Browsing Tag: Companys

If you’re experiencing some customer experience growing pains, it may be time to refocus on what your company is striving for. You’ll need to know how your company defines value and which key business drivers are most important to you so that you can prioritize the programs that matter most. Only then will you be able to provide an excellent customer experience – one that stands out in a crowded marketplace. The purpose of this article is to educate and inspire you to prioritize your customer experience efforts.

Before we dive into the strategies for prioritizing your customer experience efforts, it’s important to define those key business drivers that will help you make an educated guess as to which programs need attention. There are three key business drivers that are commonly identified by many companies: profit margins, new product development costs, and cash flow.

Prioritizing profit margin may be the most important business driver because it keeps your business profitable, which in turn enables you to invest in your customer experience. If you’re not optimizing for profits and if you don’t reinvest quickly into new programs that improve customer experience, then you’re probably not a sustainable company.

However, reinvesting in new programs can be risky as well. It’s easy to worry about building up brand awareness and introducing new products too quickly (making customers feel insecure) or introducing an inferior product that leaves users feeling frustrated. The reality is that just because something “works” doesn’t necessarily mean it’s a good idea. I-phones work, but that doesn’t mean you should spend your entire marketing budget on iPhone ads.

Prioritizing new product development costs is a tricky business as well because if you divert too many resources to new programs, you may be neglecting your existing customer base and losing potential customers. Patricia from WordView Editing, says, customers can be fickle, after all. They hate change and often feel insecure about the products they use and the companies they do business with; especially when a new “revolutionary” product or service seems to pop up out of nowhere.

Finally, if you’re not keeping an eye on your cash flow, you’re not going to be able to pay the bills. You’ll find yourself without the resources you need to maintain your company’s infrastructure or create new products that keep customers happy and coming back for more.

Before you prioritize your customer experience efforts, you’ll want to identify which business drivers are most important to your company. For my company, Profit Lab™, we chose profit margins first because our primary product (Customer Experience Profiles®) is a software product. We have no running costs. We also chose new product development costs second because our Customer Experience Profiles® are constantly being refined and improved upon based on feedback from our beta clients.

Since our sales mainly consist of subscriptions to our Customer Experience Profiles™ and the revenue is recognized immediately, we knew that new product development costs were not a big issue for us. That left us with cash flow as the most important business driver.

The first thing we did was to sit down with our CFO and talk about the current state of our cash flow. At first glance, it looked like we were achieving good, consistent growth. Our revenues increased every quarter and we even began investing in new products, like the Customer Experience Profiles® Revenue Generator Bundle™ (which is a great way for us to test applications before introducing them to our customers). The problem was that we were not receiving the revenue from these new product launches in a timely manner. This meant that we would need to “catch up” on our revenue, which put us behind and required additional funding from our investors. This caused us to borrow money from the stock market in order to “catch up.”

Once we realized this issue, we spent some time analyzing the specific processes involved with our current customer acquisition process. We discovered that several of our customer acquisitions were costly, which occurred because of poorly conceived strategies (like spending too much on sales and marketing). In addition, there were several customer acquisitions where only one out of every ten sales was actually converted into a subscription.

We decided to focus on improving our conversion rate from sales to subscription. This meant we needed to spend more time analyzing the reasons customers did not become subscribers and then come up with strategies for fixing those problems.

For example, one of our biggest problems was that we had too many free users who never became subscribers. We spent a lot of time trying to figure out why this was happening and realized that users were confused by the fact that they never received a new Customer Experience Profile® after their initial purchase (see how this could be fixed).

Instead, we decided to create a highly-targeted email campaign to our customers who had purchased the Customer Experience Profiles® package. We sent them an email that explained everything about the program, including rewards for subscribers and frequent customer benefits. This resulted in even more subscriptions within two months.

Once we were able to improve our conversion rate, we felt pretty confident that profit margins would be unaffected by our new investments in new products because most of them were already paying off. We made this determination because the majority of our existing users paid double subscription fees instead of renewing their subscriptions every six months. Our business model allowed us to invest in new products without creating losses on current ones so long as we maintained consistent recurring revenue (i.e., subscriptions).

To be sure, our new customer acquisition process was not perfect. We did have to rework our marketing strategy, but the end result was great. We were able to reach more potential customers and convert more of them into subscribers than ever before. The result was better profit margins.

Conclusion

There are always going to be ups and downs in your business, no matter what you do to boost your company’s customer experience efforts in the long run. Many companies that allocate a significant portion of their resources towards customer experience will have periods where profit margins decrease in order to pay for a new program or product that kicks off profits for a specific time.