Monday, 18 October 2010

How to deliver great customer service

Why is customer service so important?
- In the long run, good customer service is the only way to grow a successful business. Satisfied customers come back to buy more and also tell other potential customers about your service
- Good customer service forms a virtuous circle with employee satisfaction. People like to work for a business that they can be proud of and they like being able to make customers happy
- Poor service will produce the opposite effects and eventually destroy a business
What are the key elements in good customer service?
- Communication
o Understand your customer categories and the benefits they seek
o Engage customers in product development and service improvements
o Respond quickly and effectively to enquiries via the people who can provide the best solution to their need
o Agree with each client up-front what is to be delivered and how success will be measured
o Be accessible to customers at all their preferred times and using all their preferred channels
o Measure customer satisfaction regularly, publish the results and make sure the results provide a basis for action – then take it
- Culture
o Make explicit your values that tell everyone the customer is the top priority
o Train all employees in customer service and your values and then empower them to do what it takes to deliver great customer service
o Have an accessible complaints procedure focused on resolving the issue for all customers and all time
o Measure customer service and reward or acknowledge individuals who excel
o Do not tolerate poor customer service
- Processes and outcomes
o Define how you measure good customer service in your business and what key performance indicators (KPIs) are relevant for controlling the end-to-end process
o Include targets for these measures for all staff and review performance monthly and annually. Include them in your incentivisation scheme if you run one
o Publish actual performance figures against target
o Carry out regular and post-project reviews. Learn from mistakes and successes and capture improvements in revised processes
o Benchmark against the best performers inside and outside your industry

My workshop programme covers this and every other key part of running a business, from strategy through to invoicing. For more details of this comprehensive and affordable course visit my business advice website.

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Monday, 4 October 2010

How resilient is your turnover?

Not all revenue is equally certain. A business which relies on winning a small number of large contracts each year may well earn the same revenue and profit as a business that gets its income from a large volume of contracted subscriptions and a third company that gets all its income from ad-hoc repair and maintenance across a moderate number of existing customers

o In theory, the riskier nature of the project business should result in higher profit margins (returns to the shareholders) and the stable nature of the subscription business, lower - but this is not always the case in practice
o Don’t confuse spreading payments for a project with spreading both the cost and the income by using a different business model. The first impacts cash flow and actually increases risk – so should require an even higher return.

All other things being equal, businesses should strive for as much locked-in recurring revenue as possible

How can you translate one-off into recurring revenue? Some examples of spreading payments are

o A photocopier which is paid for by charging a small amount for every copy made
o Mobile phones, where the phone is given free in return for a fixed term monthly contract

Each of these relies on a higher total income over the life of the contract to cover the cash flow hit and the risk of default. It is also necessary to build in a compelling proposition to renew the contract before it expires in order to build revenue resilience

Some examples of additional recurring revenue are

o Software license maintenance
o Membership of a user group
o Subscription services
o Service and maintenance contracts

An alternative way of looking at this is separating future income from resource or asset limitations

o Translate a single consultant’s time into a course to be sold online in perpetuity

What is the proposition for the customer? Possible benefits that would induce a customer to sign up for a long-term contract are

o Access to a continuous stream of new content
o Access to special offers and discounts
o A known fixed charge covering all repairs (a form of insurance)
o The right to free future upgrades
o Continuous tuning & maintenance of the original product

One final source of revenue risk is over-reliance on a single or a few customers (high customer concentration) – avoid this.

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