A leading change consultant explains how to find hidden sources of profitability in any organization by reducing customer attrition.

1. Fixing The Leaks
A Workshop On Improving Business Profitability
Ronald D. Ryan
President
e. ron@realemail.net
t. 888-398-1624
Copyright @ 2012, Ronald D. Ryan
1

2. The Truth About
eCommerce.
“We are all on the
Internet. And on the
Internet, we are all
plumbers. Some of
us deal with big leaks,
others deal with small
ones, and still others
design and lay new
pipes. But in the end,
we’re plumbers
whose pipes carry
customers,
information, and
money.”
Copyright @ 2012, Ronald D. Ryan 2

3. •Who can benefit from fixing customer „leaks‟?
• What are the benefits from fixing leaks?
• Where can you find the leaks?
• How can you get started?
Copyright @ 2012, Ronald D. Ryan 3

4. “Slump? I ain't in no slump... I just ain't hitting.”
- Yogi Berra
Copyright @ 2012, Ronald D. Ryan 4

5. Quick Quiz
 Do you own your own business?
 Are you the Executive Director of a not-
for-profit or the CEO, COO, or CFO of a
business?
 Have you recently taken on a
promotion?
 Is your boss asking what have you done
for me lately?
Who
Can Benefit?
Copyright @ 20102 Ronald D. Ryan 5

6. Quick Quiz
 Do you own your own business?
 Are you the Executive Director of a not-
for-profit or the CEO, COO, or CFO of a
business?
 Have you recently taken on a
promotion?
 Is your boss asking what have you
done for me lately?
No matter what size of business or
not-for- profit, the leaks in your
processes will define your Who
Can Benefit?
organization and its bottom line.
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7. Are You
Acquiring,
Converting And
Keeping
Customers As
Effectively As
You Would
Like?
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8. “You've got to be very careful if you
don't know where you are going,
because you might not get there.”
- Yogi Berra
Copyright @ 2010, Ronald D. Ryan 8

9. Typical Customer Flow
Internet You Need To Model This
Online
Sales
Process
Fulfillment Repeat
In-Store Purchase
& Service
Sales
Center
Off Line
Advertising
What
Are the Benefits?
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10. Copyright @ 2010, Ronald D. Ryan
Key Concept #1
Know Who Is Leaving And Why: Knowing the
number of customers who visit your store(s) or site(s),
convert to sales, and make repeat purchases is
important. Understanding how many you lose at each What
Are the Benefits?
step in the process and why, critical.
10

11. Improving These Metrics = Easy
Money… Conversion and repeat purchase
rates shown are for discussion
purposes only. Rates in your
business will vary by product,
process, customer type, time period,
Sales Center or
and season.
Retail Store
1 in 4 or 5 buy
Fulfillment &
Service
8 or 9 out of 10
Keep What You
Sold Them Repeat Purchase
(Or Renewal)
Between 5 and 9
Out of 10
What
Are the Benefits?
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12. Copyright @ 2012, Ronald D. Ryan
Key Concept #2
Complete The Circle: Improvements in
conversion and repeat purchases have a What
Are the
huge impact on profitability. D. Ryan
Copyright @ 2010, Ronald
Benefits?
12

13. Repeat Purchase Cycle
Sales
Online Fulfillment Repeat
Center
Process & Service Purchase
Or Store
Most People Call,
Drive or Log on to
Make A Repeat
Purchase. But Not
Always From You.
What
Are the Benefits?
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14. Most Profitable Repeat Purchase Cycle
Online
Fulfillment Repeat
Sales
& Service Purchase
Process
For most companies, online or
automatic repeat sales are the most
profitable sales of all.
What
Are the Benefits?
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15. Copyright @ 2010, Ronald D. Ryan
Copyright @ 2012, Ronald D. Ryan
Key Concept #3
Angry no more: Moving repeat sales
online lowers acquisition costs, increases
customer satisfaction, and improves What
Are the Benefits?
profits. 15

16. Story Problem:
A. If each visitor to your site costs you $5.00 to
attract, and for each 20 visitors you sell one product,
what is your acquisition cost per customer?
B. For extra credit: You improve your web site.
What is your acquisition cost per customer going to
be if you sell 1 customer for 10 visitors?
C. Double extra credit: What if you buy 25K leads
per month and the cost of improving your web site
above in B is $100K. How long will it take you to
make your $100K back?
What
Are the Benefits?
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17. Story Problem:
A. If each visitor to your site costs you $5.00 to attract,
and for each 20 visitors you sell one product, what is
your acquisition cost per customer? Answer: $100.00
B. For extra credit: You improve your web site. What
is your acquisition cost per customer going to be, if
you sell 1 customer for 10 visitors? Answer: $50.00
C. Double extra credit: What if you buy 25K leads per
month and the cost of improving your web site above
in B is 100K. How long will it take you to make your
$100K back? Answer: 1.6 months.
What
Are the Benefits?
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18. Copyright @ 2010, Ronald D. Ryan
Key Concept #4
Easy Harvest: The ROI from changes that
improve conversion and repeat purchases is What
Are the Benefits?
often very high. The time to payback is very
short. 18

19. Why Study The „Leaks‟ -
 Deeper Understanding of Customers
 Higher Customer Satisfaction
 Higher ROI
 Lower Acquisition Costs
 Higher Profits
What
Are the Benefits?
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20. “You Can Observe A Lot Just By Watching.”
- Yogi Berra
Copyright @ 2012, Ronald D. Ryan 20

21. Online Sales Process
Online Sales Fulfillment Repeat
Sales Center or
& Service Purchase
Process Retail Store
Common • Right Traffic But Wrong Products/Services (or Vice Versa)
Problem • Difficult Customer Info Requirements For Purchase
Areas: • Inconsistent Look & Feel At Order Processing Page
• Confusing Interface With Poorly Articulated Funnel
• Incomplete, Missing, Or Hard To Understand Call(s) To Action
• Poor Follow-up To Non-buyers
Where
Are the Leaks?
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22. In-Store Sales Process
In-Store Fulfillment Repeat
Sales
& Service Purchase
Process
Common • Poor Outdoor Signage and Lack of Curb Appeal
Problem • Right Traffic and Location But Wrong Products/Services (or
Areas: Vice Versa)
• Inappropriate In-store Merchandising and Product Placement
• Inadequate Sales Staff Knowledge, Training and Monitoring
• Confusing or Unappealing Store Layout & Organization
• Long Checkout Lines
• Non-existent Follow-up To Non-buyers
Where
Are the Leaks?
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23. Telephone Order Process
Online
Call Repeat
Sales Fulfillment
Center Purchase
Process
Common • Confusing And Inconsistent Value Proposition from CSRs
Problem • Inadequate Scripting, Training, & Monitoring
Areas: • Poor Sales Systems And Support
• CSR Compensation Not Aligned with Company Profit Model
• Inadequate Customer Information About After -Sales Process
• No Systematic Follow-up To Non-buyers
Where
Are the Leaks?
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24. Fulfillment Process
Online Sales
Sales Center or Fulfillment Repeat
Process Retail Store Purchase
Common • Misleading or Inadequate Sales Descriptions
Problem • Confusing Delivery Process
Areas: • Confusing Packaging, Paperwork, and Business Reply
Envelopes
• Unresponsive Customer Service or Support
• Difficult or Complicated Returns Process
• Inadequate Satisfaction Monitoring
Where
Are the Leaks?
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25. Repeat Purchase Process
Sales Center
Online Sales Fulfillment & Repeat
Process or Retail Service Purchase
Store
Common • No Customer Level Tracking of Purchases, Preferences or
Problem Needs
Areas: • No Easy or Automatic Means of Repeat Purchase
• Incomplete or Inadequate Reseller Follow-up
• Wrong Channel Follow-up
• No Satisfaction Monitoring or Feedback System
• Inability to Adapt Offer To Changing Customer Needs
Where
Are the Leaks?
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26. It‟s All Connected
What You Affects What
Do Here Happens Here
Sales Center
Online Sales Fulfillment Repeat
Process or Retail Purchase
& Service
Store
• Clear Value Proposition On Web Site
• Product Descriptions, Educational Content on Web Site
• Call Me Buttons In Sales Sequence
• Pick up Merchandise At Store
…All Result In Lower Costs And More Sales In Sales Center or Retail Outlet
Where
Are the Leaks?
Copyright @ 2012, Ronald D. Ryan
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27. It‟s All Connected
What You Do And Affect What
Here Here Happens Here
Online Sales
Fulfillment Repeat
Sales Center or
& Service Purchase
Process Retail Store
• Properly Set Customer Expectations Regarding Product/ Service
• Info on Contractual Post-Sale Requirements (e.g., Signatures, Returned Forms)
• Defaulted (Profitable) Product Choices
• Defaulted (Profitable) Payment Methods and Billing
…All Result In Higher Customer Survivorship
Where
Are the Leaks?
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28. It‟s All Connected
What Affect What
You Do And Here And Here Happens Here
Here
Online Fulfillment
Sales Repeat
Sales
Center & Service Purchase
Process
• Great Experience
• Value Proposition And Brand Promises Fulfilled
• On-going Sense of Community
• Easy Repurchase Process
• Easy Referral Process
…All Result In Higher Repurchase and Referral Purchase Rates
Where
Are the Leaks?
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29. Where To Go For Data?
Online Sales Process: Web Analytics and User
Testing
Sales Center & Retail: Recorded Calls, Telephony
Data, In Store Traffic, Mystery Shoppers
Fulfillment & Service: Complaint Log, Returns
and Cancellations Data
Repeat Purchase: Repeat Buyer Profiles &
Surveys of Defecting Customers
Where
Are the Leaks?
Copyright @ 2012, Ronald D. Ryan 29

30. Summary – Where To Find The
Leaks
 Identify Your Major Customer Touch
Points
 Observe And Measure Customer
Behaviors At Each Touch Point
 Correlate Data On Customer Attrition
 Develop And Test Hypotheses
 Start Planning How To Fix The Leaks!
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31. In theory, there is no difference between theory and
practice. In practice, there is. - Yogi Berra
Copyright @ 2012, Ronald D. Ryan 31

32. But Isn‟t This Just Common
Sense?
“Constant “ But we can’t The Reality:
Improvement afford to do this Discipline Is
Should Be Part now; we’re in Difficult To Build
of Our Culture” survival mode.” & Maintain
Yes. How
To Fix The Leaks?
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33. How To Get Started?
Leadership
Outside Inside Task
Commitment
Consultant(s) Force
<Either Way>
Start Here
And
Work Your
Way Out
How
To Fix The Leaks?
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34. Why Bother With A Task Force?
 Multi-departmental
point of view
 Objectivity
 Independence and
intellectual honesty
 Customer focused
rather than
department focused
How
To Fix The Leaks?
Copyright @ 2012 Ronald D. Ryan 34

35. Make Sure You Are Looking
With New Eyes
If it ain‟t is
broken don‟t
go fix it!
How
To Fix The Leaks?
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36. 6 Sigma Ninja‟s Helpful But Not Required -
A Check List For Change Teams
 Smart – big picture
person comfortable with
ambiguity
 Understands company
and how it works
 Analytical - not afraid of
numbers
 Plays well with others - is
well respected by peers
 Has strong domain
expertise in his/her field
 Willing to work hard
How
To Fix The Leaks?
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37. How To? Buy Books Not Dogma
Customer Analytics
• How to Measure and Improve In-Store Buyer Experience (Underhill)
• How to Measure and Improve Internet Experience and Ecommerce
(Kaushik)
• How to Measure and Manage In-Bound Call Center Customer
Experience (Cleveland)
Customer Satisfaction Measurement And Management
• How to Conduct Meaningful Satisfaction Surveys (Hayes)
• Net Promoter Score (Reichold)
• Experience And Interaction Economies (Pine, Gallup)
• How (Nudges) Can Affect Buying Behaviors (Thaler,
Sunstein)
Process Improvement
• Six Sigma (Pande et al.)
• Lean (Womack, George, Seddon)
• Reengineering (Hammer)
No Single Approach Does It All How
To Fix The Leaks?
Copyright @ 2012, Ronald D. Ryan
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38. Where Should You Start?
Repeat
Online Purchase
Sales Fulfillment (Or
Process 8 or 9 out Renewal)
Call Center
1 in 20 of10 Keep Between 5
1 in 5 buy and 9 Out of
What You
Buy 10 Buy
Sold Them
again
How
To Fix The Leaks?
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39. The Higher You Start In Your Funnel, The
Greater The Impact Of The Change…
Online
Lead
Generation
& Sales
Sales
Center
Fulfillment
& Service
…But also the more controversial, risky,
and difficult to measure.
How
To Fix The Leaks?
Copyright @ 2012, Ronald D. Ryan 39

40. Where Should You Start?
Repeat
Purchase
Fulfillment & (Or
Online Service Renewal)
Sales Call Center 8 or 9 out of
Process Between 5
1 in 5 buy 10 Keep and 9 Out of
1 in 20 buy What You 10
Sold Them
Buy again
Start with a system or process you control. Fix it first.
The further back in the value chain you start, the safer
you will be. How
To Fix The Leaks?
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41. Summary
 High ROI
 Falls straight to the
bottom line
 Requires little
investment
 Improves customer
experience and
brand
 Makes the world a
better place.
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42. Copyright @ 2012, Ronald D. Ryan 42

43. Payback Calculation
Purchased Leads Cost Per Lead Acquisition Cost New Customers
25,000 $5.00 $125,000.00 1,250
12,500 $5.00 $62,500.00 1,250
Old Conversion 5%
New Conversion 10%
Per Month Savings $62,500
Investment $100,000
Time To Pay Back 1.6
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