The secret to winning and retaining customers – Part 1 of 3

As a small or medium sized business, your very livelihood rests on the loyalty of your customers. Ian Lowe from Go-Givers Australia offers a new approach of business and selling in this first of three blogs.

I read a rather astounding statistic recently. The article was about the telecommunications sector and the number of customers they lose to competitors each year – something they rather glibly refer to as “churn”.

I suppose it’s easier to stomach such a non-descript word than it is to say “we’ve done such a terrible job and our customers hate us so much they go running into the arms of the competition”. Maybe if they called it what it is leaders would take more notice. But I digress.

Churn levels vary a bit by provider and country of operation, but among wireline providers, for instance, they tend to hover around 2% to 2.5% per month. For a wireline company with 5 million customers, that means an estimated 1.32 million people and $2 billion in revenue walk out the door each year! As shocking as that is you might reasonably think that telecommunications is a very competitive industry, and there’s bound to be a lot of customer poaching going on. That may well be the case, but the numbers detailed above aren’t including that element. The actual cause is customers being ‘fed-up’ with being treated so poorly over an extended period of time. Misery and resentment builds up until they’ve finally had enough and say goodbye. I’m sure many of you can relate.

If you’re a huge corporation with more customers than you know what do with then I suppose you can cope with losing $2 billion a year – although we could debate the sustainability of such an approach. Not so if you’re a small or medium sized business, where terms like ‘churn’ really have no place. We all know the ripple effect an unhappy customer can have in the broader marketplace, especially in the always on connected world of social media. And when your very livelihood rests on the loyalty of those customers you need to take great care or you simply won’t be around for long.

But what’s the secret to winning and retaining customers?

In our business parable, The Go-Giver, we codify the crucial elements in what we termed the “Five Laws of Stratospheric Success.”

The First Principle: Value

In the story, our fictional hero, Joe goes looking for some big guns to help close a tough deal; “clout and leverage” is what Joe says he’s after. Instead, he finds a system of five interlocking principles that at first sound counterintuitive, naive, even silly, but in the end prove to make Joe’s world his oyster.

For the story’s sake, we frame this as one individual’s experience, but in real life, these five principles actually form a key that unlocks optimum productivity and job satisfaction for individuals, departments and organisations of all shapes and sizes. Taken together, they can be used to create a culture of excellence in a workplace that is entirely customer focused.

The first of these five principles: The Law of Value, goes like this: “Your true worth is determined by how much more you give in value than you take in payment.”

At this point, you might be thinking, “What are you talking about?! How does one give more in value than one takes in payment and still survive? Isn’t that a recipe for negative cash flow and ultimate insolvency?” Not at all: not only can you survive by approaching your work this way, it is the only way to ensure survival. In fact, when you adopt the first law as your guiding principle, you will not only survive but actually thrive.

The first law seems counterintuitive, at first hearing, and even paradoxical. The key to grasping its efficacy is our perspective on the question of value. Value is not the same thing as price.

You see, price is a dollar amount, it’s a dollar figure, it’s finite. Value, on the other hand, is the relative worth or desirability of a thing, to the end user.  In other words, what is it about this thing, this product, this service, this concept, this idea that brings with it so much value, so much worth that someone will exchange their hard-earned money for it and be glad, be ecstatic that they did while you still make a very healthy profit?

Let me give you an example. You hire an accountant to do your tax returns. And she charges you – let’s use a round figure – two thousand dollars. And that’s her fee or price. But she saves you six thousand dollars. She also saves you twenty-five to thirty hours of time of doing it yourself, and she provides you with the peace of mind and security of knowing it was done correctly.

So we see in this case that value can be measured in financial terms, with the six thousand dollar savings, and even the time because time is money, and also in non-financial terms with the confidence and peace of mind, knowing it was done correctly. So, we see that value is different from price. What your accountant did was give you much more in value than what she took in payment so you feel great about it, and she made a very healthy profit, which she should. And that’s the kind of relationship we want to have with everyone with whom we do business.

When you genuinely focus on the value, your customers (existing and new) trust you, and they feel good about you and are willing to exchange their money for your product or service. Focus on the money however, and they’re going to sense that too, consciously or unconsciously. They will sense it and they’ll be less likely to do business with you. So focus on the value, and the money will come.

Q: Are you giving more in value than you take in payment?

I hope you enjoy reading about The Five Laws of Stratospheric Success and the critical roles they play in winning and retaining customers in this series of posts. Of course these pages allow for only a light touch, so if you would like to dig a little deeper we are pleased to offer First5000 members access to The Go-Giver book at a special pre-launch price of $19:95 (RRP $24:95) plus postage.

To get your copy please email us at bookorders@thegogiverway.com.au quoting Ref: First5000.

Read the other blogs in this series:
The secret to winning and retaining customers – Part 2
The secret to winning and retaining customers – Part 3

Ian Lowe is the CEO of Go-Givers Australia, a consulting organisation offering a unique culture-defining philosophy and framework that makes giving value the cornerstone of a refreshingly open and authentic approach to business and selling.