Kind of obvious – isn’t it? After all, sales are meant to grow the customer base! But not so fast.
Sales organizations are by default programmed to
increase their numbers period over period. However, quality has a
different task – to retain the customers and optimize inflow such that
churn is reasonable and within industry benchmark
limits. So more is not always better! As we evaluate the quality of
customer intake, we should also be cognizant of its downstream impact.
Sales-only focus, beyond a certain threshold, invariably leads to greater customer dissatisfaction,
higher churn and lower revenue for the organization.
In a recent test, changing the incentive plan on
sales of price differentiated products led to a dramatic shift in customer take rate and early-life churn. In essence, the metrics improved, as the product
was more aligned with customer need, rather than which one offered more
commission to the sales agent. Aligning our sales with customer needs usually leads to a happy
customer, which in turn, promises to deliver a greater Life-Time Value
(LTV).
The analytics for assessing customer growth,
therefore, should look at optimizing a wider set of determining factors,
including; sales drivers, product/service pricing and customer
segments. I shared some insights into a similar strategy
for subscription based businesses. However, the
sales and customer growth optimization discussed above is bound to benefit any organization that
thrives on long-term contracts with its customers.
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