Fixing The Leaks Improving Business Profitability
Ron Ryan & Associates
Copyright @ 2012, Ronald D. Ryan 1
Ronald D. Ryan President e. [email protected] t. 888-398-1624
The Truth About eCommerce. “We are all on the Internet. And on the Internet, we are all plumbers. Some of us deal with big leaks, others deal with small ones, and still others design and lay new pipes. But in the end, we’re plumbers whose pipes carry customers, information, and money.”
Copyright @ 2012, Ronald D. Ryan 2
Agenda – Fixing The Leaks • Who can benefit from fixing customer ‘leaks’?
• What are the benefits from fixing leaks?
• Where can you find the leaks?
• How can you get started?
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Who Can Benefit?
“Slump? I ain't in no slump... I just ain't hitting.” - Yogi Berra
Quick Quiz
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Do your customers use the Internet to find your location(s) or phone number?
Do your customers place orders over the telephone? Do your customers visit your web site or Facebook page
before they decide to buy? Do your customers contact you, or place orders with you (or
your competitors) using the Internet?
Who Can Benefit?
Quick Quiz (continued)
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Do your customers use the Internet to find your location(s) or phone number? Yes.
Do your customers place orders over the telephone? Yes. Do your customers visit your web site or Facebook page
before they decide to buy? Yes. Do your customers contact you, or place orders with you (or
your competitors) using the Internet? Yes.
Who Can Benefit?
No matter what size of company you manage, the answer is usually ‘Yes’ to most of these questions.
Are You Acquiring, Converting And Keeping Customers As Effectively As You Would Like?
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What Are The Benefits?
“You've got to be very careful if you don't know where you are going, because you might not get
there.” - Yogi Berra
Typical Customer Flow You Need To Model This
Online Sales Process
Sales Center
In-Store Fulfillment & Service
Repeat Purchase
Internet
Off Line Advertising
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What Are the Benefits?
Key Concept #1 Know Who Is Leaving And Why: Knowing the number of customers who visit your store(s) or site(s), convert to sales, and make repeat purchases is important. Understanding how many you lose at each step in the process and why, critical.
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What Are the Benefits?
Improving These Metrics = Easy Money…
Sales Center or Retail Store
1 in 4 or 5 buy
Fulfillment & Service 8 or 9 out of 10 Keep What You Sold Them
Repeat Purchase (Or Renewal)
Between 5 and 9 Out of 10
Conversion and repeat purchase rates shown are for discussion purposes only. Rates in your business will vary by product, process, customer type, time period, and season.
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Are the Benefits?
Key Concept #2 Complete The Circle: Improvements in conversion and repeat purchases have a huge impact on profitability. Copyright @ 2010, Ronald D. Ryan 12
What Are the Benefits?
Copyright @ 2012, Ronald D. Ryan
Repeat Purchase Cycle
Online Process
Sales Center Or Store
Fulfillment & Service
Repeat Purchase
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Most People Call, Drive or Log on to Make A Repeat Purchase. But Not Always From You.
What Are the Benefits?
Most Profitable Repeat Purchase Cycle
Online Sales Process
Fulfillment & Service
Repeat Purchase
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For most companies, online or automatic repeat sales are the most profitable sales of all.
What Are the Benefits?
Key Concept #3 Angry no more: Moving repeat sales online lowers acquisition costs, increases customer satisfaction, and improves profits.
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What Are the Benefits?
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Story Problem: A. If each visitor to your site costs you $5.00 to attract, and for each 20 visitors you sell one product, what is your acquisition cost per customer?
B. For extra credit: You improve your web site. What is your acquisition cost per customer going to be if you sell 1 customer for 10 visitors?
C. Double extra credit: What if you buy 25K leads per month and the cost of improving your web site above in B is $100K. How long will it take you to make your $100K back?
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What Are the Benefits?
Story Problem: A. If each visitor to your site costs you $5.00 to attract, and for each 20 visitors you sell one product, what is your acquisition cost per customer? Answer: $100.00 B. For extra credit: You improve your web site. What is your acquisition cost per customer going to be, if you sell 1 customer for 10 visitors? Answer: $50.00 C. Double extra credit: What if you buy 25K leads per month and the cost of improving your web site above in B is 100K. How long will it take you to make your $100K back? Answer: 1.6 months.
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What Are the Benefits?
Key Concept #4 Easy Harvest: The ROI from changes that improve conversion and repeat purchases is often very high. The time to payback is very short.
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What Are the Benefits?
Why Study The ‘Leaks’ -
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Deeper Understanding of Customers Higher Customer Satisfaction Higher ROI Lower Acquisition Costs Higher Profits
What Are the Benefits?
“You Can Observe A Lot Just By Watching.” - Yogi Berra
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Where Are The Leaks?
Online Sales Process
Online Sales Process
Sales Center or Retail
Store
Fulfillment & Service
Repeat Purchase
• Right Traffic But Wrong Products/Services (or Vice Versa) • Difficult Customer Info Requirements For Purchase • Inconsistent Look & Feel At Order Processing Page • Confusing Interface With Poorly Articulated Funnel • Incomplete, Missing, Or Hard To Understand Call(s) To Action • Poor Follow-up To Non-buyers
Common Problem Areas:
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Are the Leaks?
In-Store Sales Process
In-Store Sales Process
Fulfillment
& Service Repeat
Purchase
• Poor Outdoor Signage and Lack of Curb Appeal • Right Traffic and Location But Wrong Products/Services (or Vice Versa) • Inappropriate In-store Merchandising and Product Placement • Inadequate Sales Staff Knowledge, Training and Monitoring • Confusing or Unappealing Store Layout & Organization • Long Checkout Lines • Non-existent Follow-up To Non-buyers
Common Problem Areas:
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Are the Leaks?
Telephone Order Process
Online Sales Process Call Center Fulfillment Repeat
Purchase
• Confusing And Inconsistent Value Proposition from CSRs • Inadequate Scripting, Training, & Monitoring • Poor Sales Systems And Support • CSR Compensation Not Aligned with Company Profit Model • Inadequate Customer Information About After -Sales Process • No Systematic Follow-up To Non-buyers
Common Problem Areas:
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Are the Leaks?
Fulfillment Process
Online Sales Process
Sales Center or Retail
Store Fulfillment Repeat
Purchase
• Misleading or Inadequate Sales Descriptions • Confusing Delivery Process • Confusing Packaging, Paperwork, and Business Reply Envelopes • Unresponsive Customer Service or Support • Difficult or Complicated Returns Process • Inadequate Satisfaction Monitoring
Common Problem Areas:
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Are the Leaks?
Repeat Purchase Process
Online Sales Process
Sales Center
or Retail Store Fulfillment &
Service Repeat
Purchase
• No Easy or Automatic Means of Repeat Purchase • Incomplete or Inadequate Reseller Follow-up • Wrong Channel Follow-up • No Satisfaction Monitoring or Feedback System • No Customer Level Tracking of Purchases, Preferences or Needs • Inability to Adapt Offer To Changing Customer Needs
Common Problem Areas:
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Are the Leaks?
It’s All Connected
Online Sales Process
Sales Center
or Retail Store
Fulfillment
& Service Repeat
Purchase
What You Do Here
Affects What Happens Here
• Clear Value Proposition On Web Site • Product Descriptions, Educational Content on Web Site • Call Me Buttons In Sales Sequence • Pick up Merchandise At Store …All Result In Lower Costs And More Sales In Sales Center or Retail Outlet
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Are the Leaks?
It’s All Connected
Online Sales Process
Sales Center or
Retail Store
Fulfillment
& Service Repeat
Purchase
What You Do Here
Affect What Happens Here
• Properly Set Customer Expectations Regarding Product/ Service • Info on Contractual Post-Sale Requirements (e.g., Signatures, Returned Forms) • Defaulted (Profitable) Product Choices • Defaulted (Profitable) Payment Methods and Billing …All Result In Higher Customer Survivorship
And Here
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Where Are the Leaks?
It’s All Connected
Online Sales Process Sales Center
Fulfillment & Service
Repeat Purchase
What You Do Here And Here And Here
• Great Experience • Value Proposition And Brand Promises Fulfilled • On-going Sense of Community • Easy Repurchase Process • Easy Referral Process …All Result In Higher Repurchase and Referral Purchase Rates
Affect What Happens Here
Copyright @ 2012, Ronald D. Ryan 28 Where
Are the Leaks?
Where To Go For Data? Online Sales Process: Web Analytics and User Testing
Sales Center & Retail: Recorded Calls, Telephony Data, In Store Traffic, Mystery Shoppers
Fulfillment & Service: Complaint Log, Returns and Cancellations Data
Repeat Purchase: Repeat Buyer Profiles & Surveys of Defecting Customers
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Are the Leaks?
In theory, there is no difference between theory and practice. In practice, there is. - Yogi Berra
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How Can You Fix The Leaks?
But Isn’t This Just Common Sense?
“Constant Improvement
Should Be Part of Our Culture”
“ But we can’t afford to do this
now; we’re in survival mode.”
The Reality: Discipline Is
Difficult To Build & Maintain
Yes. Copyright @ 2012, Ronald D. Ryan 31
How To Fix The Leaks?
How To Get Started?
Outside Consultant(s)
Leadership Commitment <Either Way>
Inside Task Force
Start Here And Work Your Way
Out
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How To Fix The Leaks?
Why Bother With A Task Force? Multi-departmental point
of view Objectivity Independence and
intellectual honesty Customer focused rather
than department focused
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How To Fix The Leaks?
Make Sure You Are Looking With New Eyes
If it ain’t is broken don’t
go fix it!
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How To Fix The Leaks?
Smart – big picture person comfortable with ambiguity
Understands company and how it works
Analytical - not afraid of numbers
Plays well with others - is well respected by peers
Has strong domain expertise in his/her field
Willing to work hard
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6 Sigma Ninja’s Helpful But Not Required - A Check List For Change Teams
How To Fix The Leaks?
How To? Buy Books Not Dogma Customer Analytics • How to Measure and Improve In-Store Buyer Experience (Underhill) • How to Measure and Improve Internet Experience and Ecommerce (Kaushik) • How to Measure and Manage In-Bound Call Center Customer Experience
(Cleveland)
Customer Satisfaction Measurement And Management • How to Conduct Meaningful Satisfaction Surveys (Hayes) • Net Promoter Score (Reichold) • Experience And Interaction Economies (Pine, Gallup) • How (Nudges) Can Affect Buying Behaviors (Thaler, Sunstein)
Process Improvement • Six Sigma (Pande et al.) • Lean (Womack, George, Seddon) • Reengineering (Hammer)
No Single Approach Does It All Copyright @ 2012, Ronald D. Ryan 36
How To Fix The Leaks?
Where Should You Start?
Online Sales Process 1 in 20
Buy
Call Center 1 in 5 buy
Fulfillment 8 or 9 out of10 Keep What You
Sold Them
Repeat Purchase (Or
Renewal) Between 5 and
9 Out of 10 Buy again
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How To Fix The Leaks?
Sales Center
Fulfillment
& Service
…But also the more controversial, risky, and difficult to measure.
Online Lead Generation &
Sales
The Higher You Start In Your Funnel, The Greater The Impact Of The Change…
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How To Fix The Leaks?
Where Should You Start?
Online Sales Process
1 in 20 buy
Call Center 1 in 5 buy
Fulfillment & Service
8 or 9 out of 10 Keep What You
Sold Them
Repeat Purchase (Or
Renewal) Between 5 and
9 Out of 10 Buy again
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Start with a system or process you control. Fix it first. The further back in the value chain you start, the safer you will be. How
To Fix The Leaks?
Summary High ROI Falls straight to the bottom
line Requires little investment Improves customer
experience and brand Makes the world a better
place.
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Appendix
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Payback Calculation
Purchased Leads Cost Per Lead Acquisition Cost New Customers
25,000 $5.00 $125,000.00 1,250
12,500 $5.00 $62,500.00 1,250
Old Conversion 5%
New Conversion 10%
Per Month Savings $62,500
Investment $100,000
Time To Pay Back 1.6
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