Your Most Valuable Asset

There has always been the argument that “Staff are a company’s most valuable asset” and in these turbulent times many employees may feel that this hasn’t been their company ethos in the past and is apparently not one currently. The reality is that on a company’s bank balance there are two columns – debits and credits. The debits feature outgoings such as bills and wages, the credits consist of income, the lifeblood of the company -
IT'S CUSTOMERS
It is true that an organisation simply cannot function without the commitment and abilities of it’s staff, however they need remunerating and so I would argue that the most important asset to a business is in fact it’s customers.
A fault of many companies is focussing all efforts on customer acquisition, constantly fishing for new custom and then once they’ve reeled it in, they let it go! Lord Lever is quoted as saying “Half the money we spend on advertising is wasted, I just don’t know which half”.
It is 6 times more expensive to acquire a new customer than it is to hold on to an existing one
It’s a buyers market and prospective customers are more discerning than ever as they concentrate on getting “Value for Money”. This increase in focus on achieving “Value for Money”, means that there is a reduction in customer promiscuity, customers want a reliable, cost effective solution ideally from one source. The way I see it, the resulting factor is an opportunity for companies to capitalise on their relationship with the customer – cementing their loyalty and creating advocacy.

80% of a businesses profit usually comes from only 20% of it’s customers.

Late paying, constant complaining and over demanding customers are what all businesses could do without, but we all know they exist and we cannot afford to let them go just yet given the current economic climate. However, these types of customers are not worth building a relationship with, as not only are they not profitable, but there is the danger that they will advocate the company to other “like-minded” prospect customers, thus potentially reproducing the problem. Businesses need to focus energy and money nurturing the relationship with their “Best Customers” and encourage advocacy amongst them only.

If a customer feels satisfied with an organisation they may tell a couple of people. If a customer feels dissatisfied with an organisation, they will definitely tell everyone!

The table below illustrates a simple comparison of two customers. Both cost the same amount to acquire and the company spends the same amount each month on communicating their products to them. However Customer A sent their goods back, were constantly on the customer support line, paid late and told 10 other people that the company’s products and service were appalling, resulting in a 6 month total profit of £360.
The table below illustrates that by reducing communication with Customer A and using the saving on nurturing the relationship with Customer B by adding benefits and thus perceived value, the company has increased its profit to £400
The company should identify the “Good” and the “Bad” customers and treat them very differently.
Simply relying on inertia isn’t going to work because competitors are out there and eager to take your customers away. Investing in retaining customers is adding value to relationship with them, creating loyalty. Therefore the recruitment stage is taken care of by the retained, loyal “Best Clients” advocating the company’s products or services to other like-minded prospective customers – reproducing the success!
A past customer is still 5 times more likely to purchase from you than someone you have had no contact with
It’s all about “share of customer” in that a company or individual may purchase their products or services from several suppliers, therefore it is imperative that businesses adopt a “Customer Centric” approach to commerce and ensure the whole team are engaged in nurturing the relationship between the organisation and it’s clients – it’s true “Most Valuable Asset”.