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…)
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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…)
Who we are. What we do. What motivates us.
We have been working on a new website. Not our current website is bad, but we knew we could do better. We knew we could be more authentic. For us this meant getting way from business buzz words, and being more engaging. We wanted our website to reflect what we are like in person.
The new site will launch in January or February of 2013, but I couldn’t wait to share a little. We have been working with Oxide Design Co. in Omaha and this is brand story that Rainbow Rowell developed. It captures who we are, what we do, but most importantly why we do it. If you ever meet one of us in person, it is obvious that we work because we love what we do. So here we go, CAN’s brand story! (more…)
How to Calculate Customer Lifetime Value and Cost of Customer Acquisition
While it is important to focus on new client acquisition, it is equally and perhaps more important to focus on improving your relationships with your current customers. This will help you improve your customer lifetime value. Customer lifetime value is the amount of net profit you receive from each customer. As a general rule, the average customer lifetime value needs to be 3 to 5 times the average cost to acquire a customer.
Improving customer lifetime value will help you have a sustainable and profitable business. To stay in business, the net profit from each customer has to be more than the cost to acquire each customer.
Customer Lifetime Value is the average net profit that can be attributed to a company’s entire relationship with a customer. (more…)
CAN 2013: We’re Taking Our Own Medicine
Grant Stanley, CEO of Contemporary Analysis, stands in front of his wildly smart team at a recent company meeting to unveil his strategic plan for 2013. The plan includes comparing critical performance numbers internally against given benchmarks. Grant and CAN’s HR Director Nino Natasti have developed ways to track and classify the active SaaS projects in our pipeline, the productivity and workflow of our Data Scientists, and the traffic on our website in order to “determine whether or not we are adding meaningful value to the company and our people in the coming year.”
One data scientist astutely remarked, “It’s like we’re taking our own medicine.”
Speaking of medicine, I would say CAN’s operations are akin to operations in a hospital. No we don’t save lives every day, but just like a team of medical professionals, our data scientists use industry-leading technologies to inform decision-making processes. With your data, we can build decision-making models to predict the most important factors in your business.
And we won’t let red tape and redundancy stand in our way. There is no doubt we’re ready to solve your problems. Our internal analytics department and HIPA, FERPA, SSAE16, and PCI compliances are in place to make sure your Business Intelligence tools are accurate, effective, and easy to interpret. We’ve checked into the new age of Analytics, have you?
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