Job 1: Think of Customers as Assets

Start this way: See if you can partner with your CFO and whoever owns the customer database.  Then create a simple way to look at the flow of customers in and out of your company.  Do the customer math:

Net Customers = Incoming CustomersOutgoing Customers

This is the best way I know to start to get your company and leaders to understand that it is managing this asset that is the business of the business.

What I always have as a goal is to get the CEO’s attention with this math.  Have him or her make a goal that within a month or six weeks, you can get to your version of customer math.  Then, have every big meeting start with doing the math and discussing the reasons for why your customer asset is growing or shrinking.

In later posts on metrics and accountability, I’ll talk about some of the things you might run into with the math. For now, just chew on this idea of customer math and let me know what you think.  Or ask me some questions on how you can do the math.



2 comments to " Job 1: Think of Customers as Assets "

  • In his book, Flip the Funnel, Joseph Jaffe makes the comment that any ‘acceptable’ churn rate is unacceptable. Meaning, it’s never ok to lose a customer. Company’s should focus as much of their energy as possible on retaining said customer instead of focusing their energy on acquiring new customers. What are your thoughts on that?

    • Hi Rebecca,
      Thanks for asking this question.

      Here’s what I work hard to do with companies: I want people to track and talk about the flow of customers in and out of their business. For example, I urge leaders to begin every key meeting talking about how many new customers trusted the company to sign on, and in the same breath, how many customers walked away. Then I want them to do the math to reconcile the value of incoming and outgoing customers.

      The reason for this is that companies need to become passionate about customers as human beings. We talk about customers in “retention rate” terms and that leaves the human behind. You can’t get a bunch of people in the organization passionate about the “rate” raising or falling – but you can get them passionate about knowing why their operational process drove a 20 year customer out the door.

      So now to (FINALLY) address your question:
      I urge companies to do this “customer math” because I want them to know their customers, feel the pain, and pound their fists about what they’ll do to keep more customers. This is where Joseph Jaffe and I agree totally. It’s about the passion about wanting to not let any customer slip through their fingers that make the companies customers and employees love…beloved. That’s because they have pain and angst that they drove someone away.

      Regarding saying that no churn is acceptable…in theory we want the sentiment of the passion and pain as I noted above. But the fact of the matter is that there will be churn. An informed company should know which customers they are driving away and be deliberate about what is making that happen, which customers are leaving and what that means to the shrinkage or growth of their customer “asset”.

      Let me know if this makes sense Rebecca.

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