How well do you really know your customers?  Surprisingly, I find that more and more companies are losing touch with their customers at the exact time that it’s becoming more important than ever to get closer to your customers.

Everyone talks about how important customer churn rates are, particularly as we transition into a subscription-based economy. We benchmark it, measure it and talk about it incessantly. A Forbes (  ) article was chock full of sobering statistics related to the importance of customer acquisition and retention:

  • A 5% increase in customer retention can increase profitability by 75%! (Bain)
  • It costs 5-7X more to acquire a new customer vs. retaining an existing customer
  • 80% of your companies future revenue will come from just 20% of your existing customers (Gartner)
  • 80% of companies surveyed said that they were providing superior customer service but only 8% of their customers agreed with them!

Clearly there is a huge and painful disconnect here, so let’s examine some possible theories behind this that I will posit below:

  1. There is a glut of information available on your customer – Information overload and customer analytics can be overwhelming and counterproductive.  The key is to focus on the things that matter to your customer.  Do you know what really matters to your customer today?
  2. The customer’s expectations have dramatically changed – In this subscription economy, each of your customer’s have more choices than ever before and the switching costs have been commoditized.  The simple fact is that the customer is fully in charge and expects more out of you and all of their vendors.  They only want to work with companies that really take the time to invest and learn about their business and marketplace.  They expect real insight and value add from the sales teams and customer services teams that they engage with.  These are now the table stakes to play in your customer’s world and stay engaged.
  3.   Make it personal – Time to pull your nose out of the spreadsheets and analytics and spend real quality time with your customers.  Demonstrate through your actions that you really do care about them, and not just at renewal or upsell time.  What big changes are happening in their marketplace?  How can you help them become more competitive?  How can you help them help their customers and partners? Are there things that they should be thinking about that they aren’t based on your experience with your other customers? How can you make more of a strategic business impact by collaborating with them?
  4. Think outside of the box – Innovation and disruptive thinking is what separates the “strategic trusted advisor” customer relationships from the vanilla vendor or supplier customer relationships.  And the vanilla vendor relationships are the ones that companies are always looking to change due to the perceived lack of value.  Ask yourself what value are you bringing to your customer and how can you prove it?
  5. Be sober and honest about your customer relationship – Stop thinking that you really know and are close with your customers if they don’t feel close to you.  That disconnect in the Bain study bullet point above is astounding!  How can you be so far off the mark as to not know how your customers really perceive you?  Start by regularly asking them how they perceive you, where is their room for improvement, how do you compare to other solution providers they have relationships with, what do they like about you, how and why do they value you, etc.  Then act on what they tell you.

In summary, acquiring and retaining customers is harder than ever.  Every B2B study or research report you read today shows similar painful trends and stats supporting this assertion.  At the same time, it’s more important than ever to your company’s growth and long-term success.  It’s time to really get to know your customers as intimately as possible.