I started an online clothing store in a very niche sector when I was in university. I had $0 to invest in the business when I started the brand and three years later sold the company to a multi-national for a low 6-figure amount. Not much — in the big scheme of things, but 6-figures more than what I invested in the business. I was studying at the time, and that money provided me a bit of runway after leaving university to decide what I wanted to do with my life.
I did this all off the back of building good relationships — especially with my customers. Because I had absolutely no money in the beginning to assign to marketing, I had to do something else which would differentiate me from my competitors in the industry — which were mostly international brands with big marketing budgets. So I turned my customers into my biggest marketing asset, through intentional relationship building.
Here’s the story of how.
At the core of every business is relationships. Relationships make businesses tick. That’s why some people place so much value on networking.
All businesses require relationship management. You have to manage them both internally and externally to be successful.
A company without happy, driven employees is no business that will last.
Of 101 failed startups in 2019, 23% cited a poor team as part of the reason their business failed — if not the main reason.
Similarly, a company without loyal, satisfied customers is no business that will even get off the ground.
Of those 101 failed startups, 42% cited no market need as part of the reason their business failed — the most frequent reason given.
You might be thinking, there was no market need for their product, so they didn’t have any customers, so relationship management was not the reason they failed.
Part of scoping market viability for your business is ensuring you have willing, buying customers from the get go. If you have not validated the need, that means you’ve failed at establishing important relationships from the start.
This article looks at a quick way you can drastically improve customer, employee and third-party contractor relationships and make sure your business sets itself apart from its competitors. There is a quick tip at the end for turning first-order clients into long-time loyal customers.
You might think that these relationships aren’t important for the longevity of your business. They’re purely transactional, right?
I need your service, x, and I will pay you y, if you do it for me. As long as I am paying you y, as we agreed, the relationship will continue and you won’t go anywhere. That’s true, to some extent.
Outsourcing on the rise
As big business has developed in the 21st century, the nature of businesses has changed substantially. Previously where corporations preferred to keep the majority of operations in-house, they are now turning to outsourcing.
This means, although the cost of running that ‘arm’ of the business may be reduced, they have less oversight into the operations within that third-party provider. The provider might be saying they’re delivering the service they need in one way, and actually cutting costs somewhere in the supply chain — putting both businesses at risk.
Although this is referring to big business in general, it applies to your small business too.
A review system
The best way to maintain a healthy relationship with any service provider is by keeping a clear line of communication. The best way to do this is to schedule in a periodic review.
For new service providers, a quarterly review is good for the first year. Thereafter, the frequency of the reviews can be shortened as the relationship beds in. This is naturally dependent on the value the service provider is providing for you. If they are a highly integral part of your business, more frequent is better.
In the review, you provide feedback on the service they are giving you. Here’s a brief breakdown of how we do it:
- The good: What’s working for us. Example: Having a direct contact person is really helpful for us in resolving issues.
- The bad: What’s causing friction for us. Example: The drop off rate through the call center is not good enough. We are losing too many leads we’re passing you.
- How to improve: What you can do to improve on your service: Example: We need to improve conversion rates. Better call center agent training is required on the product and how to keep potential customers on the phone for longer.
- What can we do? What can we do to help you provide your service more efficiently? Example: We currently pass you leads via email trigger, maybe an API connection directly into your CRM would make things more efficient and reduce our costs?
- Big changes in the next quarter/year (period) within our business. Example: We are doing a capital raise and anticipate a large increase in the lead volume coming in, is your call center capable of handling x number of calls a day?
By keeping a healthy line of communication, it ensures there is no mismatch between your expectations and what your service provider is delivering. This is what causes a break down in relationship. By staying on the same page consistently, you ensure that you’re both headed along the same trajectory.
It’s a known fact: Happy employees = productive employees. Anyone who has been part of either a positive or negative workplace will confirm this.
It is very difficult to maintain motivation and efficiency doing your job if you hate what you’re doing, where you’re doing it, and who you’re doing it with.
The reasons for this are extensive and not the point of this article. What we’re trying to establish is what makes employees happy.
One quick path to employee dissatisfaction is by making them feel like they don’t have a means of getting through to the people that matter.
If an employee has a concern about their job, or how they are being treated, there should be an easy and effective way for them to voice their concerns to the right people.
Sometimes, this might need to be anonymous. Regardless, it is important that employees have a voice and feel like their concerns are noted and addressed.
This also provides a good feedback mechanism for the company. Early communication about a break down within the company structures allow for a quick and easy fix. If a problem is allowed to fester, it may be much more difficult to address down the line.
Your employees need to know what their path through the company looks like — if they have one.
If they are aware that by meeting certain performance targets, they’re able to progress up through the company, they are much more likely to be motivated to work to meet those targets.
On the contrary, a worker at the bottom of the ladder who has no hope of a promotion, or even salary raise, is much more likely to be unhappy and possibly look for alternative employment.
Make sure your employees have some direction.
People, not machines
The worst mistake an employer can make is to treat your staff as if they are machines.
Sure, you’re hiring a person to do a job and you expect that they will do what you have asked of them in return for their wages. However, what makes humans unique is the fact that we are complex beings with emotions. Sometimes these emotions are not conducive for effective work. But sometimes, they’re the reason we come up with breakthrough innovations.
Just as in any relationship, you have to take the good with the bad.
I know from personal experience that I was much more inclined to work hard for my employer because he was very flexible about when I needed to be in the office. Doctor’s appointment during work hours? No problem. Need to pick up my mom from the airport? No problem.
Because I was allowed that lenience, I felt an obligation to catch up the few hours I missed. I ended up probably working more than what I had missed simply because I wanted my boss to know I valued the wiggle room he was offering.
Hold people to performance targets, but also understand that we sometimes miss the mark. Help your employees understand when that’s the case and then show them how to improve.
The chance to make a difference
Create a culture where creative thinking is rewarded. There is no one who knows your employees’ jobs like they do. After doing them for a while, they might have an idea about how they can do it better, or improvements that can be made for the company.
Encourage this thinking. Allow them to feel valued.
This might involve allowing employees time in a week where they can approach managers with ideas.
They need to feel invested in the company. The best way to get them fully on board is to make them feel like they are actively contributing to making it better. What better way than coming up with innovative solutions to the company’s problems.
Celebrate the wins
It is the single best way to get your employees well and truly on your team.
It is so easy to pick someone’s performance apart. However, it is neither encouraging nor productive to do so without first building them up.
The best way to get someone on your team and working towards the common goal is to celebrate and congratulate them on what they’re doing to take the company in that direction.
By starting with the positives, they get a sense of pride in what they’re doing. It also means when it comes time to receive criticism, it is off the back of them knowing what they’re doing is of value.
Congratulate them with a personal note, email, or even just a quick, “Well done, what you did on the new client’s project was outstanding work. Keep it up.”
The pinnacle of the relationship triangle.
You can have fantastic employee’s, manage your thirty party relationships perfectly, but without a paying customer — you don’t have a business.
The best way to make sure your customers know they are valued is by not treating them like they’re disposable.
Depending on the nature of your business, your customer life cycle might be different. If you’re an insurance broker, you will have a very lower customer-turnover rate. You’ll bring on new customers every now and then, but if you’re doing your job properly, your customers won’t be leaving your ‘eco-system’ quickly.
If you’re a FMCG retailer, your customer life cycle is very different. Your transactions are fleeting, but happen repeatedly — again, if you’re running your business properly and retaining customers.
Regardless of where you fit in that spectrum, you should be treating your customers like they’re a lifetime asset for your business. Do whatever you can to make them feel like they’re valued, and not just another invoice on the revenue T-account.
I’m going to focus on my area of expertise, fast moving retail goods. Here are some quick tips to increase your customer lifetime value:
1. Encourage feedback
When a customer buys something from you, they are putting a little bit of trust in your brand: I think you guys have built something cool, I’m going to pay you a bit of my hard-earned money in return.
When your product doesn’t live up to their expectations, there is an inherent feeling that their trust has been betrayed.
You know the feeling. You’re scrolling through Instagram and an ad pops up with a guy wearing a shirt that looks really good on him. You take the leap, and buy from their online store despite not knowing anything about the brand. When it arrives the shirt looks and feels completely different from the ad and you have a sinking feeling of, this is not what I paid for. That’s where you’ll instantly lose a customer.
If they are left sitting with that negative feeling without an easy opportunity to let you know that they’re dissapointed — you can kiss that customer good bye forever.
However you do it, make sure your customers know they can be a part of making your brand better.
I’ll give you an example of how I collected valuable feedback for an online store I started in my teens in the next section.
2. Make it personal
I setup an online store in a very niche sector when I was young. The product was very unique and catered to a very specific type of customer. I had to make sure I was nailing the product.
For every single one of my first 100 customers, I called them. I set up a Zap on Zapier to remind me two weeks after an order was fulfilled with an email to follow up with that customer. When I received the email, I dropped everything I was doing and called them straight away.
I asked about the product, the service they received and the general experience/impression they got from our brand. I noted every bit of feedback in a big spreadsheet.
Not only was the feedback I received in this process invaluable for refining my product, but it also gave me an opportunity to connect on a personal level with my customers.
By even associating a friendly voice with a brand, I managed to turn 79 of those 100 customers into repeat customers. A few of them I have even ended up meeting, and they’ve helped with certain aspects of the business — like distribution and marketing.
Make your interactions personal, even if they are automated.
After learning the value of connecting on a personal level with customers through those phone calls, I realized it was something I had to continue doing going forward. But calling every single customer was already not becoming sustainable. As a side-business (I was studying at the time), making 15 calls a day became unsustainable pretty quickly.
Here’s what I did.
3. Write a note
Not just any, generic, thank you note, though. Hand write it.
I started off writing the notes myself, but quickly had to pay someone else to. The message was mostly the same combination of words each time, but I always included something specific to their order. I had their address from the online order so I’d usually include something specific about their area.
The response I got from these notes was unbelievable. Customers were more than happy to over look a shipping error, or garment malfunction just because they’d got a note addressed from the owner of the business.
It even became a marketing tool. Customers would take pictures of their handwritten notes and post pictures of social media. We soon latched on and turned it into a campaign with its own hashtag. The theme was supporting small, local businesses. In return for supporting a local business, we treat you like a human being and provide the service you deserve and expect.
4. Go out of your way to be helpful
This is almost a summary of all of what I’ve mentioned before. If you’re doing all of the above, most customers will already be blown away. If they’re not, make sure you do your utmost to make them feel special in any interactions you have with them.
It’s a tactic that Zappos used to get them off the ground. The stories about their customer service department are littered across the web. They were even known for sending flowers to customers who were sick or celebrating something.
It’s a tactic that clearly worked. 10 Years after the business was started, Amazon acquired them for $1.2 billion dollars at the time.
So I employed the same tactic.
Because I had no money to make an initial order of products to sell, I crowdfunded the product. To thank my initial customers for their loyalty, I hand delivered each of the initial orders that were in my home province (South Africa’s equivalent of a State). For the other orders country-wide, I couriered to friends in each city and got them to deliver with a note from me. Each customer got a lifetime discount code and my direct cell phone number to give feedback.
As the business progressed, I used other tactics. I used to always upgrade customers who wanted to return products to free return shipping.
Despite our T’s and C’s saying that we would only do exchanges when we’d received the item back at our distribution warehouse (aka my digs at university), I would always ship replacements (returns or otherwise) the day that the customer asked for an exchange, without waiting for the return product to arrive back. This almost never backfired. I can think of only three orders (when I used to handle the distribution myself) where the customer never returned the product and we weren’t able to get hold of them. That was an expense I was happy to absorb, considering the value it provided.
When I sold the business, we had over 5000 reviews on our Facebook and Google pages collectively, with not a single one below 4 stars and an average (across both) of 4.94/5.
This is a tactic I would highly recommend for anyone running a D2C brand.
I hope this has helped you understand the importance of relationships in your business and given you some insight and tips into how to improve yours.
If you’d like some more reading on the topic of business, here we go: