strategy – and the answers to the four big questions. They are:
(1) How do you increase the number of customers?
(2) How do you increase the average order value?
(3) How do you increase the average order frequency?
(4) How do you increase the retention of customers?
The first question addresses the “A” of your AMR strategy, questions two and three are the “M”, while question four represents the “R”. Which one do you think most businesses focus time, effort and resources on? Increasing the number of customers.
While this is certainly key for business growth, the amount of time you should focus on customer acquisitions isn’t the same for all businesses. The maturity of your company and the size of your existing customer base, when aligned to your growth ambition, will determine how much focus you need to place on the “A” part of AMR.
I always remember reading this headline in a UK business newspaper: “A million customers come back to energy provider.”
The challenge I have with this headline is: why did the company lose a million customers in the first place? There is a danger for every business owner, leader and entrepreneur of obsessing about finding new customers, all the while failing to focus on the customers they’ve already invested the time, effort, and money to acquire.
Which leads me to making it real for you. AMR can be approached from two very different perspectives, depending on the maturity of your business.
If you’re in the early stages of your business lifecycle, then your focus might be weighted towards acquiring new customers. If this is the case, then great. Just make sure from day one that you have strategies in play to maximise and retain customers you bring in and don’t fall into the trap of becoming stuck in the acquisition stage. You will never build a high-performing, sustained business by just focussing on the “A”.
What you bring in through the front door will only compensate for what you’re losing out the back door if you’re not looking after existing customers and realising the value they can bring to you.
If your business is more mature, it might serve you to turn AMR on its head. Start by finding ways to retain customers. Run an audit of how well you’re doing in “M” – maximisation – and finally, aligned to your business growth ambitions, make up any shortfall in retention and maximisation through targeted acquisition activity.
Business growth is about acquiring the right customers through the front door of your business, and building a compelling value proposition that fulfils their needs and wants. It’s about delivering your products and services through an exceptional customer experience and maximising the value and worth of each customer.
And finally, because of the great value and experience you deliver, it’s about keeping the back door of your business firmly shut by having the means to retain customers – giving them good reasons to stay with you for the long-term.