Accompanying blog post: http://www.sigmapro.co.uk/blog/entry/customer-based-thinking These slides show the importance of customer based thinking, or "voice of the customer" when it comes to your business. They highlight the differences from business based thinking, and the potential pitfalls of not employing a customer based thinking strategy.

1. Read the accompanying blog post on Customer Based Thinking
by clicking here

2. Imagine you are
the General
Manager of a DIY
chain with many
employees.
You will be out of the
country for several
weeks and have
asked your staff to
send you a weekly
report every
Monday morning.

3. What information and
measures would you
like to see in that
report?
Take a moment
to write down what
you would expect to
see..

4. No doubt you
will have written down
such items as sales
revenue, maybe by
product line, costs,
overtime, profit.
Possibly things such as
customer complaints,
refunds and stock
levels.
WEEKLY REPORT
Sales Revenue
Product Lines
Total Costs
Overtime
Profit
Complaints
….

5. Now imagine
you need some DIY
tools & materials.
The material may be
available at several
stores in your area. All
equidistant from your
home.
Take a moment to
write down the
criteria you will use to
decide which store to
go to?

6. No doubt you
will have written down
such items as product
range, availability,
customer service,
delivery options and
price.
CRITERIA
Product range
Availability
Customer service
Delivery options
Price
….
…..
..

7. The point is, the two lists
won’t be the
same.
The former is an example
of business based
thinking, or voice of the
business.
The later of customer
based thinking, or Voice
of the Customer.
WEEKLY REPORT
Sales Revenue
Product Lines
Total Costs
Overtime
Profit
Complaints
….
CRITERIA
Product range
Availability
Customer service
Delivery options
Price
….
…..
..

8. Far too many organisations don’t
consider the
Voice of the Customer
when thinking about what to
measure and report on.

9. Many organisations
Hugely
Underestimate
the true value of a
customer.
Consider a shopper,
shopping every week at a
major brand supermarket in
the UK.
Assume a weekly spend of
£100.
How much is the customer
worth to the supermarket?

10. To Keep it
simple let’s talk
about revenue. So, for
one week’s shopping, the
customer is worth £100,
right?
Correct as far as it goes
of course, but how many
weeks a year does the
shopper shop at the
supermarket?
£100

11. Let’s assume 50, allowing
for 2 weeks holiday.
50 times £100 is £5,000.
So for one year, the
customer is worth £5,000
to the supermarket.
But How many
years does the
shopper shop at the
supermarket?
£5,000

12. It could easily be 20 years
or more.
If we assume 20 then the
customer is worth 20
times £5,000.
That equates to £100,000
in today’s money
ignoring any inflation
factors.
A Huge amount
bigger than the original
£100.
£100,000

13. But that’s not the
end of the
story.
If we have a good
experience not only will
we continue to use a
supplier but we will also
most likely recommend
them to others.
On average if we have a
good experience we will
tell three other people
about it.
£100,000

14. If we apply this
logic to our
supermarket example,
then that’s 3 other
people that will
potentially spend
£100,000
Multiply £100,000 by 3
and that’s £300,000.
£300,000

15. If we have a bad
experience with a
supplier, we will tell
others of our bad
experience!
On average we will tell
eight other people of our
experience, and
potentially that’s eight
people that will not deal
with that supplier.
£300,000

16. Eight times £100,000 is
£800,000, so the
potential lost revenue
from bad customer
service is £800,000.
These may not be the
numbers for your
business, but check your
own numbers to see
what the real
value of a customer
is to you.
£800,000

17. Still not convinced about
the value of customers and
the need to satisfy them?
It costs typically
Five times
as much to attract a new
customer as it does to keep
an existing one.

18. Still not convinced?
91% of unhappy
customers will never
purchase goods or services
from you again.

19. Still not convinced?
In the average business,
for every customer who
bothers to complain, there
are 26 others who
remain silent, and just
walk away…

20. But our customers are pretty happy with what we do,
aren’t they?
Let’s assume that we ran the following survey, in which
we asked our customers to rank their agreement with the
following three statements from strongly agree to
strongly disagree:
1. I think that this product provides exceptional value.
2. I will recommend this product to others.
3. I will purchase future products from this company.

21. The survey results showed that the majority of our
customers either
“agreed or strongly agreed”
with each statement.
So that’s a good result isn’t it?
Strongly
agree
Agree Neutral Disagree
Strongly
disagree
1 7% 60% 20% 7% 6%
2 17% 58% 12% 6% 7%
3 26% 53% 15% 3% 3%

22. To be classified as a Loyal Customer, our
customer will need to score top marks in all 3 of these
questions.
1. Only 7% or less could have scored top marks for all
3 questions,
2. It is likely that around 33% of our customers are not
totally satisfied (scoring neutral or below).
The survey results would not give us a great deal of
comfort, other than indicating some great potential for
improvement!

23. A Loyal Customer is
one that scores 5 in all
three areas:
Perceives
Value
Will
Repurchase
Will
Recommend

24. There is a Difference between business based and
customer based thinking and we must do both because
the true value of a customer is often vastly
underestimated.
It is Not enough to just satisfy the
customer on average
If we want our businesses to be Exceptional then
we have to provide Exceptional service and value
That way we Maximise our revenue potential
long term by retaining our existing customers, and
generating strong referral business.

25. For more information on Customer Based Thinking you
can read our blog post by clicking here.
sigmapro.uk@sigmapro.com
www.SigmaPro.co.uk
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