Sticky customer lifecycles are the “norm” for many sales professionals. Once the initial sale is consummated, sales people assume the customer is theirs for life. All that is required is serving customers with a median level of satisfaction. All their company needs to do is not screw up.
Off to hunt down the next new customer! What can go wrong?
Sales people assume each customer becomes “stuck to” products, services and equipment. However, from that customer’s perspective, they soon realize they are “stuck with” you.
Rate of customer retention becomes the barometer of a customer’s experience and their “stickiness”.
However, when sales people are busy hunting, it is difficult to keep an eye on customer retention metrics. And besides, isn’t customer retention the responsibility of someone else in your organization?
Don’t worry. Sticky customer lifecycles become stickier when equipment is involved, right?
The longer the duration of the contract, the longer the assumed stickiness of that customer. Especially for those of you selling products and services with multi-year contracts. Especially for those of you selling equipment with long lifecycles involving training, service and warranty.
As long as you keep the machinery humming along, what can go wrong?
From your perspective, the client is indentured to your company. They “stick around” because of the huge capital investment made in that equipment purchase. The cost to switch becomes more prohibitive every day that equipment is in service.
This scenario provides some sellers a lot of wiggle room to fall short, way short, on quality of service delivery throughout the equipment lifecycle.
Until things changed.
Prior to the industrial Internet of Things (IIoT), sales involved hunting. Serving customers remained a function of farmer-doers.
Prior to the advent of the fourth industrial revolution in 2011, otherwise known as the industrial Internet of Things (IIoT), customer retention was a “snap.” As long as internal teams did their collective jobs working with the customer’s internal teams, execution of sales strategy into the implementation phase remained a non-sales function.
Then the industrial Internet of Things (IIoT) happened along.
A machine might have a 15 year equipment lifecycle. However, the software and sensors generating machine data will morph thousands of times during that lifecycle. The workforce operating, analyzing and strategizing off these machine-generated data sets will change hands, function and format thousands of times during the lifecycle of the equipment.
Customer retention is impacted as well. High performing hunter types realized the need to remain connected to the customer experience team, pre and post sale. Savvy sellers upped their game by working cross functionally and collaboratively.
In the industrial Internet of Things plant environments, the collective end user journeys, post sale, become just as important as the buyer’s journey, pre-sale.
Sticky customer lifecycles may be dead: at least yesterday’s sales version of them. It is a question of underestimating vulnerability to customer defection throughout the duration of your relationship with a customer.
A client is most vulnerable to customer defection immediately after the sale. Let’s explore three areas compromising transition from the Buyer’s Journey into the End Users’ Customer Experience.
Sticky customer lifecycles under-appreciate “buyer’s remorse.” Clients soon realize your company is going to be just like everyone else’s. There are snags in the order process. Client design drawings are flawed, requiring costly in-house rework. Follow-up on invoicing and payment issues is compromised by systems incompatibilities. Delivery and installation is delayed. Post-purchase scheduled training doesn’t happen when promised.
The “stickiness” of sticky customer lifecycles assumes brand experience yields customer loyalty. In the industrial Internet of Things (IoT) ecosystem, length of equipment lifecycles are not necessarily a sign of brand loyalty. Even the most “sure fire” loyal clients may elect to defect to another software solution because that interface generating machine data becomes more valuable than the equipment.
Sticky customer lifecycles focus on Overall Equipment Efficiency (OEE). Prior to the rise of smart machines in smart manufacturing plants, customer retention focused on deriving total cost of ownership based on OEE, reduction of downtime and increase in total productivity over the lifecycle of that equipment. Manufacturing models were “build-to-forecast”: overproducing, then discounting, when consumption fell short of forecast. However, in contract manufacturing, the model is build-to-order. The combination of equipment, software, workforce and plant environment creates predictability and flexibility over time. Depending on the project, not only continuous production may be involved, but flexible and scalable production.
Industrial Internet of Things sticky customer lifecycles are just as interoperable as the equipment-software interfaces characterizing the total plant environment.
An Industry Week seminar speaker recently characterized the industrial Internet of Things (IIoT) as “complexity on steroids.” Complex sales just became far more complex, as well.
So did the concept of sticky customer lifecycles. While not dead, they certainly are far more complex to sustain.
Customer retention strategy starts during the buyer’s journey and involves far more than the sales team. For enlightened companies seeking to make a pivot and increase their rates of retention, the sales model becomes just as interoperable as the equipment and software interfaces sold.
The customer has many choices to make during the lifecycle of products, services and equipment. Courtesy of the industrial Internet of Things, those choices increase exponentially each day.
In my Playbook, create a collaborative environment which encourages customers to stick with your company, based on co-investment with each other’s growth, expansion and sustainability. Service beyond buyers and decision makers. Focus on the end user experience.
Babette Ten Haken is a management consultant, strategist, speaker and coach focused on customer success for customer retention. She traverses the interface between human capital strategy for hiring and developing collaborative technical and non-technical teams. She serves manufacturing, IT and engineering intensive companies. Babette’s playbook of technical / non-technical collaboration hacks, Do YOU Mean Business? is available on Amazon. Visit the Free Resources section of her website for more tools.
Image author: AKS. Image source: Fotolia