Forbes Councils Member
August 04, 2020
In most industries, there is an established formula for success. For example, there is a structure designed to help large corporations sustain profit margins, sometimes at the cost of people who run small businesses. There are reasons many stick to these types of overall plans, like mitigating risk and supporting stakeholders. The problem is, established formulas don’t always leave room for new ideas.
Modern business philosophy has begun to evolve and adapt to hyper-focus on the consumer. Individuals want more from companies they do business with. In one Salesforce survey, 70% of customers indicated that “connected processes — such as seamless handoffs or contextualized engagement based on earlier interactions — are very important to winning their business.”
Business-to-business models have some catching up to do. Clients are coming with higher expectations, and when their needs aren’t met, they will look elsewhere for the services they need, or, worse, they’ll fail altogether. When clients fail, that revenue stream is lost.
It’s plain logic: Without a successful client base, an operation in any industry, no matter how large it is, can’t expect to survive for long.
In order to realize the full potential of the economy, leaders must shift from a mindset designed solely for their own profit to a plan designed to help their clients profit. This kind of model is not only beneficial for everyone involved but it is also more sustainable in the long run.
After more than 18 years of experience in the traditional world of manufacturing, I couldn’t help but notice that a lot of business was being left on the table, namely, small businesses. The barriers to entry in a typical facility are enormous, such as huge minimum quantity orders and agonizingly long lead times, which are often insurmountable obstacles for most aspiring entrepreneurs.
My partner and I started our business with a completely different mindset. We wanted to provide opportunities to those who had previously been left behind. Including an entirely new cross-section of customers means a larger pool of potential income for us.
Taking that philosophy a step further means setting up processes that are all about helping clients achieve success. For example, startups need more than just a single service to thrive. They need things like packaging, marketing, finance and legal advice, web design and strategic planning help. Whether through affiliates or in-house services, businesses can build their clients’ success by offering a wider range of resources.
It helps to think of clients more as partners in a long-term investment than a number on a spreadsheet. As Lincoln Murphy, Customer Success Evangelist of Gainsight, was quoted in a 2015 Forbes article, “The majority of the revenue from your relationship with a customer happens post-sale.” Investing in an up-front relationship leads, more often than not, to a scalable business model that yields dividends for both the service provider and the individual brand.
And clients will pay for that strong relationship. American Express conducted a survey in 2017 showing that consumers will pay up to 17% more on goods and services from companies that offer excellent service. While this study was focused on end-users, the attitude is permeating the market, meaning that business owners (particularly up-and-coming millennials) are likewise willing to spend more money on superior experiences.
But strong relationships and extra services aren’t enough. To truly shift to a client-success mindset, B2B companies must take the lead in explaining to clients why additional services are necessary and worth the money.
The key takeaway from my first five years of disrupting the manufacturing marketplace is that client education must be forefront in our processes. Not only education but also over-education and solidifying expectations even before a contract is signed circles customers back to you. If you hold all of the keys to their success, they have every reason to continue their relationship with you.
A client success philosophy can seem counterintuitive, especially when there are investors in the picture. But convincing investors to hop on board the client success bandwagon shouldn’t be too difficult. Just follow the dollar signs:
• A 5% increase in customer retention can increase profits by 25%, according to research by Bain & Company.
• Depending on the study you review, it can cost five to 25 times more to acquire new customers than it does to retain and upsell existing ones, the Harvard Business Review reported.
• Nearly three-fourths (74%) of consumers cite word-of-mouth as an influence on their decision to purchase, according to an article by Google.
If statistics alone don’t sell the idea, consider the ripple effects: Successful clients are happy clients. Word-of-mouth is not just an important tool; it’s far and away the most successful form of marketing. If you help your clients succeed, not only will they return for further business, but they will also become your biggest engine of growth as they refer their friends.
Client support can also help weather a crisis. As Covid-19 pushed virtually every commercial enterprise online, offering in-house web design and information technology support — or a pipeline to get to these resources quickly and efficiently — was a lifeline to keep long-term clients afloat. In unexpected circumstances, the more prepared and stable your client base is, the stronger your sources of revenue are.
Successful clients lead to a successful business model. Through strong relationships, varied service offerings, leading through education and adapting to client needs as the market shifts, a client success model can be the key to ensuring long-term profits.