8 Ways Your Customers Can Give You A Competitive Edge
Entrepreneurship

8 Ways Your Customers Can Give You a Competitive Edge

Identify “pain points” on the customer’s journey. Let’s say your company manufactures and sells laptop computers. You may think you understand each phase the customer goes through when engaging with your organization–from the initial decision to buy a new computer to becoming a loyal customer–but how much of that “knowledge” is based on assumptions, incomplete impressions, and wishful thinking? Where, really, are the barriers to making the sale?

“Let’s say you thought price was your biggest barrier to improving sales,” says Sauro. “But when you really analyze the data, you find that 30% of prospective customers aren’t aware of your company in the first place, that over a quarter misunderstand the product’s features, and that half feel that the set-up process is too difficult. The point is, if you do not evaluate and measure each stage of engagement, you’ll miss vital opportunities for damage control, improvement, and innovation–and you might waste resources trying to alleviate pain in the wrong places.”

Decide how much money to devote to customer acquisition. As its name suggests, customer lifetime value (CLV) is the total profit that a customer generates for your business between his or her first and final purchases. This metric is important because, among other things, it can help you evaluate how much money can reasonably be devoted to customer acquisition.

“If it costs $1,000 to acquire a new customer through marketing, sales, and production but that customer generates only $750 in revenue over the typical lifetime, that’s obviously bad for business,” Sauro says. “And the longer the customer lifetime is, the less likely you are to come to this conclusion organically. Sounds simple, but unless you proactively gather the numbers and weigh acquisition costs against CLV–which many companies don’t–you might not realize you have a losing strategy until it’s too late.”

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