Herman Blog

Customer Centricity: The Value of Service First in Building Life Long Customers

Written 2016-11-30 by Chris Bianchet
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In my career in the AV Industry, one of the things that has been a tough pill to swallow time and time again has been the amount of turnover that I’ve seen with customers. It often felt like one day we were celebrating a new customer win, only to have one little issue with a project or service agreement go badly and off they ran to the next integrator. Sometimes, we would see the customers come back a few years later as they moved through several integrators and none were able to meet their demands.

 It may be easy to say that this was a byproduct of a fickle customer. However, I’ve truly come to believe this is somewhat indicative of an industry that focused entirely too much on winning the deal, and not enough on winning the hearts and minds of the customer.

 Today, we are seeing things change in a big way. For years our industry has discussed a need to move to a more service based model, but only recently due to massive shifts in technology, lower hardware pricing and external industry competition has our industry truly bought into the shift to new business models that are heavily service focused.

 Bottom line, customers in a deal by deal capacity are no longer a sustainable business model. We need to win and continue to earn the business of customers for life, because if we can deliver to our customers needs in the long run, the fruits of our labor are not only more work, but significant improvements in our bottom line.

 To win and keep customers, I have found that it requires a few key focuses in the organization. 

  1. Customer Centric Organization: To maximize lifetime customer value, you cannot have an organization that isn’t customer centered. Our industry has a lot of challenges because the work we do is difficult. Sometimes our customers get frustrated and it is easy to point the finger back. The problem is that our business is a service business and we are supposed to be solving complex problems for our clients. When we don’t, it is a typical response that they will be unhappy. However, customer first means we set great expectations from the onset, we work hard to deliver satisfaction and we own the challenges of each project. The more we do it, the more we will be able to work through the tough times.
  2. Services are the First Sale: As I mentioned above, many integrators built their businesses around projects. This was an okay way to live for a long time, but it isn’t any more. We need to make maintenance part of every sale because the continued touch points will not only give us a chance to fix any issues that took place with the initial installation. But, it will also give us the ability to stay in touch regularly and be the first person our customers think of as new opportunities arise. I still believe far too many companies have services and contracts as a secondary item and changing this is great for customer relationships and business performance.
  3. Retention is the #1 KPI: They say an improvement in customer retention of just 2% can yield a 10% improvement to profitability. That is a substantial gain in profit by making a small but meaningful extra commitment to customer satisfaction. Playing the customer merry-go-round is just too hard these days and by spending more time and effort keeping your customers you will find the additions to be the ones that drive growth rather than survival.

 Studies have shown that acquiring a new customer can cost up to 6x what the investment requires to keep a customer. And with margins continuously shrinking, the added cost of new customer acquisition can be trying for any company. However, I focus on winning and keeping customers for the long run can create enormous lifetime value and so much of this starts by putting the customer first and making service sales and customer retention the key performance indicators of how well your business is doing.

Tags: audio video | customer service | life time value of customer | service-based model