Customers: Love Them As You Would Yourself

By Jacques Murphy August 15, 2007

from PRODUCT MANAGEMENT CHALLENGES
A Weekly Newsletter of Tips For Companies that Develop Software

Most companies pay lip service to truisms like 'The customer is king.' But it's easy for software companies to immerse themselves in the magic of their technologies and not actually focus all that much attention on the customer base. Far more companies talk about treating their customers well than do a good job at it.

Yet connecting with your customers is ultimately the way to build customer loyalty, and consequently increased revenue and strong profitability through lower cost of sales. Read on for some ideas on how to help build an enduring connection with your customer base.

Customer Events

If you want to know your customers and bond with them, it's like any other relationship. You need to spend time together. Your company can do this by organizing events, whether virtual or physical, that bring customers together to concentrate on what interests them and to mingle with your management, employees, and products.

It's Their Business

Software companies, like other companies, are busily immersed in their specialized activities, in this case building software and tying in with all sorts of excitingly complex and innovative technologies. And so they quite naturally lose site of what is most important to their customers. What's most important to customers is their own business.

The intricacies and challenges of their own business are what holds your customers' attention. They care about what they have to do every day, and want to figure out how to do it better, or more easily. They want to find out how other people are doing so they can see how their company compares. And they want to keep current on advances in their industry.

Product Managers, because of the nature of their position, focused on what customers want and need in the software, have a deep understanding of what excites the customer base. They have a good exposure to the customer's business. A Product Manager is the ideal resource to devise compelling topics of interest that will draw customers to events where the company and the customer base can connect.

A Big Draw

A Product Manager can help engineer an event that really draws customers to attend. Use the knowledge of what makes your customers tick and your industry knowledge to line up dynamic individuals and industry trendsetters to speak to your customers.

The dynamic presenter may be one of your very own customers, a consultant at your company, or an industry expert you hear at a conference. The opportunity to present to a group of individuals in their specialty is often valuable enough to an outside expert that they will do this for free.

By lining up a big draw, you get better attendance at your event and consequently increase the potential return on your investment of time and money.

Customers and Users

When your product is a B2B (Business-to- Business) product, it's important to distinguish between customers and users. While many companies sponsor user conferences, these can often settle to the level of day-to-day use of the software. The attendees also settle to that same level. Busy executives are hesitant to attend such events when they focus on hands- on issues.

You want to elevate your contact with your customers - and the content of your events--so that you interact not just with the everyday user, but with top management and executives wherever possible. Attracting executives usually requires something different altogether.

It's Lonely at the Top

The thing to understand when you want to create an event that attracts executives from your customer base is that it's lonely at the top. It's also lucrative, and it's the executives who have the authority to buy your product, so that's why it's so worthwhile to develop a good relationship with them.

Executives have a hard time finding others at their level with which they can interact to broaden their understanding of their industry and hone their business strategies.

If you want an event that will be attended by executives and top decision makers, you'll need to create a relatively exclusive meeting that focuses on the strategic and lets attendees easily interact with each other in a low key and personal way.

Face to Face

A face-to-face meeting is the most personal and memorable type of event. The higher the level of attendee, the more likely that a good face- to-face meeting is what you need.

In-person events provide a good opportunity for you to spend quantity time, not just quality time, with customers so that they get comfortable with you, your management team, and your products.

The challenge of in-person events is that they require travel and other down time. It's tough to get customers to take that kind of time out of their busy schedules. The more you are able to make an event local (and short, meaning no more than half a day), the more likely you are to get a good turnout. Your ability to organize such an event that draws a sufficient number of people depends upon the size and concentration of your customer base.

Virtual Communities

Virtual events are a way to get around the resistance to spending too much time away from work. So in some ways, you can get a better attendance at a virtual event that only lasts a couple hours than at a conference that lasts a day or two.

A webcast on a compelling business topic is a great example of a virtual event. Virtual events do not have to deal with the restrictions of geography. Since they last no more than a typical meeting, customers can easily schedule them.

Online discussion groups, through email lists, blogs, or discussion boards, provide a virtual event that builds a more enduring relationship. Customers can assist each other with solutions to challenging problems, and act as sounding boards for best practices. A Product Manager can call upon his or her familiarity with tips and success stories from the field to keep the momentum of such a list going. When things go quiet, the Product Manager steps in and makes a contribution that gets everyone thinking and talking again.

Virtual events are weaker when it comes to building comfort and familiarity between your company and your customers. So shorter and more frequent virtual events make a great complement to less frequent (and more expensive and disruptive) face-to-face events. In order to build a solid bond with customers, expect to provide a mix of both types of event.

Nice Places to Meet

A great way to bring in customers is to provide a nice place for them to meet. The definition of 'nice' can be pretty broad. It could be a really fancy resort, or a tasteful and unusual meeting location. It could be the corporate headquarters of one of your trend-setting customers, where your customer base can take a tour and hear about some best practices in action.

A 'nice' place to meet might be a perfectly mundane spot that happens to be really convenient to a large number of attendees.

Magnet Customers

Look for customers that you can use as magnets to attract attendance at events at their facilities. These could be customers with interesting stories to tell, located centrally to a large number of your customers, or with great facilities. Your customers, so interested in their own business, are curious to compares theirs to somebody else's.

This also appeals to the hosting customer, by giving them exposure within their profession. So visits to customer sites cements your positive relationship with the hosting customer as well as your overall customer base.

Reference Customers

Organizing contacts between prospects and reference customers is another way to build a positive connection with targeted members of your customer base. Such contacts can be site visits or phone calls.

Diva Customers

As with every group of people, a few people stand out as stars - great speakers, dynamic and dramatic presenters, people with inspiring ideas. These diva customers are a great way to increase turnout at your customer events.

By promoting diva customers for case studies, media interviews, and speaking engagements at industry conferences, you help spread success stories of your product, and create a strong working partnership between industry visionaries and leaders and your own product.

Increasing the Maintenance Stream

The work you put into treating your customers well and developing a close bond pays off in specific ways. The first is a higher renewal rate on your maintenance contracts, which increases your maintenance revenues over time.

Keeping the Customer Base Current

Customers who are close to you, and familiar with the benefits of your latest product capabilities, are more likely to upgrade. This keeps more of the customer base on the latest version, which is easier and cheaper to maintain.

Increasing Revenues

With a more loyal customer base, you keep a larger portion of your potential maintenance revenue. You also sell more upgrades and cross- sell more optional modules and services. This increases your company revenues.

Increasing Profitability

The best part about cross-selling optional modules and services is that the cost of sales is lower than the cost to win new customers. Add to that the lower support costs that come from having more of your customer base on the most current version, and your company experiences increased profitability.

Copyright (c) 2002-2004 Jacques Murphy. All rights reserved.

Categories: Leadership Go-to-Market
Jacques Murphy

Jacques Murphy

Jacques Murphy is a consultant who helps software companies develop their products faster. He does this using a focused process which quickly develops product requirements. Contact him at www.ProductManagementChallenges.com.

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