CONGRUITY - Newsletter | Vol V, Issue 3

Before you read the newsletter, I wanted to share a few changes to the way I will share tips, tools, and techniques to help you strengthen customer relationships and grow your business:

1. I have started a new business blog titled CUSTOMER U. It's purpose is to share my insights into strengthening customer relationships on a more frequent and interactive basis with those who read and subscribe to the blog. I plan to post weekly and there are several methods to subscribe to the blog, so please check it out and sign up to read the latest.

Critical Customer Metrics - If You Don't Know These, You Don't Know Your Business - Part II

Last time, we discussed the three critical customer groups every business should be measuring at a minimum. They were:

1. New customers and revenue they generated - those buying for the first time

2. Repeat customers and revenue they generated - those who bought more than once within a defined time period (which is unique to your business model)

3. Lost customers and lost revenue - these need to be defined for your business model and should include parameters for number of purchases, frequency, and time elapsed since last purchase.

Using a very basic example, here is what a sample of the data might look like (results above our goal are in green, and results below our goal are in red):

Customer Metric	Actual	Goal	Progress
New Customers - Number:	35	30	+ 5
New Customers - Revenue:	$8,750	$7,500	$1,250
Repeat Customers - Number:	125	140	- 15
Repeat Customers - Revenue:	$43,750	$49,000	-$5,250
Lost Customers - Number:	15	12	- 3
Lost Customers - Lost Revenue:	$6,000	$4,800	-$1,200
Total Revenue:	$46,500	$51, 700	-$5,200

If you did not look at these 3 distinct customer groups you would only know that this company fell $5200 short of it's revenue goal. Many companies would then increase the focus on bringing in new customers. This isn't a bad idea, but it's one that will only prolong identifying significant problems with the business - that revenue from existing customers is decreasing and they are losing customers faster than they predicted.

So how do you fix this problem? First, a little research is in order. Chat with customer facing employees (sales, customer support, etc) for their insight. Look at your most valuable customers to define their behaviors. What are the characteristics that make your most valuable customers so loyal? Do you have a firm grasp on customer expectations, and know well you are meeting them? Conduct lost customer assessments to find out why they leave. Maybe your product quality has declined, you are no longer convenient, or your value has declined in your customer's eyes.

This is not just about a single customer satisfaction measure. It doesn't help if all you know is that your customer satisfaction metric went up or down this time compared to your last measurement. If it went from 4.8 down to 4.2, what are you going to change? You need to dive deeper and understand the drivers of customer satisfaction.

Bottom line is that at a minimum you need to understand your different customer groups, know why they stay and why they go. Then you can appropriately dedicate resources to growing new and repeat customers, and stem losses of valuable customers.

Being successful in business often comes from knowing more about your customers than your competition. Need help designing a customer dashboard for your business? Please contact us to see how CONGRUITY can help measure and improve the value of your customers. Visit CONGRUITY on the web at www.congruity.biz.

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