How many products can the average salesperson keep in their head while they are making reccomendations to customers? You will be shocked to find on average it is only 8. What if 8 isn’t enough? What if you have more than 8? What if you have twice that? Ten times that?
If you have more than 8 products, when a member of your sales team calls on a current client, they only recommend the products that they are most familiar with. You have provided them an entire playbook, and they use only a tiny fraction. Unless, those 8 products just happen to be the correct product for a customer, your sales staff just put a client into the wrong product. They assumed that everyone was like them.
Think about that for a second. The whole point of cross-sell is to keep your clients happy and purchasing from you. Matching the wrong product with the wrong person means reduced satisfaction, frustration, and loss of loyalty. On the balance sheet, you are losing income, not maximizing profitability, and your salespeople are misusing their time. How do you improve this? (more…)
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8 isn't enough. Why you need a better sales system.
On Entrepreneurship, Risk and Uncertainty
Entrepreneurs live with risk and uncertainty. They don’t have a choice. The future is up to them. They are responsible for their successes and failures, and success is never permanent. Therefore, Entrepreneurs have to learn to handle the risk and uncertainty of having to be responsible for their company and employees.
I have been fortunate. I have spent the majority of my life as an entrepreneur. In fact, I have never had a “real job”. I started my first real company when I was in elementary school, and sold it when I was 20. I have spent most of my life focused on building successful and sustainable companies. My early start allowed me to adjust gradually to the risks and uncertainty of being an entrepreneur.
When I started I had nothing to lose. I started a business because the people I knew needed a service and I had time. Gradually, the risks and uncertainty increased. In order to increase profits I started to take on more and riskier projects. They required hiring more employees, purchasing more equipment, investing more money, and taking more risks. Over the years, I have been forced to learn to handle the risk and uncertainty of being an entrepreneur, both in the good and bad times. I have made and lost money, employees, and capital.
In good times, I learned to stay paranoid. In High School, after getting overly confident I learned the importance of Andy Grove’s quote, “Success breeds complacency, complacency failure, only the paranoid survive.” (more…)
Why Customer Segmentation Analysis is Essential
Customer segmentation analysis is essential. No company has just one type of customer. Customer segmentation analysis allows you and your data to capture this reality. Capturing reality is a pre-requisite to using data to make decisions. Each customer segment needs to be understood, marketed to, and tracked. Download our case study.
It is time to stop thinking about your “customer” and start thinking about your “customers”. Don’t let your marketing and customer metrics, hide valuable facts and insight in aggregated data and averages. The next level of marketing analytics is to calculate and track metrics for each customer segment. Customer segmentation provides you a window through which to understand why people do what they do. This gives you enormous power when trying to improve customer lifetime value, increase customer loyalty, reduce the cost of customer acquisition.
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The Friendship Paradox
About 20 years ago, a sociologist named Scott Feld discovered an interesting phenomenon where on the average, people have less friends than their friends do. However, most people believe they have more friends than their friends do. This is the paradox. The friendship paradox is a form of sampling bias. (more…)
Net New Sales: Sell More by Selling Less
“Selling more by selling less”, is a phrase that most salespeople write off. They can’t believe that you can increase sales by focusing less on acquiring new clients, and more on your current customers. This is a basic misunderstanding and over simplification of the sales equation. Most salespeople focus only on new people. They fail to recognize the huge crowd of people that have already decided to become clients. They forget about their current clients. They have already been sold, and are waiting to be called again. But you have already sold them you say? Sure, weeks, months, and sometimes years ago. Don’t your think they are ready for something else? They are. Salespeople just don’t know how to resell to someone that already knows their game, and therein lines the trouble. Learn how we helped increase customer loyalty by reselling current clients.
Sales is not about new sales, it is about net new sales. To increase net new sales, salespeople have to also be concerned with reducing the number of their current clients that are lost each month to customer churn.
Current clients. I find it fascinating that sales people never think of their current clients as leads for more sales. I think this stems from bad Customer Service Management systems that do not allow salespeople to keep track of when customers are ready to be sold another product, and management’s lack of understanding about how salespeople should be trained and compensated. But why? Why cant sales people just focus on new sales. Because new sales are only half of the equation.
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When should you Update Predictive Models?
New clients often have questions about why and how frequently CAN needs to update their predictive models. Predictive models need to be updated because everyday new data is being created. For example, your customers are buying more, subscribing or unsubscribing. The environment is constantly changing. While predictive models can handle a lot of new new data, overtime environmental changes build up causing predictive models to lose their effectiveness. After a month, quarter, or a year it is necessary to update predictive models with new data.
As these new patterns emerge its important to periodically take time to investigate your data, update your models, and challenge your assumptions about your business. But how often should you do this?
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Dear Community Banks: This is Why Your Customers are Leaving
I recently had to make a deposit and fix a small issue with my bank account. I think my community bank has maybe 5 locations in the entire midwest, which means that everyone is cheery and I can always expect christmas lights in the winter and maybe cookies on the table when I walk in there. The staff are attentive and wonderful and always call me sir. “Is there anything else we can do for you, sir?”
Yes. Yes, local community banks, there is something you can do. But it’s less for me and more for you.
The smiles are great and sometimes I consider visiting the bank if for no other reason than to be surrounded by people who’s job seems to be to boost my self esteem at all costs and make me forget the cruel, harsh realities of this world. It is icing on an otherwise mundane task of paying the bank a visit.
But do you think this is why customers are staying with you? (more…)
How to Increase Customer Lifetime Value
While many business make substantial investments to improve customer acquisition, they often fail to invest in improving their customer lifetime value. Customer lifetime value is the average monthly net profit per customer divided by the monthly churn rate. Learn how to calculate customer lifetime value here. Companies can increase customer lifetime value by making investments to improve customer loyalty, crossing selling, and up-selling.
Improving customer loyalty, reducing customer churn, allows you to increase net new sales. Net new sales = # of New Customers – Customer Churn. Your sales and marketing teams work hard to bring in new customers, and customer churn erodes their efforts. Fortunately, improving customer loyalty and reducing customer churn, increases the return on investment from customer acquisition, improving your customer lifetime value.
To reduce customer churn, you need to know each of your customers. You need to know who is most likely to leave and why. Knowing who is most likely to leave allows you to contact them before they leave. Knowing why people leave, allows you to fix your systems. The who is a short-term fix, the why is a long-term fix. For small companies, knowing the who and why might be obvious. However, for companies with thousands or millions of customers this becomes very difficult.
Let’s look at the impact of increasing customer loyalty on revenue. (more…)
Why Corporate Hierarchy is Important
CAN has experienced a lot of growth over the last 4 years. From 2010 to 2011 we experienced 508% growth, and in 2012, while we were focused on improving our infrastructure, strategies and processes, revenue still grew 166%. This growth has required a lot of changes. All of our employees have had to grow as leaders, technicians and businesspeople. And our culture, processes and systems have had to mature. I wanted to make sure that CAN is prepared for more growth in 2013.
To prepare I spent 2012 asking, “What do I need to know to grow my company from less than 10 employees to 50 employees?” The question was less about the number of employees and more about how to grow from a startup to an established company.
I knew that a company with 4 employees was different than a company with 50 employees, but I wasn’t sure about the details. Books, conferences, podcasts, associations, coaches exist for people trying to start a company or run an established company. Unfortunately, I struggled to find resources about how to go from a startup to an established firm. (more…)
Get More Sales from Your Current Customers
Since 2008, we have been helping our customers learn how to get more sales from their current customers. One of the quickest, easiest, and most profitable ways to start is using the data you already have. Using data from your accounting and CRM system it is possible to determine which of your current customers can be made more profitable, more loyal, and which are the most likely to buy more from you. Learn more, Download our Case Study.
Contemporary Analysis specializes in using predictive analytics to forecast consumer behavior. Using a statistical technique called multinomial logistic regression, we can use patterns in your past data to predict future events. (more…)
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