I was speaking on a panel a few weeks ago at an event of businesses in the distribution industry. The companies ranged in size from $10M to over $150M in annual revenues. I had a chance to speak to a number of owners and presidents before the panel got started to hear about some of their challenges and opportunities. We spoke about customer retention and the ever-growing challenge of getting customers and more importantly, keeping them.
As the panel got underway, I stressed the importance of a number of the core concepts I've taught in these weekly tidbits. But it wasn't long before the questions and panel discussion drifted towards the complexities of artificial intelligence and the ability to mine copious amounts of data to know our customers better.
One of the discussion points drifted around the question of how businesses could better understand their customers in the, and I quote, “ever-changing digital landscape, and the new, developing world of big data.”
As the discussion seemed to drift deeper into a dark rabbit hole, the moderator turned to me and said, “What do you think Noah?”
I pondered for a few seconds, and then turned to the group and said.
"Before we go deeper on the subject, let me ask you all question. Raise your hands if you have a customer retention process in place?"
A handful of hands went up. Only a small handful of hands, maybe 3, out of 500 or so in the room went up.
Then I asked a follow-up question.
“Raise your hand again, if you can tell me, unequivocally the last time your existing customers were spoken to and the context of those conversations.”
Another scatter of hands drifted across the room.
Then I said, “If you want to understand your customers better, start there.”
Start with the basics.
Of course, it's sexy to think about all the ways we could better know our customers by mining data, and looking for unique commonalities across massive datasets. Just think about the simplicity that might bring our salespeople!
That sounds easy and perhaps a lot like the secret sauce you've been missing.
But it's a trap. It's always a trap. Most businesses just aren't ready, yet.
I've worked with billion dollar++ companies that haven't mastered the basics yet, but they're excited about big data and the potential it offers. And yet, when we start to get the basics in place, revenues rise. When we start to “DO THE WORK” to understand our customers better, or have a pulse of our people’s actions, revenues go up.
But the data draw is sexy and promises us something we've maybe been missing. But for 99% of the companies out there, it's a trap. You can't run a marathon until you can run a solid 5K. Big Data is the Boston Marathon of data.
The reasoning is simple–Big Data is the Boston Marathon, and most businesses haven’t learned to crawl yet. Unless you’ve mastered decision making with Small Data, then Big Data is going to suck all the money and time out of your company and leave you with no ROI.
Look, don’t get me wrong,
I’m a massive believer in tools and technology.
You’ve heard me talk about the importance of the right tools & processes a million times. I talk about it in this video…
But it’s important to know why you’re making the investments and what you’re looking to improve before you do that. Too many are trying to make a giant leap without learning to walk, first.
Most companies have a lot of areas in their business where the simple (but incredibly important) questions aren’t being asked or answered on a regular basis.
Focus your attention there first, and you’ll not only find much higher ROI – you’ll also save yourself and your people a lot of wasted time and effort.
Like…If you want to better understand your customers in this robust, ever-evolving digital world, start with making sure someone is talking to them regularly.
Your Challenge for This Week: Pick just ONE single area of your business where you’re about to make an investment (tools, training, technology) and ask yourself, do you know the outcome or result you’re trying to achieve?
Always start with the desired results and remember my classic big data golden rule: If you can’t explain to a 12-year-old what you’re looking for and why then you likely don’t need it.
Bonus Challenge: Only a handful of hands in the room went up when I asked about a customer retention process. Start with the basics…
- What are the top five or ten things that MUST happen every time you get a customer?
- How do you know those things are happening?
- How sure are you they're happening every time?
More on this in future weeks…