If You Just Count Customers as "Speed Kills," You'll Kill Your Business Growth

Organic customer growth drives long-term profitability. But without up-to-date information trending profitable versus non-profitable customers and issues driving the best customers away, CEOs and their businesses are unable to manage customers as assets.

As internal leaders of each silo report and recommend customer actions separately, CEOs react to the random issues landing at their feet, rather than focusing on key issues eroding customer loyalty and customer profitability. They lack one unified view of how customers are voting with their feet: deciding if they'll stay or leave your company, based on the experience you're delivering. This is where the customer commitment falls apart, because what's actively asked for, measured and rewarded doesn't always line up with what's good for customers.

So why isn't understanding and managing customer profitability as important as quarterly sales goals? We've made it too difficult to measure how we're making progress with customers and customer experiences. The easily understood and well-defined quarterly sales goals win out and stay top of mind.

One business-to-business company was typical. Executives were counting the number of customer accounts but not the flow or the quality. The sales team was led by an ex-fighter pilot who sent off the sales force on what sales reps actually called "speed kills." They were fired up to get as many customers as they could, as fast as they could. But they weren't keeping track of the difference in the value of business each new customer would bring. To them, one unit was one unit. Customers had become widgets.

Each speed kill carried the same weight on the tote board used to measure success. The sales team exceeded its goal for new accounts that year, but sales became a drag on profits, which actually declined. They hadn't focused on the profitability of customer accounts, just the number of them. And no one actively identified, prioritized and eliminated issues driving profitable customers out the door.

I call these "guerrilla metrics" in my book, Chief Customer Officer: Getting Past Lip Service to Passionate Action. They are "guerrilla" because often a campaign is necessary to propel the organization into understanding the customer end-game and supply leaders with a platform to stand behind and reinforce. They establish a language for CEOs in how they ask about customers. They are a potent first step to kick-start or re-energize a faltering customer "focus." They work because they clear through the clutter usually encountered in the drive for customer experience and profitability, including inconsistencies in defining, reporting, and managing the state of relationships with customers and focusing on survey administration to the detriment of driving action and accountability.

Guerrilla metrics give leadership five questions for commanding customer accountability inside their organizations:

What are our new customers, based on volume and value?

Ask about the volume and value of your incoming customers as often as you ask about sales goals. You may find that you are tracking incoming customers across a multitude of company areas—with conflicting definitions of what it means to be a new customer. The wild card here is whether or not you have achieved alignment in how customers are classified inside your system. The part that's not likely to be tracked is the quality of incoming customers. This is especially important as the market becomes more saturated and new, profitable customers are harder to come by.


1. What are our lost customers, based on volume and value and reasons for defecting?
   
   The volume and value of lost customers needs to be paired with the new customer information to lay out the true situation for your company. You must reconcile "customers in" with "customers out" to know how well you are doing with managing customers as an asset of your company. In addition to knowing which customers left, you need to know the reasons why they don't care to do business with you anymore, so you can drive change across the business.
   
   
   
   
   
   
2. Which customers renewed, at what rate and why?
   
   You'll need to define customer behaviors that constitute renewal or the commitment to continue doing business with you. Understand patterns that indicate loyalty based on continuous purchase habits. You must ask why customers are staying with you to ensure that you personally know what you are delivering to customers that they value—and to ensure that you are aware when these reasons shift or begin to erode.
   
   The "with reasons" part of these metrics is key to taking a leadership role in demanding focused actions to drive customer profitability, rather than reacting to random pitches that come across your desk.
   
   
   
   
   
   
   
   
3. What is the revenue and profitability by customer group?
   
   Getting to this classification of customers is not trivial. Understand the movement of customers from one profitability group to another, so you can strategically lead the customer agenda. Your goal should be driving efforts that cause your costliest customer groups to decline and those most profitable to grow. If you are not demanding that the business be tracked this way and if you do not ask for accountability around these metrics in the regular language of meetings, it won't happen. Aligning this data to achieve a regular pattern of accountability around customer profitability patterns will take some time, but stay the course. It will optimize your ability to manage customers as an asset of your business.
   
   
   
   
   
   
4. What is our referral rate by customer segment?
   
   If your customers are willing to stick their necks out vouching for you, they have become your marketers. Keeping these customers, growing them and developing other customers like them are key. If you can track the rate of referrals in general, and by customer group, you'll know the strength of your ongoing revenue stream before you even spend another dollar on marketing. Companies completely focused on customer profitability will learn how referral rates differ by customer group and reasons for not referring. They will rigorously apply this learning to constantly adjust and improve.
   
   
   
   
   
   

Guerrilla metrics will create your customer scoreboard. With this simple "customer math," you can elevate high-priority customer issues, and get your board to sanction investments required to keep them.