Asking the right questions..

There seems to be a consensus that the US has seen the worst of this recession and that we are now experiencing the “back half” - coming out of the recession.  History shows us that the smarter companies position themselves to take advantage of this time.  What makes these companies smarter?  I believe it comes from asking the right questions – and then finding the answers to these questions.

These questions are not intended to make us individually smarter, but smarter about the way we conduct, measure and manage business.  There are five basic and universal questions that need to asked and answered, irrespective of the industry you are in. 

Let’s talk about the first question:  What is your Customer Retention? 
Are your customers repeat customers?  Let’s be honest, revenue is great, but recurring revenue is better.  Does your company calculate Customer Retention?  How does your company define customer retention?  Do you know your retention number now?  Do you know how it has been trending over the past several months and quarters?  (hint: the trend is more important than a snapshot number)
Why is this important?  Because it costs four times as much to gain a new customer than it does to retain one.  Also, one study found that increasing your customer retention by 10% can double your bottom line.

Answering this question will require data (translation: information) that you may or may not have at hand.    How comfortable are you that you can access this data on a timely basis?  And if you are able to determine your Customer Retention, what strategy and tactics work to improve retention?

Asking the right questions, accessing the information that will provide answers, and then making smart decisions is critical as you consider deploying your resources to take advantage of the “back half” of the recession.