In my consultant business, I’m often discussing the needs of the customer. While this sounds like an obvious discussion between a consultant and a client, you would be amazed how often the goal to have happy customers gets lost in a sea of conflicting internal strategies.
It’s not that they forget that the customer is paramount, it’s that the company is trying to do so many things to woo the customer that they lose their attention on what really drives customer retention.
Customer retention is really about your company’s unique value proposition, or more specifically, the need to clearly define and stay laser focused on delivering that proposition.
In Michael Treacy and Fred Wiersema book, The Discipline of Market Leaders, they state that the customer is King. While we all know this to be true, we can still find ourselves underestimating what keeps customers satisfied for the long-term. As the book notes, consumer expectations continually increase. This means that businesses need to offer a value proposition which continues to deliver as the consumer’s wants increase.
Not an easy proposition, but approaching your product offering and market positioning with your eyes wide open to this reality will surely help to contour a long-term strategy for success.
For example, if your customer appreciates your company’s prompt service, then they will expect even faster service in the future. If your customer values price above all else, they will expect even greater discounts or lower pricing in the future.
Market leaders also know that even with the best product or service, competitors can and will copy successful ideas, undercut them on price, and if given the opportunity, take away their market leader position. That is why companies such as Apple continue to push the envelope on product design and features to stay one step ahead of their competitors.
They also realize that it isn’t about being all things to all people but rather focusing on one area in which to excel. That doesn’t mean that other areas of their business can slide, but it does equate to a mastery and concentration on one thing.
Amazon is a perfect example of such single-mindedness. Amazon excels at operational excellence, offering lower cost items with reliable service, because they chose to make this the foundation of their value proposition. At the same time, they haven’t rested on their laurels and instead offer an even stronger proposition through their Prime membership offering. This is because their customers not only want lower cost items and reliable service, they also expect free shipping.
Amazon clearly understands their customer, and it has paid dividends. According to CNN Money, 46% of U.S. households have at least one Amazon Prime member.
So how can a small or medium business be like Amazon or Apple? The most important step is accepting that the customer will continue to expect more from your business. Rather than resist it and leave a door open for your competition, embrace it.
The second equally crucial step is understanding your customer such that you can anticipate their next need or the evolution of their needs. That is when businesses achieve true market dominance, because the other thing that customers want is to be understood.
Combine these two elements, plus an unmatched value proposition, and you will have happy, repeat customers with your competitors left in the dust.