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Fixing The Leaks

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A leading change consultant explains how to find hidden sources of profitability in any organization by reducing customer attrition.

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Fixing The Leaks

  1. 1. Fixing The LeaksA Workshop On Improving Business Profitability Ronald D. Ryan President e. ron@realemail.net t. 888-398-1624 Copyright @ 2012, Ronald D. Ryan 1
  2. 2. The Truth AbouteCommerce. “We are all on the Internet. And on the Internet, we are all plumbers. Some of us deal with big leaks, others deal with small ones, and still others design and lay new pipes. But in the end, we’re plumbers whose pipes carry customers, information, and money.” Copyright @ 2012, Ronald D. Ryan 2
  3. 3. •Who can benefit from fixing customer „leaks‟?• What are the benefits from fixing leaks?• Where can you find the leaks?• How can you get started? Copyright @ 2012, Ronald D. Ryan 3
  4. 4. “Slump? I aint in no slump... I just aint hitting.” - Yogi Berra Copyright @ 2012, Ronald D. Ryan 4
  5. 5. Quick Quiz Do you own your own business? Are you the Executive Director of a not- for-profit or the CEO, COO, or CFO of a business? Have you recently taken on a promotion? Is your boss asking what have you done for me lately? Who Can Benefit? Copyright @ 20102 Ronald D. Ryan 5
  6. 6. Quick Quiz Do you own your own business? Are you the Executive Director of a not- for-profit or the CEO, COO, or CFO of a business? Have you recently taken on a promotion? Is your boss asking what have you done for me lately? No matter what size of business or not-for- profit, the leaks in your processes will define your Who Can Benefit? organization and its bottom line. Copyright @ 20102 Ronald D. Ryan 6
  7. 7. Are YouAcquiring,Converting AndKeepingCustomers AsEffectively AsYou WouldLike? Copyright @ 2010, Ronald D. Ryan 7
  8. 8. “Youve got to be very careful if youdont know where you are going,because you might not get there.” - Yogi Berra Copyright @ 2010, Ronald D. Ryan 8
  9. 9. Typical Customer FlowInternet You Need To Model This Online Sales Process Fulfillment Repeat In-Store Purchase & Service Sales Center Off Line Advertising What Are the Benefits? Copyright @ 2012, Ronald D. Ryan 9
  10. 10. Copyright @ 2010, Ronald D. Ryan Key Concept #1Know Who Is Leaving And Why: Knowing thenumber of customers who visit your store(s) or site(s),convert to sales, and make repeat purchases isimportant. Understanding how many you lose at each What Are the Benefits?step in the process and why, critical. 10
  11. 11. Improving These Metrics = Easy Money… Conversion and repeat purchase rates shown are for discussion purposes only. Rates in your business will vary by product, process, customer type, time period,Sales Center or and season. Retail Store1 in 4 or 5 buy Fulfillment & Service 8 or 9 out of 10 Keep What You Sold Them Repeat Purchase (Or Renewal) Between 5 and 9 Out of 10 What Are the Benefits? Copyright @ 2012, Ronald D. Ryan 11
  12. 12. Copyright @ 2012, Ronald D. Ryan Key Concept #2 Complete The Circle: Improvements in conversion and repeat purchases have a What Are the huge impact on profitability. D. Ryan Copyright @ 2010, Ronald Benefits? 12
  13. 13. Repeat Purchase Cycle Sales Online Fulfillment Repeat CenterProcess & Service Purchase Or StoreMost People Call,Drive or Log on toMake A RepeatPurchase. But NotAlways From You. What Are the Benefits? Copyright @ 2012, Ronald D. Ryan 13
  14. 14. Most Profitable Repeat Purchase Cycle Online Fulfillment Repeat Sales & Service PurchaseProcess For most companies, online or automatic repeat sales are the most profitable sales of all. What Are the Benefits? Copyright @ 2012, Ronald D. Ryan 14
  15. 15. Copyright @ 2010, Ronald D. Ryan Copyright @ 2012, Ronald D. Ryan Key Concept #3Angry no more: Moving repeat salesonline lowers acquisition costs, increasescustomer satisfaction, and improves What Are the Benefits?profits. 15
  16. 16. Story Problem: A. If each visitor to your site costs you $5.00 to attract, and for each 20 visitors you sell one product, what is your acquisition cost per customer? B. For extra credit: You improve your web site. What is your acquisition cost per customer going to be if you sell 1 customer for 10 visitors? C. Double extra credit: What if you buy 25K leads per month and the cost of improving your web site above in B is $100K. How long will it take you to make your $100K back? What Are the Benefits? Copyright @ 2012, Ronald D. Ryan 16
  17. 17. Story Problem: A. If each visitor to your site costs you $5.00 to attract, and for each 20 visitors you sell one product, what is your acquisition cost per customer? Answer: $100.00 B. For extra credit: You improve your web site. What is your acquisition cost per customer going to be, if you sell 1 customer for 10 visitors? Answer: $50.00 C. Double extra credit: What if you buy 25K leads per month and the cost of improving your web site above in B is 100K. How long will it take you to make your $100K back? Answer: 1.6 months. What Are the Benefits? Copyright @ 2010, Ronald D. Ryan 17
  18. 18. Copyright @ 2010, Ronald D. Ryan Key Concept #4Easy Harvest: The ROI from changes thatimprove conversion and repeat purchases is What Are the Benefits?often very high. The time to payback is veryshort. 18
  19. 19. Why Study The „Leaks‟ -  Deeper Understanding of Customers  Higher Customer Satisfaction  Higher ROI  Lower Acquisition Costs  Higher Profits What Are the Benefits? Copyright @ 2012, Ronald D. Ryan 19
  20. 20. “You Can Observe A Lot Just By Watching.” - Yogi Berra Copyright @ 2012, Ronald D. Ryan 20
  21. 21. Online Sales Process Online Sales Fulfillment Repeat Sales Center or & Service Purchase Process Retail StoreCommon • Right Traffic But Wrong Products/Services (or Vice Versa)Problem • Difficult Customer Info Requirements For PurchaseAreas: • Inconsistent Look & Feel At Order Processing Page • Confusing Interface With Poorly Articulated Funnel • Incomplete, Missing, Or Hard To Understand Call(s) To Action • Poor Follow-up To Non-buyers Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 21
  22. 22. In-Store Sales Process In-Store Fulfillment Repeat Sales & Service Purchase ProcessCommon • Poor Outdoor Signage and Lack of Curb AppealProblem • Right Traffic and Location But Wrong Products/Services (orAreas: Vice Versa) • Inappropriate In-store Merchandising and Product Placement • Inadequate Sales Staff Knowledge, Training and Monitoring • Confusing or Unappealing Store Layout & Organization • Long Checkout Lines • Non-existent Follow-up To Non-buyers Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 22
  23. 23. Telephone Order Process Online Call Repeat Sales Fulfillment Center Purchase ProcessCommon • Confusing And Inconsistent Value Proposition from CSRsProblem • Inadequate Scripting, Training, & MonitoringAreas: • Poor Sales Systems And Support • CSR Compensation Not Aligned with Company Profit Model • Inadequate Customer Information About After -Sales Process • No Systematic Follow-up To Non-buyers Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 23
  24. 24. Fulfillment Process Online Sales Sales Center or Fulfillment Repeat Process Retail Store PurchaseCommon • Misleading or Inadequate Sales DescriptionsProblem • Confusing Delivery ProcessAreas: • Confusing Packaging, Paperwork, and Business Reply Envelopes • Unresponsive Customer Service or Support • Difficult or Complicated Returns Process • Inadequate Satisfaction Monitoring Where Are the Leaks? Copyright @ 2010, Ronald D. Ryan 24
  25. 25. Repeat Purchase Process Sales Center Online Sales Fulfillment & Repeat Process or Retail Service Purchase StoreCommon • No Customer Level Tracking of Purchases, Preferences orProblem NeedsAreas: • No Easy or Automatic Means of Repeat Purchase • Incomplete or Inadequate Reseller Follow-up • Wrong Channel Follow-up • No Satisfaction Monitoring or Feedback System • Inability to Adapt Offer To Changing Customer Needs Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 25
  26. 26. It‟s All Connected What You Affects What Do Here Happens Here Sales Center Online Sales Fulfillment Repeat Process or Retail Purchase & Service Store• Clear Value Proposition On Web Site• Product Descriptions, Educational Content on Web Site• Call Me Buttons In Sales Sequence• Pick up Merchandise At Store…All Result In Lower Costs And More Sales In Sales Center or Retail Outlet Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 26
  27. 27. It‟s All Connected What You Do And Affect What Here Here Happens Here Online Sales Fulfillment Repeat Sales Center or & Service PurchaseProcess Retail Store • Properly Set Customer Expectations Regarding Product/ Service • Info on Contractual Post-Sale Requirements (e.g., Signatures, Returned Forms) • Defaulted (Profitable) Product Choices • Defaulted (Profitable) Payment Methods and Billing …All Result In Higher Customer Survivorship Where Are the Leaks? Copyright @ 20102 Ronald D. Ryan 27
  28. 28. It‟s All Connected What Affect What You Do And Here And Here Happens Here Here Online Fulfillment Sales Repeat Sales Center & Service PurchaseProcess • Great Experience • Value Proposition And Brand Promises Fulfilled • On-going Sense of Community • Easy Repurchase Process • Easy Referral Process …All Result In Higher Repurchase and Referral Purchase Rates Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 28
  29. 29. Where To Go For Data? Online Sales Process: Web Analytics and User Testing Sales Center & Retail: Recorded Calls, Telephony Data, In Store Traffic, Mystery Shoppers Fulfillment & Service: Complaint Log, Returns and Cancellations Data Repeat Purchase: Repeat Buyer Profiles & Surveys of Defecting Customers Where Are the Leaks? Copyright @ 2012, Ronald D. Ryan 29
  30. 30. Summary – Where To Find TheLeaks Identify Your Major Customer Touch Points Observe And Measure Customer Behaviors At Each Touch Point Correlate Data On Customer Attrition Develop And Test Hypotheses Start Planning How To Fix The Leaks! Copyright @ 2010, Ronald D. Ryan 30
  31. 31. In theory, there is no difference between theory and practice. In practice, there is. - Yogi Berra Copyright @ 2012, Ronald D. Ryan 31
  32. 32. But Isn‟t This Just CommonSense? “Constant “ But we can’t The Reality: Improvement afford to do this Discipline Is Should Be Part now; we’re in Difficult To Build of Our Culture” survival mode.” & Maintain Yes. How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 32
  33. 33. How To Get Started? Leadership Outside Inside Task CommitmentConsultant(s) Force <Either Way> Start Here And Work Your Way Out How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 33
  34. 34. Why Bother With A Task Force? Multi-departmental point of view Objectivity Independence and intellectual honesty Customer focused rather than department focused How To Fix The Leaks? Copyright @ 2012 Ronald D. Ryan 34
  35. 35. Make Sure You Are LookingWith New Eyes If it ain‟t is broken don‟t go fix it! How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 35
  36. 36. 6 Sigma Ninja‟s Helpful But Not Required -A Check List For Change Teams  Smart – big picture person comfortable with ambiguity  Understands company and how it works  Analytical - not afraid of numbers  Plays well with others - is well respected by peers  Has strong domain expertise in his/her field  Willing to work hard How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 36
  37. 37. How To? Buy Books Not Dogma Customer Analytics • How to Measure and Improve In-Store Buyer Experience (Underhill) • How to Measure and Improve Internet Experience and Ecommerce (Kaushik) • How to Measure and Manage In-Bound Call Center Customer Experience (Cleveland) Customer Satisfaction Measurement And Management • How to Conduct Meaningful Satisfaction Surveys (Hayes) • Net Promoter Score (Reichold) • Experience And Interaction Economies (Pine, Gallup) • How (Nudges) Can Affect Buying Behaviors (Thaler, Sunstein) Process Improvement • Six Sigma (Pande et al.) • Lean (Womack, George, Seddon) • Reengineering (Hammer) No Single Approach Does It All How To Fix The Leaks?Copyright @ 2012, Ronald D. Ryan 37
  38. 38. Where Should You Start? Repeat Online Purchase Sales Fulfillment (Or Process 8 or 9 out Renewal) Call Center 1 in 20 of10 Keep Between 5 1 in 5 buy and 9 Out of What You Buy 10 Buy Sold Them again How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 38
  39. 39. The Higher You Start In Your Funnel, TheGreater The Impact Of The Change… Online Lead Generation & Sales Sales Center Fulfillment & Service …But also the more controversial, risky, and difficult to measure. How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 39
  40. 40. Where Should You Start? Repeat Purchase Fulfillment & (Or Online Service Renewal) Sales Call Center 8 or 9 out of Process Between 5 1 in 5 buy 10 Keep and 9 Out of1 in 20 buy What You 10 Sold Them Buy again Start with a system or process you control. Fix it first. The further back in the value chain you start, the safer you will be. How To Fix The Leaks? Copyright @ 2012, Ronald D. Ryan 40
  41. 41. Summary High ROI Falls straight to the bottom line Requires little investment Improves customer experience and brand Makes the world a better place. Copyright @ 2012 Ronald D. Ryan 41
  42. 42. Copyright @ 2012, Ronald D. Ryan 42
  43. 43. Payback Calculation Purchased Leads Cost Per Lead Acquisition Cost New Customers 25,000 $5.00 $125,000.00 1,250 12,500 $5.00 $62,500.00 1,250 Old Conversion 5% New Conversion 10% Per Month Savings $62,500 Investment $100,000 Time To Pay Back 1.6 Copyright @ 2012, Ronald D. Ryan 43

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