Improving Customer Attrition Requires As Much Heart As Smart

Headline: Three years of misses on both the top and bottom lines, customer churn exceeding $56 million annually and continuous market share losses result in the break up and sale of another industry leader. Approximately 1,500 employees received their pink slips as the Company closed it doors today!

If a firm’s revenue growth is unimpressive I recommend that leaders first look to how they manage current customers for clues to the solution. More often than not customer attrition is the canary in the mine, a harbinger of poor sales growth. Not surprisingly many leaders opt for the sex appeal of new sales to solve their growth problem. They often conceptualize that a focus on customer attrition is too defensive, too demoralizing for their “hunters”. In this exciting technology led world we live in let me remind you that an idea always precedes action. Your idea or philosophy about where the customer fits in your business determines everything about you as a company and ultimately what strategies you decide to implement.

In no particular order of offense let me describe how customer attrition philosophy is often actualized in real life. When faced with customer attrition challenges one group of managers will take a deep dive into spreadsheet management. All in the name of accountability they start tracking everything imaginable. They will assign task forces for task forces and even measure the number of project teams working on the problem. Sometimes they schedule conference calls before they know why. Very often marketing functionaries are wrongly obsessed with measuring outbound emails, outbound phone calls, scheduled presentations, and face-to-face sales meetings. This group clamors incessantly about how effective managers track activity and measure everything. I so want this group to re-read Deming’s book, “Out of the Crisis” to get a sense of what the father of quality had to say about this phenomenon.

A second group of managers is marginally more thoughtful and tends to use lean process, six-sigma, and continuous improvement initiatives to kick start customer attrition improvement believing that process drives everything. Their teams minimize the kinds of data previously mentioned in favor of critical service incidents, order form errors, call center wait times, and a host of other process variances. Unfortunately this faction often draws conclusions from an exclusively internal perspective. This unit’s findings mistakenly become the customer’s in a very “we know best” kind of way. Although this cluster usually extolls the virtue of the customer’s voice very rarely do we hear that voice in the final analysis. This crowd still finds its growth strategies de-railed because their perspective about customers is too fragmented. These managers tend to see customer attrition issues as quantitative exercises and often miss the human side of the customer’s decisions.

The next group systematically and purposefully denies that customer attrition is a problem for their organization. These managers work extremely hard at separating facts and particulars about the customer situation. The level of dissection is so granular that it is impossible to understand context or to see important customer decision and use patterns. These managers see the truth that supports the story they want told but you can be sure their truth is not the complete truth. Make no mistake this group is often motivated by a combination of internal politics as well as pending investment trade-off decisions. However, this group is also motivated by the need to defend their turf.

The success culture in many of these organizations encourages managers to focus their energy on positive service events and customer experiences. The critical incidents that chip away at loyalty are decided to be outliers and exceptions that are not reflective of how the organization treats customers. Because it is our nature to unify observations any customer example that does not fit this unification pattern creates a tension that is inconsistent with the beliefs of this managerial group. Leaders grossly over-promote the positive customer experiences exaggerating their significance to such an extent that customers interpret the firm as “out of touch with our priorities”. Customer attrition denial creates a false sense of excellence. It may take awhile to manifest itself in the marketplace; however, customers ultimately describe this group as complacent, misinformed about the quality of the customer relationship, and unresponsive. The term zone of tolerance comes to mind with this faction.

A relatively small group of leaders reason that customer attrition is not a bad thing. This faction assumes that unprofitable customers either need to be fired or charged draconian dues and fees for the privilege of doing business with the company. This group’s decisions are based on the concept of customer attrition as a purification tool. Managers of this ilk promote their decisions as a spiritual cleansing of the firm based on a mystical Swedenborgian-like alignment with a higher cause. We often see this philosophy exhibited in firms where the sales force had been encouraged and/or commissioned to write new business at any cost. Ultimately the pendulum swings and either operations or finance feels compelled to clean things up. This concept of customer attrition is exceptionally dangerous because of its negative impact on brand image and sales force morale.

Time and again we are reminded that customer attrition is a complex business problem. There is no doubt that customer attrition improvement demands a certain degree of vision, alignment, and execution from both individuals and organizations. However, lacking a moral center that informs the customer attrition strategy there can be no sustainable vision, alignment or execution. So where do we find ourselves? Borrowing from Emerson: “We awake and find ourselves on a set of stairs; there are stairs below us, which we seem to have ascended; there are stairs above us, many a one which go upward and out of sight.” In the context of customer attrition we must decide how we will conduct our customer relationships and whether we go up or down.

There is a three-step rubric to help you define your customer attrition philosophy. The first guideline recognizes the importance that customer history has on our success. Especially in these times it is insane to operate any business without the benefit of a marketing software solution. However, a history of critical incidents, sales call reports, webinar attendance, email communications, campaigns etc. is not as useful as actually living the customer’s reality. Until leaders find a way to make customer history personal customer attrition will always be nothing more than an intellectual exercise. If you are serious about solving a customer attrition problem your systems and procedures must be aligned in a way that aids in developing a deep knowledge of the customer as an individual. You must accept that there will be data that unifies your understanding as well as information that defines relevant degrees of variance. To make history personal you must be willing to accept and use these two qualities of nature to your advantage. By the way, creating this kind of history is not simply a matter of algorithms and customer surveys.

Second, sustainable customer attrition solutions also require virtue. For example, organizations can implement technology in either a virtuous or a dishonest way. Does your marketing software system enhance your ability to manage the customer lifecycle or does it only recognize the initial sale? Does your system encourage honest customer responses or inquiries or does it manipulate customer visits by directing customers to home pages of your design? Does the structure of this critical system essentially support how you intend to conduct the customer relationship over time? Why are these questions important? Within the context of customer attrition we know that a subjectivity bias is disastrous. As in most things virtue is in truth. So, the marketing software system must not only possess the right architecture to match your customer attrition philosophy it must enable you to conduct a truthful inquiry and analysis.

The final piece of the rubric is to implement a diagnostic framework that helps you perform a comprehensive analysis of the individual customer situation. Customer attrition is a dynamic challenge and as such is not something you solve today and then check off the list. Organizations that have an actionable customer attrition philosophy develop a common system for examining the health of each customer relationship. Their systems, whether automated or manual, recognize the interrelatedness of price, product and service quality, delivery system effectiveness, communications, ethics, and customer experience. In addition, the implementation of this framework will be consistent and routine providing a longitudinal analysis that aligns with the customer lifecycle.

At the end of the day there may yet be a few commercial enterprises in which customer attrition has little significance. However, most of us live in a competitive business environment and understand how difficult it is to win a new customer. So while keeping and growing customers may be considered somewhat less exciting than winning new customers I have argued that customer attrition performance is the center of sustainable business performance. It requires a greatness of heart and smart.

How to Alienate Your Sales Team

After 50 years in business, most of which has been in sales related roles, it seems to me that there is a great appetite by many sales managers to alienate their sales teams. How do I know this? Well – over those fifty years I might have met no more than a handful of salespeople who have anything positive to say about their managers. During that same period I have many sales managers who have shown an interest in not alienating their sales teams by undertaking studies and programmes aimed at motivating and/or inspiring their sales teams. However I am additionally aware that the vast majority of sales managers tend to seek programmes and undertake studies which avoid taking any personal responsibility for the failure of their sales teams and instead seek programmes which involve analysing data

To assist in this quest I have constructed the major behaviours to adopt which will ensure that your team will a) be alienated, b) have contempt for you, and c) will at the first opportunity leave. The numerical sequence does not indicate a ranking. The behaviours are:

Spend as little time as possible accompanying your salespeople on customer visits. A good ratio would be 5% of available time – or once a year with every team – whichever is the lower. The most important thing for sales managers is to focus on manipulating spreadsheets of sales data so you can work out who to fire next.

Whenever you’re on an accompanied call make sure the customer knows that you have more knowledge and experience than the salesperson. In this way the customer will tend to talk mainly to you. Obviously, when the opportunity presents itself, close the sale. The salesperson will then know how it’s done and will appreciate the lesson learned.

When you do go on calls with the salesperson try not to spend a full day as the salesperson might think you have nothing better to do. It’s a good idea to arrange for someone in the office to call you at a specific time so you can say that something more important has come up and you’ll have to leave in order to deal with it.

It’s important to keep your mobile switched on all of the time – whether you’re out on calls with a member of your team; whether you’re in a meeting; if you’re on a training course or at a conference; or in the toilet. If you put the phone on silent no-one will know it’s switched on. As a sales manager it’s vital you are able to be contacted at every minute of the day. You should consider leaving your mobile switched on 24/7. Your boss might try calling you during the night or at weekends just to check out your commitment.

Have a brainstorm session at every sales team meeting to generate ideas for increasing sales. This is important whether the team is on target or not as there will always be someone who is behind target. Make sure you pick on underperforming individuals to pick out the best idea for increasing sales and have them commit to a specific target to achieve between sales meetings. You don’t need to do anything with the ideas as they will probably come up again next time you do brainstorming. The act of doing this at every meeting shows how important increasing sales is.

Publish a league table of results which should be updated each week. It is important for those salespeople who are falling behind others to see the gap increasing each week as they are probably not aware of their poor results in relation to others in the team.

Be sure to support the idea that managers always have a superior benefits’ package to salespeople, no matter how successful they are. Whilst many members of your sales team might not be able to determine how much you are paid, one way of making them feel inferior is the choice of company car, on the assumption that your company still provides company cars. When your new company car arrives, and hopefully it’s a superior model and specification than for salespeople, either arrive early at the next meeting and pretend to be unloading something from the boot as they arrive. This will give you the opportunity to say loudly ‘sorry I’m running a bit late – I haven’t got used to the new features on this car yet’. If your company gives you a car allowance, be sure to bring up how much you’re saving every month because of the new policy.

If you’re unfortunately enough to have to spend any time in the field with individuals in the team, be sure to gossip about other colleagues of theirs whenever the opportunity presents itself. They are probably too stupid to work out that you’ll be gossiping about them to their colleagues.

If you’re a newly promoted sales manager, or even if you’ve been in the role a while, keep some of your best customers for yourself. You can say that the customer insists on dealing with you. It will also give you the opportunity of proving that you’re a far better salesperson than a sales manager.

Lastly, and this is a great motivator, ask each person in the time to call you last thing on Friday each week with their sales figures. This is especially motivational for those who have had a bad week, and your reaction will ensure that they have a dreadful weekend worrying about what will happen next week.

GROW to POWER

Who originally developed the GROW model of coaching is debatable. Many attribute Sir John Whitmore and his colleagues in the world of sports with its creation; others say GROW was developed as a result of Tim Gallwey’s work in his role as a tennis coach; some say that one of the originators was Frank Dick who from 1979 to 1994 was the British Athletics Federation’s Director of Coaching. John Whitmore, David Whitaker (coach of the British men’s hockey squad in 1988) and David Hemery (Olympic 400m hurdles champion, 1968) ran courses in Bisham Abbey entitled The Challenge of Excellence.

Although it’s not important to know who developed GROW it is useful to understand that it was developed to improve the performance of sportspeople (specifically athletes) and that the relationship between the coach and the sportsperson was and is based upon the premise that the sportsperson wants the coach to help them identify the barriers and problems to performance improvement and how to overcome them. This is why the GROW model is widely used by Life Skills coaches where the aim is to identify what people’s life goals are and to move them towards achieving them. It’s also the reason why many businesses now use the TGROW model, where ‘T’ stands for Theme, or Topic, or Task.

I attended The Challenge of Excellence in 1991 and in 1992 wrote the first of three books on the topic of coaching using the POWER model which I developed as a more business focused coaching tool. Since this time I have researched the use of coaching in not only Sports, but also in the professions of Music, Dance, and Acting – the common factor between these professions being the emphasis on excellence in physical performance. I have used this experience to further develop the POWER model so that it specifically deals with improving performance of salespeople which has proved to be extremely effective given that if selling is anything, it also is a physical performance.

The main premise of the POWER model is that the agenda for coaching sessions should be driven by the sales coach, not the salesperson – hence the model begins with ‘P’ Purpose and Parameters: what is the purpose of the coaching session for the coach and the organisation. Only after this has been determined does the session move towards the salesperson’s Objectives and Options (‘O).

The POWER model asserts that coaching is not a voluntary process although it does eventually lead to salespeople seeking out the sales coach to help them improve. The model also does not assume that there are problems and barriers to improvement but that even if people are performing well that they can improve. Sales coaching involves continuous improvement by examining what it is that salespeople are doing and how they are behaving which produces current performance. The POWER coaching model focuses on the inputs that cause the output and the premise is that no-one is so good that they can’t get better.

The GROW model is a very good first step in acquiring basic coaching skills. The POWER model seeks to build on those basic coaching skills and to move those involved in improving the sales performance of salespeople to the next coaching level.

I have identified four possible levels of coach:

Level 1: this is the entry level to coaching; this person will probably be working with an experienced coach, learning the ropes and coaching technique. During training as a coach the focus will be on checking that formal training is being transferred to the field; that the specific work-related process is being learned and implemented; and that the person is demonstrating basic levels of skills and behaviour. It can take anywhere between 3 to 12 months to become accomplished at this level.

Level 2: After twelve months of experience at Level 1 the coach should be able to assume the role of full time coach, focussing on improving performance.

Level 3: It takes at least 24 to 36 months for a sales coach to be described as a ‘top’ coach. At this level the coach will primarily be improving the performance of sales managers.

Level 4: Specialist coaches operate almost entirely as freelance consultants, coaching and improving the performance of senior sales managers and designing and implementing organisation wide coaching cultures.

Coaches will stick at any of the levels they feel most comfortable with. It is important not to fall into the trap of many top salespeople where promotion to the next level (i.e. sales management) is seen as the goal of self-fulfilment. In the same way that good salespeople do not necessarily make good sales managers, good level 1 coaches do not necessarily make good level 2 coaches, and so on.

I believe that the headline competencies that make for a good sales coach are:

1. Constructs a sales process appropriate for the sales team, the market, and the organisation’s objectives.

2. Determines the behaviours required of the sales team in order to effectively achieve organisational sales objectives.

3. Recruits, selects and maintains a sales team in sufficient numbers, quality and competence to sell the company’s products and services.

4. Determines the basic training requirements for the sales team.

5. Ensures that the sales team is sufficiently trained to meet organisational sales objectives.

6. Designs and implements a sales coaching process which ensures that the sales team is able to competently achieve basic organisational sales aims and objectives.

7. Uses an effective and robust process of sales coaching to ensure continuous improvement of the whole sales team.

8. Instigates action to meet organisational needs to identify the next generation of sales coaches.

Specific skills include:

Questioning skills
Listening skills
Observation skills
Non-verbal skills