Have You Chosen the Right Customers, That Will Remain with you during a Crisis?
By now you might have already established that there`s one path that leads directly to failure: “Let’s start a company to get rich.” 85% of entrepreneurs who launch it without having a long-term business strategy will close it after two years following that path. The rest have stubbornly crawled for another two or three years, and wonder WHY they do not succeed the way others do, without asking for any customer feedback. From the very beginning of our article allow me to reveal a difficult truth that real business leaders understand. I’m telling you about it now, because it will get you closer to the 35-40% companies that succeed. Here’s the axiom: Nobody cares about you. Shocking, isn’t it? Were you prepared to find out something like that?
How do you view this cruel reality? Think about what you give people, about customer experiences and your own validation purposes. Because Point Zero in today’s article is that people do business with people they know, like, and trust. Customer engagement is much higher with people that trust you and know you.
How can you apply this concept to preparing for the crisis lifts?
Honestly ask yourself how do you help a customer win in pre-crisis period and during crisis (see our session about the Cash Cows and the fields that will thrive during crisis). Honestly ask yourself how can you solve your customer`s problems and how do you make them HAPPY. Then you’ll see that they suddenly care that you have a business, and they come to ask you to get their money.
Now we have to prepare our customers to buy from us during the crisis. Here we have two goals:
- To choose the right customer, starting with your current and potential interests. You will immediately see how this goal will help you, and how to accomplish it through offering added value for the customer experience engaging with your brand.
- To keep them coming back in a fair manner, building customer loyalty .
In times of economic crisis, the number of buyers dramatically decreases, especially because they can no longer afford to purchase some of the products or services they used to buy. Or they now prefer to buy a cheaper version of the product. Therefore, let’s discuss first…
How Should We Choose the Right Customers of Interest Now, As Well As during a Crisis?
Some of your current or potential customers will no longer be of interest to you. Does this seem weird to you?
Yes, during normal times, it is true, just as it is during a crisis: for your business, keeping your existing customers is a cheaper solution than finding new clients and customers. In many cases, the company’s survival depends on registered customers. But, during crisis, that`s not all! During a crisis like the one started april 29 2020, that has touched thousands of companies in the U S and the entire world, you will survive based on the level of your customer service, customer loyalty programs, by building high quality customer experience and strong customer relationships! Let me explain, step by step… If you’ll recall, I said during the Introduction: many times, business or marketing specialists do not agree with each other.
And now here’s an example: Frederic Reichheld is a best-selling author, speaker, and business strategist who’s well-known for his research and writing about the loyalty business model and loyalty marketing.  He has demonstrated that companies can grow financially if they develop a dedicated customer network that shares excellent insight into the company’s products and services with friends and acquaintances. He claims that a customer’s value proportionally increases, according to the time the customer remains loyal to the business, because the cost of the acquisition of a new customer (including the promotion, publicity, and discounts for the first purchase) is amortized and increases the profit that the company gains from the customer. On the other hand, loyal clients spend more than you’ll spend on them. and you won’t need to spend a lot of time for the customer success acquisition process.
Here’s an example that’s very well-known among online marketers: at the beginning of online and social-media campaigns, we spend a lot of money, but receive nothing from clients. Let’s say we’ve spent $2,000 for 3,000 clients on a subscription list to gather the email address database. If 1% of them (30) demand a product that costs $60, we gain $1,800 (30 x $60).
Up until this moment, we spent more to gather this sum than our clients spent on our products. But after that moment, what happens if you gave them valuable information and solutions and a great customer experience? This investment will cost you a little more. For instance, $500 is a normal expense for marketing tools. Yes, $500 is a normal estimate for them to get to know you better, like your solutions, and trust you that will finally lead to customer success. As I said, people do business with the people they know, like, and trust.
But in this phase, you spent $2,500 (2,000 + 500) and gained $1,800. You spent more than you received. In the second phase, you offer them a $400 product, whether or not it`s a physical product, a set of products, an online course, consultancy, or coaching. And 20 people that know, like, and trust you are demanding this product. How much did you spend? $2,500. How much did you gain? $9,800 ($1,800 [in the first phase] + $8,000 [20 x $400])
So you continuously deliver good solutions that make them happy this way offering a good customer experience and building customer loyalty. When you launch the same product or service again, maybe 50 of them will buy. So you will gain $20,000 (50 x $400) with much less effort than you used before! Why? Because you have loyal customers, so that’s why I said before that a loyal customer will spend more than you’ll ever spend on him!
Moreover, this type of customer brings new customers—with ZERO cost to you! And this is very important during a crisis: an old customer is more tolerant when a company raises its prices. Thought leaders are not necessarily leaders of successful companies until they prove their value, and their value can be measures through customer loyalty results. When they manage to increase the rate of their returning customers than they can be called true leaders.
Am I sure that a loyal customer is a profitable one? Here’s the bad news: fidelity is not always synonymous with profitability. The theory that a company can grow financially if it develops a dedicated customer network is merely hypothetical unless it is not properly put into practice. That is why, many believe that the Reichheld theory isn’t really that simple. And old, devoted customers do not necessarily bring more money and more new customers, simply because they have been loyal for a long time. (Do you remember what I said about consultants and experts disagreeing with each other? Quite embarrassing, isn’t it?
Because of all of this arguing among academics, what conclusion do we glean? To succeed during a crisis, you will have to correctly manage customer loyalty. How can you do that? It`s purely logical, and I think you understand it: the company that has loyal but unprofitable customers sinks as fast as the company that has profitable but transient customers. Therefore, you must find a way to add value to your customers, offer them new products/services constantly and build up on the value of their purchase, so each time they will give you more and more money. You must keep them interested, if you provide them the same webinar or ebook all over again, you can’t make them buy something they already paid for, but if you upgrade it with new updates, information and insights, they will definitely come back for more and more.