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The Tuk-tuk Phenomenon

A tuk-tuk ride in Cambodia reveals surefire strategies for reaping and retaining customers.
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Imagine this. You're in Cambodia. It's hot. It's also the slow season, kind of like end-of-quarter. Folks in tourism there are desperate; they mob you at every turn. Did I mention it's 90 degrees and 100 percent humidity?

It was our second day in Pnom Penh. Leaving the Royal Palace, we're swarmed by tuk-tuk drivers, all wearing slippers and rolled pants, all exhausted, all yelling some variation of "I give you cheap price!" I notice a driver sporting a clean vest, tucked shirt and huge smile standing away from the pack. He's also holding up two icy bottles of water.

My husband bargains with five drivers at once. But I look at Ali. He looks at me. Then he approaches, smiles, hands me the water and bows with arms outstretched toward his wagon.

I think, "Differentiation and assumptive close. Very nice."

Ali won more than a sale that day -- he won a loyal customer and a promoter. You can read Ali's tale in its entirety at The Phelon Group's blog. But know this: At trip's end, I gave Ali's information to around 20 people heading his way.

Sans satisfaction survey and CRM system, Ali differentiated himself and delivered value throughout our stay. He also has just one customer at a time. You have to do this across a complex set of accounts and relationships. Not easy. But possible.

From Casual Encounters and the Connected to Committed Customers

Barbara Cardenas, executive director of Central San Jose YMCA, recently told me, "We have three types of members: casual, connected and committed. We want 70 percent committed -- to love their experience here, keep coming back, do more with us and spread positive word of mouth."

What makes the scales tip away from committed and toward casual are artifacts like sales incentives, marketing success measures (new leads, page views), and giving kudos for "innovations" that benefit new not existing customers.

It also doesn't help that actually working to keep customers opens a heap of less apparent emotional and operational issues -- dealing with unmet expectations, having tough conversations, apologizing and otherwise cleaning up in the aftermath of things gone wrong.

Customer Retention as a Strategy: Four Essential Acts

Some say it's seven times more expensive to acquire a new customer than to keep an existing one. What would it cost to run your business if there were no new markets to conquer, products to introduce or customers to acquire? How much more profitable would you be if customers consistently bought more and told their friends and colleagues? Yes, you'd be more profitable. You'd also have a stronger and more sustainable customer base. Marketing costs would drop. Sales effectiveness would skyrocket. Products would evolve for buying customers.

You can do this. What it takes is for you to treat customer retention, refer-ability and repurchase as a must-have growth strategy instead of as a wish-we-could-have-it ideal. These four essential acts will get you started.

  1. Teach sales how to manage complexity and escalate within your company, predict and prioritize evolving customer needs, and deal with organizational shifts and customer politics -- and less about how to prospect and qualify.
  2. Repeat success, don't just promote it. Get marketing to spend more time reverse engineering repeat (and profitable) customers and less on press releases and success stories.
  3. Tune in to real customer pain. Gather the voice of customers with a commitment to change and improve. Talk to customers who've defected or stopped being customers -- ask them what you could have done to keep or win them back.
  4. Empower employees to go beyond accountability to serving customers and delivering added value.

Companies that retain customers can extend unique value propositions beyond the initial sales, through the lifecycle and the evolving needs of its customers. Keeping customers (and sustaining margins) means continually increasing the value your company brings to market; something that's doable with a strategy focused on retention, refer-ability and repurchase.

Last updated: Jul 1, 2007




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