Monday, June 27, 2005

Go To The Orchard And Pick Your Customers....Not.

On page 25 of the current issue of Fast Company Magazine (July 2005) you will find a very interesting essay titled "Customers Don't Grow on Trees", by Don Peppers and Martha Rogers. These two seasoned business consultants and authors know a thing or two about customer service, and they have a new book: "Return on Customer: Creating Maximum Value From Your Scarcest Resource" (Currency Books). Their article is an important reminder of how businesses need to place a higher value on their current clients.

Customers are the only reason you build factories, hire employees, schedule meetings, lay fiber-optic lines, or engage in any business activity. Without customers you don't have a business.

But how often do we forget this in our quest to get the sale and hit the numbers for the quarter?

Peppers and Rogers suggest that companies should focus on the ROC (Return on Customer) rather than the ROI (Return on Investment). By doing this you will not only be able to focus on the need for current revenues, but also guard yourself for future income. Too much attention to what YOU need NOW can weaken your bond with your customer. In the end, if the customer feels that your company is putting too much attention on its own short term goals, they will eventually take their business elsewhere.

They conclude the essay by reminding the reader that customers are not an unlimited resource. Getting customers can be harder than raising money, but if you cultivate your relationships with your customers then you will have an source of capital. Thus, focus on your customers instead of your bankers and venture capitalists and you will be more likely to succeed.

(****"Return on Customers" is a registered service mark of the Peppers & Rogers Group).

Have a great day.

Thom Singer

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