Comments on: Focus on customers to survive in this economic downturn http://www.digitalsolid.com/2009/02/12/focus-on-customers-to-survive-in-this-economic-downturn/ Marketing Technology Musings and Tips by Jeff Larche Sat, 17 Sep 2011 02:41:46 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Rick http://www.digitalsolid.com/2009/02/12/focus-on-customers-to-survive-in-this-economic-downturn/comment-page-1/#comment-4746 Rick Fri, 13 Feb 2009 15:15:19 +0000 http://www.digitalsolid.com/?p=1046#comment-4746 I hear ya Jeff. What's great about Gartner is that you typically have their position as a starting point for a debate or a sales call. I used to use their stuff all the time to justify CRM projects, especially to companies who already had at least one failed CRM initiative. The "10%" assertion is actually quite good, because for many businesses (especially those selling commodity products) I would assume the churn rate to be higher. But I've also seen those numbers used to scare customers into action - which isn't necessarily a bad thing. I hear ya Jeff. What’s great about Gartner is that you typically have their position as a starting point for a debate or a sales call.

I used to use their stuff all the time to justify CRM projects, especially to companies who already had at least one failed CRM initiative.

The “10%” assertion is actually quite good, because for many businesses (especially those selling commodity products) I would assume the churn rate to be higher. But I’ve also seen those numbers used to scare customers into action – which isn’t necessarily a bad thing.

]]> By: Jeff Larche http://www.digitalsolid.com/2009/02/12/focus-on-customers-to-survive-in-this-economic-downturn/comment-page-1/#comment-4745 Jeff Larche Fri, 13 Feb 2009 13:25:46 +0000 http://www.digitalsolid.com/?p=1046#comment-4745 I agree, Rick, that those types of predictions are dubious. And my numbers are as free and loose as theirs. Not only do I not take into account acquisition (although I did try to protect myself with "assuming every other rate is unchanged"), the truth is there is no 80 / 20 rule. If you're looking at the top 20%, it may be 88%, or 69%. And if you'll looking at the top sources of 80% of revenue, that number could be 14% or 24%. You get the picture. Every company has to do their own customer valuation analysis. I guess that's the point, though. If you haven't looked at your customer database in that way, you may be arriving late to the party if you start now, but at least you're not completely out of it. You can always continue with the metrics you're using now, and pray that your competitors are doing the same! I agree, Rick, that those types of predictions are dubious. And my numbers are as free and loose as theirs. Not only do I not take into account acquisition (although I did try to protect myself with “assuming every other rate is unchanged”), the truth is there is no 80 / 20 rule. If you’re looking at the top 20%, it may be 88%, or 69%. And if you’ll looking at the top sources of 80% of revenue, that number could be 14% or 24%. You get the picture. Every company has to do their own customer valuation analysis.

I guess that’s the point, though. If you haven’t looked at your customer database in that way, you may be arriving late to the party if you start now, but at least you’re not completely out of it. You can always continue with the metrics you’re using now, and pray that your competitors are doing the same!

]]> By: Rick http://www.digitalsolid.com/2009/02/12/focus-on-customers-to-survive-in-this-economic-downturn/comment-page-1/#comment-4744 Rick Thu, 12 Feb 2009 15:49:49 +0000 http://www.digitalsolid.com/?p=1046#comment-4744 Jeff, Interesting post, but I'm not sure I agree with your churn analysis. When Gartner says you can reduce churn by 10%, you may not really be gaining 8% on the gross, especially if the acquisition of new customers remains stagnant or the cost of acquisition rises. But I do agree that anything you can do to retain your customers will be significantly less expensive in the long run, and that by keeping more customers, you will end up losing less of your profits. On the other hand, I wholeheartedly agree that automation of the lead disposition system is absolutely essential for any size organization. Not just to streamline how leads are distributed, but more importantly, how they are disqualified. In my experience, most companies work to qualify leads instead of working to disqualify leads. It can be an extremely time consuming and expensive exercise to work toward lead qualification, while it can be very easy and inexpensive to burn off the chaff so you can really focus on harvesting the wheat. Once you've got your qualified leads list, the automation needs to effectively nurture the qualified non-hot leads, while the sales staff work to close the hot ones. I could talk about this all day. It's a topic near and dear to my heart - selling and automation. Thanks for posting! Jeff,

Interesting post, but I’m not sure I agree with your churn analysis.

When Gartner says you can reduce churn by 10%, you may not really be gaining 8% on the gross, especially if the acquisition of new customers remains stagnant or the cost of acquisition rises. But I do agree that anything you can do to retain your customers will be significantly less expensive in the long run, and that by keeping more customers, you will end up losing less of your profits.

On the other hand, I wholeheartedly agree that automation of the lead disposition system is absolutely essential for any size organization. Not just to streamline how leads are distributed, but more importantly, how they are disqualified.

In my experience, most companies work to qualify leads instead of working to disqualify leads. It can be an extremely time consuming and expensive exercise to work toward lead qualification, while it can be very easy and inexpensive to burn off the chaff so you can really focus on harvesting the wheat.

Once you’ve got your qualified leads list, the automation needs to effectively nurture the qualified non-hot leads, while the sales staff work to close the hot ones.

I could talk about this all day. It’s a topic near and dear to my heart – selling and automation. Thanks for posting!

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