The finance world lives on the mantra of “cash is king”. Why, you ask? Well, it’s because it’s a company’s cold, hard cash, not its reported profit, that determines the value of a business. Profit is merely an accounting mechanism. Future cash flows actually pay the bills. And the investors. And, most importantly, the investors’ investors.But, how does one going about creating this tsunami of future cash? You best believe it’s by buying your customers’ delight and loyalty, which manifests in continued purchasing and future cash flows.After all, it’s their cash that is ultimately all of our king and your ticket to success.Here’s a crazy statement…“customer-focused companies are 60% more profitable.” Ok, we’re talking about cash not profit, but you get the point. Bottom line, focusing on your customers’ happiness is important to ensure steady cash flow.[/ctt] Here are 4 steps to generating future cash from customers:
Step 1: Get Customers
This is so obvious that it’s almost painful to type, but let’s be clear here: without customers, you have no one to buy your products. This likely means you have no sales and no customer-generated cash. This, in turn, means you’re beholden to other people (i.e., capital providers) who can provide you with cash. Problem is, these people like customers’ cash too, so the fact that you have none will turn them off. No accounting shenanigans, beautiful decks, or even talent will overcome this on an ongoing basis.
Step 2: Keep Their Business
Acquiring a new customer costs five times as much as keeping an existing customer. So, you better make the customers you’ve already gotten happy; else, you’ll spend more of their cash replacing them with new customers you have to keep happy. This is one reason churn is so painful. Another reason is the extremely dilutive impact it has on your company valuation as you miss out on the compounding magic of compounding recurring revenue growth and its contribution to your future cash flows. Here’s a simple model we’ve built we’ve built to play with your bookings and churn rates and see the impact on your potential valuation.
Step 3: Make Them Mouthpieces
80% of customer service related tweets are negative and critical. That’s a crazy stat. How are we that bad at servicing our customers? It’s probably because we think we’ve done the hard work by getting them to actually pay us. Our onboarding and activation flows are so dialed, they can take care of themselves. Troops, we must find more customers!I think we all fall victim to this top of funnel mindset. I think we’re suffering from it. We’re missing out on the engagement opportunity to build the relationships that make our customers comfortable to say, “You’ve got to give [your_company_name] a try. They’re amazing!” Which leads us to…
Step 4: WOW THEM
Answer their chats with empathy. Take their calls and listen to learn. Don’t direct them to your FAQ. Don’t point them to obscure features that might kind of solve their problem. Make them want to reach out to you, both because you solve their problems and your enjoyable to interact with.There’s your funnel humanized. Next, we’ll delve into how to delight the customers who have chosen to give you their cash.Ready for more? Check out Part 2: 3 Steps to Delighting Your Customers.
Looking to take the next step? Get started here!