Small Business Consultants

  

 in Houston Texas USA

  Add to My Yahoo! Add our blog to your My Yahoo page to receive updated information as it is posted.
 

 

Visit our Internet Marketing blog for current observations!

 

improving customer retention through profitability analysis

By Michael A. Till

Partner, Mohle Adams.L.L.P.

[ Up ] [ Car-Pros-for-Kids-2007 ] [ Press releases,web site traffic ] [ small home based business ] [ search engine ranking. keyword analysis ] [ time management techniques ] [ small business marketing ] [ office phone systems ] [ analyze for business opportunities ] [ profitability analysis ] [ ira withdrawal rule ] [ free personal investment advice ] [ retirement plans ] [ defined contribution pension plan liabilities ] [ small home based business ] [ broadband connection speed test ] [ Instant messaging joins the firm ] [ wireless networking ] [ start a web business ] [ Marketing Your Business on the Internet ] [ Search engine submission sites and other links. ]

 

Let's begin with some staggering truths that profitability analysis tells us about customer retention:

 

On average companies now lose:

  • 50% of their customers in 5 years

  • 50% of their employees in 4 years and

  • 50% of their investors in less than 1 year.

Put that another way, customer loss, employee loss and investor loss are major issues. Let's turn that around by looking at the opposite of loss - retention.

Profitability analysis tells us that a 5% increase in customer retention causes between a 25% and 100% increase in profitability.

 

Retention (or loyalty) is therefore a critical factor.

 

Creating value builds loyalty.

 

Loyalty builds growth, profit and even more value.

 

Profit is indispensable but it is a consequence of value creation.

 

Value creation along with loyalty makes up the heart of your business.

 

The key is to understand that creating value for customers is the foundation of every successful business.

 

Consider the following inter-relationships of Service

 

 Business Profit Drivers:

  • Customer Loyalty drives profitability and growth.

  • Customer Delight drives Customer Loyalty.

  • Value drives Customer Delight.

  • Productivity drives Value.

  • Focus, Commitment and Systems drive Productivity.

  • Team Happiness drive Commitment.

  • Internal Quality drives Team Happiness.

  • Leadership and Accountability drive Internal Quality.

  • Vision and Articulation drive Leadership.

  • Paradigm drives Vision.

 

Getting Our Focus Absolutely Right

The Customer buys value.

Value equals Benefits / Cost.

We have to increase benefits or decrease costs to increase value.

What is the greatest impediment to creating value?

 

FTI - Failure To Implement

Stephen Covey's definition of insanity is to keep doing the same thing and expecting to get a different (better) result.

 

Creating The Difference

In a competitive market people choose to deal with you, only because of the differences they perceive.

 

Four Fundamental Truths

  1. It's always the little things that produce profound effects. For the most part people cannot really evaluate your technical mastery. They instead substitute the little things that you do as surrogates for their evaluation of value and quality.

  2. Focus, systems and accountability determine whether you get the little things right on a consistent basis.

  3. Customers leave or change because of Perceived Indifference (only 15% because of product/price/time). 

  4. You rarely get a second chance.

This means we have to do the following things:

  • Understand that we can set the expectations. 

  • Set them in such a way that we exceed them. Under promise, over deliver.

  • Lift the process levels dramatically.


Put another way: The aim is not to be 1000% percent better, it's to be 1 percent better in 1000 things. That is doable with focus and systems.

 

 

The Fatal Assumption (E Myth)

If you understand the technical work of a business then you understand a business that does technical work.

 

The Fatal Actions

Most people work in the business doing the technical work instead of working on their business.

 

The 3 Stages 

Infancy - The owner and the business are one and the same thing.

  • Things start to go wrong.

  • You realize that things will have to change for you to survive.

Adolescence - Hire someone to do the things you don't like to do.

  • You realize no-one is as good as you are.

  • You end up working harder still.

Maturity 

  • You get small again.

  • You go for broke and the business self-destructs.

  • You hang in there and you self-destruct.

Another Way - The Entrepreneurial Perspective

 

Ask "How must this business work?" rather than "What work has to be done".

  • Start with a picture of a well-defined future.

  • Design the present as close as possible to this picture.

  • Relentlessly press forward toward the future.

To the entrepreneur the business is the product. Others believe the product is what they deliver to the customer.

Acknowledgements:

Portions of this material were derived from Results Accountants' Systems consulting manuals. References have also been made to published works by Michael Gerber, "The E Myth" and Stephen Covey's "The Seven Habits of Highly Effective People".

[ Up ] [ Car-Pros-for-Kids-2007 ] [ Press releases,web site traffic ] [ small home based business ] [ search engine ranking. keyword analysis ] [ time management techniques ] [ small business marketing ] [ office phone systems ] [ analyze for business opportunities ] [ profitability analysis ] [ ira withdrawal rule ] [ free personal investment advice ] [ retirement plans ] [ defined contribution pension plan liabilities ] [ small home based business ] [ broadband connection speed test ] [ Instant messaging joins the firm ] [ wireless networking ] [ start a web business ] [ Marketing Your Business on the Internet ] [ Search engine submission sites and other links. ]

Call or write us now to arrange for a free initial consultation (by phone or e-mail) to identify the ways that we can help you become a more modern, efficient and competitive business.

 

Small Business Consultants

5602 Dumfries Drive, Houston, Texas  77096-3920

713.721.2109  Fax: 832.553.2902

  Search our Site!
Google
www.small-business-consultants.net

  FreeFind


powered by FreeFind