Archive for November, 2012

Customer Satisfaction – What state of mind do customers have of your business?

In modern business there’s increased competition, crowded markets, lesser product differentiation and flatter sales.

So measuring customer satisfaction is key. It reportedly costs five to eight times as much to get a new customer than to hold onto new ones.

So why not operate a measurement system for customer satisfaction and find out what your customers expect from you?

Firstly, don’t just watch sales volumes or rely on a sales rep determining your customer’s state of mind. Also, don’t just track the frequency of complaints or look at ageing debt.

Implement a survey via mail, e-mail, or over the phone and rate experiences on a weighted scale (1 out of 5 etc.). Ensure to repeat this process to see how your customers experience changes over time.

Consider these factors:

  • Who is responsible for implementing a system – sales and marketing.
  • Management must champion the initiative.
  • Compare your own customer satisfaction with your competitors.
  • Engage all employees.
  • Inform your customers about the changes made due to the survey. Its  important to communicate.

Satisfaction can be based on:-

  • Quality
  • Business relationship
  • Price
  • The Service and Product meeting or exceeding customer expectations

Did you know? A 5% increase in loyalty can increase profit by more than 25%.

A very satisfied customer is six times more likely to be loyal than a satisfied customer.

Only 4% of dissatisfied customers actually bother to complain, and on average that same dissatisfied customer is likely to tell nine other people about it.

In comparison, satisfied customers will tell five other people on average about the good treatment they received.

You also need to consider the following:

  • Are your products less than advertised?
  • Are employees making promises they can’t keep?
  • Do you know why customers prefer another brand over yours?
  • Do you get customers to compare and contrast?
  • What is the technology expectation? – E.G. Mobile phones are constantly evolving.
  • Conduct a Customer Satisfaction Survey on a regular basis and look for:
  •    Overall satisfaction: How satisfied are you with ……
  •     Loyalty Measure: Would you recommend us to…
  •     Intention to repurchase: Do you intend to repurchase…

Here are 6 thoughts for putting together a customer satisfaction programme:

  1. Who should be interviewed? The end user, the manager or the directors or all?
  2. What should be measured? Put yourself in the customers mind-set – what do they consider important?
  3. How should the interview be carried out?
  4. How should satisfaction be measured?
  5. What should the measurement mean?
  6. How to use the survey to the greatest effect?

It’s debatable whether these should be anonymous or not.

Another strategy is to identify the best company in your sector and set your benchmark against them.

There are links between customer satisfaction and employee satisfaction as happy employee’s work harder, providing greater customer satisfaction.

If a survey is right for your business, then your customer will in-turn expect positive changes to come from it. Most surveys just sit gathering dust. Be sure to communicate quick wins. The newsletter can be a good starting point and turn your customers into very satisfied customers.

This article was taken from a discussion of the Business Exposure Group.

If you are a Director or business owner and would like to attend one of their informative round-table discussions, please contact philipdrazen@bxgroup.co.uk

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Cash Flow Management – How do you manage yours?

Getting customers to pay their bills on time is one of the biggest challenges a business owner faces. According to the Department of Business Innovation and Skills, last year 4,000 businesses failed because of late payments and cash flow issues.  Analysis of invoices highlights that many are submitted late or are deficient due to having the wrong details on them, leading to the incorrect processing of the invoices.

If a customer’s payments slow down, it’s advised that you should check them out as it may be a sign that they are in trouble, therefore it would be better to stop supplying than to suffer a bad debt. On average, small  businesses  in 2012 wait two months on top of their payment terms to get paid.

However there are a few tips for trying to ensure the invoice is paid correctly and on time:

  • Send invoices ASAP – and make sure they are sent to the right person. If they need to be passed from person to person, department to department, this will slow the process immensely.
  • Explain every single charge clearly and concisely.
  • Make deadlines clear from the very beginning – especially from when they sign the original contract.
  • More invoices to clients for smaller amounts.
  • Send a hand-written thank you note to the credit controller on a regular basis – get to know them, so that you are pushed to the top of the pile.
  • Find the best date to get the invoice to the customer so it doesn’t go past their cut-off date and another month is wasted.
  • Learn about customers’ internal accounts processes and work with them. Get your best customer to pay quickly.
  • Be tough and don’t accept excuses
  • Threaten to use winding up orders to excerpt more pressure on debtors as a last resort.

Aside from these tips, there are other methods that could potentially be utilised to secure payment on-time.

  • Take upfront deposits before you even start working. Since the start of the recession this is more acceptable.
  • Utilise discounts or loyalty rates to get paid quicker.
  • Only pay on set days in the month to hold onto your cash longer.
  • Use suppliers as a line of credit, instead of banks.
  • Swap excess funds in your operating account into an interest bearing account. Ask your bank to automatically sweep excess funds.

Invoice Finance– Is it only for struggling businesses?

That used to be the case, but now it is a good  form of finance. Invoice Finance bridges the gap between the point at which you make a sale, and the time payment is received. An  arranged percentage is released to you, which is good if the customer has long payment terms .

Choose either Factoring or Invoice Discounting- Either the finance company chase your customer or you chase your customer.

Don’t forget, under the law you can claim interest at 8% over the Bank of England base rate, and compensation of between £40 to £100 on each overdue invoice under the Late Payment of Commercial Debts (Interest) Act 1998. This does not have to be referred to in your Terms and Conditions, and can be applied to goods exported to the EU.

To summarise, getting paid on-time to keep cash flow projections on track is hard. Use your educated guesses to project cashflow which is based on a balance between understanding your customers payment habits and your realistic management of expenditure.

All points in the article above were taken from conversations at The Business Exposure Group where business owners and Directors are invited to take part in round-table discussions at venues across the North of England.

If you are a business owner or Director and would like to be considered for an invitation, please contact Philip Drazen directly at philipdrazen@bxgroup.co.uk

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