LEADER’S GUIDE
Overview
This class focuses on developing a deeper understanding of the Company’s external customer demographics. We’ll discuss how we acquire customers, how the Company makes money, and why customer retention is a priority. Use the information below to enhance class discussions.
Roles
Manager – This particular class can have a significant impact on your employees with regard to their understanding of their “customers.” Clarify and describe how the Company views the demographic makeup of its customers; what the segmentation looks like in terms of quantitative (numbers and percentages) and qualitative (attributes and characteristics) data; and how new customers are acquired, retained, and reactivated. Help them understand what a new customer “costs” and the time it takes before they benefit the Company in terms of profitability.
Employee – Develop a deeper understanding of the Company’s customer demographics. Learn how customers are acquired, how the Company earns income, and why retention of existing customers is a priority.
Preparation
Refer to the customer groups identified earlier in Tenet 1 and collect quantitative data and relevant facts from Company publications such as the Company’s Annual Report. Discussions with Company executives can yield invaluable quantitative and qualitative information to add into your notes from class discussion. If there is little or no statistical data available for the questions below, focus the class discussion on qualitative information.
- How many active customers does the Company currently have?
- How many customers have not been active within the last 12 months?
- Where are customers located? International? Domestic? Region-specific? Urban? Rural?
- Into what groups or categories does the Company segment its customers?
- How do they compare with the groups identified previously in Tenet 1?
- Based on the total number of active customers, what is the percentage of total customers in each group?
- How does your Company make money? What are its sources of income?
- What is the Company’s customer acquisition cost?
- How much does it cost the Company to get a new customer?
- At what point (timeframe) in the relationship does a customer become profitable to the Company?
- What is the customer growth rate?
Review class guidance below.
CLASS GUIDE
Getting Started
At the beginning of the session, welcome everyone and follow-up on last week’s homework assignment where they were asked to be aware of how you react and respond to positive and negative feedback from your customers.
Ask: “What did you learn from your homework assignment last week? Did you respond differently that you would have prior to the last class?”
Remember to encourage conversational dialogue by using open-ended questions. Another technique is to say, “Tell me more,” or “Tell me more about that.” Be prepared to share some of your personal thoughts and examples. Refer to the Getting Started sections in Tenet 1 or Tenet 2 for more information.
Introduce the sixth Tenet – Know Your Customer and You’ll Be Rewarded
Say, “Today, we will focus on the sixth Tenet – Know Your Customer and You’ll Be Rewarded’.”
Ask, “What does this tenet mean to you?”
Main Discussion
1. Customer Demographics
Note: Open the discussion by referring to the list of customers compiled in Tenet 1 – Customers Make the Rules. Tailor the content below based on the quantitative and qualitative information collected when preparing for this class. To further enhance the learning process, provide the class with the source of any data you share. Refer to information developed in the Preparation section above.
Say, “When we discussed Tenet 1 – Customer Make the Rules, we identified the different types of customers with which we come in contact. It’s been a few weeks since we made our list. Is there a group we missed that we need to add? Today, let’s dig a little deeper and discuss our customer demographics.”
Ask, “How many customers does the Company have?” After a few responses, provide the answer.
Ask, “Where are our customers located?” After a few responses, provide a breakdown of customer locations.
Ask, “How does the Company segment its customers for marketing/promotional purposes?”
Provide the customer demographic segmentation used by the Company. Explain that these groupings allow the Company to customize its messaging for customers with the same or similar attributes. Help the employees understand how the groups they identified in Tenet 1 are represented in the demographic groups created by the Company.
Example (if needed):
In the mid-2000’s, Best Buy identified its most profitable customer demographic segments and gave them personas. The four originally created were:
- Buzz – the young tech enthusiast
- Barry – the wealthy professional guy
- Jill – the suburban soccer mom
- Ray – the family man
By identifying each customer type BestBuy was better able to focus its efforts and market its products and services in a meaningful way.
2. Recruiting New Customers
Say, “Marketing activities are the primary means by which companies acquire customers. To evaluate the efficacy of those efforts, companies track the cost of customer acquisition and the return on that investment.
“Acquisition cost is determined by calculating sales and marketing expenses for a specific period of time and then dividing that result by the total number of new customers acquired during the same period.”
Note: It may not be possible to provide your Company’s actual customer acquisition cost or even an estimate but it is important that the class understands that there is a cost associated with recruiting every new customer. As an alternative, provide the customer growth rate if available.
3. Retention and Reactivation
Say, “It’s easier and less expensive to retain or reactivate existing customers than it is to acquire new ones. Customer retention can be more effective and successful by incorporating the Tenets of Customer Service into each customer interaction.
Considering the cost of obtaining/attracting new customers and the amount of time needed for customers to become profitable, it is important to retain those clients we already have. When a customer leaves prior to the Company’s relationship becoming profitable, the Company loses its investment in recruiting that customer and the potential income that customer may have generated in the future.”
4. Company Income Opportunities
Note: The information in this section will be specific to your Company. It is important to provide enough detail to articulate the point clearly without adding unnecessary complexity. If different customer groups have different or varied approaches to income generation, include each of the approaches in the discussion.
Say, “How does our Company generate income?” Incorporate Company-specific information here.
Note: Link the Company’s income opportunities to the cost of the customer recruitment process.
Say, “Based on the cost associated with acquiring new customers, it may take a considerable amount of time before the Company begins to realize a return on that investment in terms of profitability from that new relationship. There are additional costs associated with new customers after the initial acquisition. What is important is to understand the point at which the relationship with the new customer becomes beneficial for the Company, i.e., profitable.”
Example (if needed):
In the insurance industry, it can potentially take up to two years before an automobile policy becomes profitable for the Company.
Note: You may not be able to provide the Company’s specific profitability timeframe. What is most important for participants to understand that there is a period in which customers are not yet profitable for the Company. Everyone has the potential to impact that timeframe through their interactions with customers and the way in which they respond to customers’ needs.
5. Employee Impact
Note: It is important that employees understand the Company’s customer recruitment and retention practices and expectations because they have a direct impact on their roles.
Say, “When the Company grows and prospers, potential growth and promotional opportunities are created for the employees.”
Summary
Customer demographic data provides valuable insights to better understand the Company’s customers. New customer recruitment, retention of existing clients, and reactivating past clients are financial investments made by companies as part of a long-term strategy that ultimately benefits both the employees and shareholders.
Homework/exercise
Over the next week, review the Tenets we’ve discussed over the last 6 sessions and determine how you can better incorporate them into your daily activities.
Let’s Engage!
I’m Agent in Engagement Simpson…Gregory F Simpson.
Employee engagement is a critical mission. I hope I can count on your help! Subscribe to the RSS Feed to receive the latest intelligence/insights and/or register to make entries in the comments log.
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P.S. First contact? Welcome to the Agent In Engagement community. Explore and join fellow employee engagement operatives in targeting a known thief – alias: Disengagement. Together we can bring this thief to justice and make the world a better place for all companies and their employees.
You can access information on The 10 Tenets of Better Engaged Employees below:
Tenet 1 – Customers Make the Rules
Tenet 2 – Service Comes from the Inside Out
Tenet 3 – Provide Solutions and Show that You Care
Tenet 4 – Customers Define Quality and Service
Tenet 5 – Feedback from Customers is a Gift
Tenet 6 – Know Your Customer and You’ll Be Rewarded
Tenet 7 – Skip Satisfaction, Exceed Expectations
Tenet 8 – Create Value
Tenet 9 – Be More, Better, Faster, Different
Tenet 10 – Honor Your Customer
