Keep Your Customers

Release Date: November 5, 2019 • Episode #91

Guest host Pat Gibbons interviews author Ali Cudby about her new book “Keep Your Customers,” which discuss how companies can create loyal customers and slow customer turnover.

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Pat:
We've all heard that it is more efficient and more productive to keep your existing customers in favor of searching out new ones.

Ali:
Because businesses serve unprofitable customers so often, those most loyal customers are incredibly overlevered in their value. And all the more reason to make sure that you keep those customers because that's where loyalty is born.

Pat:
The hidden value of customer retention, the topic on this episode of The CX Leader Podcast.

Announcer:
The CX Leader Podcast with Steve Walker is a production of Walker, an experience management firm that helps companies accelerate their CX success. Find out more at walkerinfo.com.

Pat:
Hello, everyone, I'm Pat Gibbons, I'm guest host of the CX Leader Podcast, sitting in for Steve Walker today, and thank you for listening. On The CX Leader Podcast we explore topics and themes to help leaders like you leverage all the benefits of customer experience and help your customers and prospects want to do more business with you. As CX leaders we've heard a variety of statistics about customer churn. You can reduce your cost and increase your long term value by retaining more customers. And yet many of our organizations spend much more resource on acquiring new business. Today, we'll discuss practical ideas for increasing customer retention. My guest today is Ali Cudby, leader of the company, Your Iconic Brand. In addition, she's an author, has a Wharton MBA, teaches entrepreneurship at Purdue University and has just released a new book called "Keep Your Customers." Ali, welcome to The CX Leader Podcast.

Ali:
Thanks, Pat. It's great to be here.

Pat:
Well, you know, I'm delighted to have you here. You know, we've interacted in the past and I've always admired your work and the fact that, you know, I've been kind of waiting for this book to come out so we could have you on the podcast and today's the day. So… so I know just from our work together that you have a fascinating background. Why don't we start there: tell everybody a little bit about yourself and kind of how you got to this point of your, your company and the book and all of that good stuff.

Ali:
Well, after Wharton, I started at the New York Times Company, and that's really where I got my first taste of customer loyalty and the importance of retention. It was in the late 90s when the Internet was eating newspapers' lunch from a revenue perspective, and I was challenged to do a better job with customer service and our call center, because when unhappy customers left and became online customers – when they stopped getting the paper and started reading the paper online – they went from being profitable to unprofitable. And I thought it was a fascinating world. And throughout my tour in corporate America. And then when I became an entrepreneur and launched the world's leading bra-fit training and certification program, which is a little detour,

Pat:
Yes.

Ali:
We, can talk about…

Pat:
Interesting. Maybe we'll go there.

Ali:
That in its own way, reinforce the lesson of the importance of customer retention and customer loyalty.

Pat:
Yeah. So. So this isn't just a topic that you've studied, you have experienced it. Right?

Ali:
Yes I have.

Pat:
Yeah. So obviously with all of that, you know, we talk a lot about customer retention in the whole area of CX. Why do you see it as so important?

Ali:
Well, the numbers don't lie, and I know that your listeners are steeped in them. I came across some really fascinating research when I was starting to write the book and it showed that a company's most loyal customers don't necessarily follow that Pareto principle idea of 80/20. It's not in fact, true that 80 percent of revenue comes from the top 20 percent of customers. The research showed that it was around two thirds to three quarters of the revenue came from those top 20 percent. But here's where it gets really fascinating: the top 20 percent of customers actually ended up contributing anywhere from one hundred and five to one hundred and thirteen percent of net income. Because businesses serve unprofitable customers so often, those most loyal customers are incredibly overlevered in their value and all the more reason to make sure that you keep those customers, because that's where loyalty is born.

Pat:
So it seems that so many companies put so much more into their business development efforts, bringing on new customers and all that. Why do you think that is and is it the nature of just their business or is the whole retention thing kind of: "Oh, yeah, we try to keep our customers."

Ali:
Well, I will say, and this is the scientific term. It makes me bonkers.

Pat:
[Laugh] Very scientific,

Ali:
Yes. Yes. Well, I am a technical leader also.

Pat:
Right. Of course, of course.

Ali:
Sure. The reason I think it exists like this is because companies have somebody who's in charge of sales. It is somebody's KPI to hit the number and sales people are, by their nature, hunters and not farmers. So they're more jazzed by going out and getting the fresh meat than they are tending the existing customers. If you don't have somebody in your company whose job it is to make sure that you have customer retention as a key piece of their bit of their goals, that that's their job, then it's not going to be a priority. It's nice. It's a "nice to have". It doesn't end up being a "have to have". Somebody has to be tied to that goal in order to make it a real priority in companies. And oftentimes, the people who end up working in the retention side of things, the CX folks or the customer success folks, they're either not senior enough or they're not able to leverage that kind of cross-functional role that's needed in order to truly make retention a priority.

Pat:
Do you see also that at the executive level, they say all the right things, right? You know, take care of our customers. We want to provide an outstanding customer experience. But do people see that as just talk or, you know, how do they… how do they view that and how does that translate to the importance of retention?

Ali:
Well, I think some companies really get it. And the companies that get it see results. It's simple, but it's not easy. And so it's the… it's the leaders who get that this has to be something that is knit into the fabric of the company that see the best results. And I think that when the economy is good, it's easy to just, you know, turn on the money hose and keep selling. But the recession is coming and keeping those customers is going to be increasingly important. And that's where the smart CEOs are going to focus their energy.

Pat:
Right. Right. So I've got a copy of the book in front of me. Tell me, why'd you write the book?

Ali:
The book was born out of my work in the lingerie industry. In reality, I was working with a bunch of lingerie retailers around the world helping them become better bra fitters, which was sort of this act… company that I accidentally created and accidentally went global with. And what happened was there these clients would come to me and they would say, "Ali, this is amazing. My customers are literally crying tears of joy in the fitting room based on the work that I've done with you." And I would say, "that's fantastic. Now, what are you going to do to make sure that these customers keep coming back? How are you going to make sure that they are loyal to you and not just taking what you've shown them and going to the cheaper guy or the next guy?" And none of them had a plan. They all looked at me with this kind of confusion, like, "Well, I'm just going to keep giving them great fittings like you taught me." And I knew from my work in corporate America that it just wasn't enough. And that's what inspired this company and the book.

Pat:
Right. And you have books on that topic as well.

Ali:
Yeah, I do.

Pat:
So…

Ali:
I do.

Pat:
Which I have to tell the brief story: you know, I've known for some time that Ali was working on this book. And so every once in a while I would go out to Amazon, check to see if the book was out, And I, I would just search on her name, Ali Cudby, which is a rather unique name. And I would find these other two books on bra fitting and thinking: "is that the same?" Of course, not only is it the same, but it had a role in inspiring this book, which I find really interesting. So give us a few of the key highlights from the book. I know it's filled with kind of practical tips and so forth. Give us kind of the big picture of it.

Ali:
Well, the fundamental principle of the book is that there are two components to customer retention. There is the emotional connection that companies make with their customers. It's the relationship building where customers feel seen, heard, and valued. And that's really important. But it's not something that moves the needle by itself. In order to truly get long term customer retention and improve lifetime customer value, you have to marry that to the clarity and consistency inside your company. You have to know what it is that you're doing. You have to have process. You need tracking and measurement. It can't be an ad hoc system. And companies tend toward one or the other. It's not either. It's both.

Pat:
Ok, I want to dig in a little bit on the topic of consistency, what you were saying about consistency across the company. Do you have an example from the book that you can share?

Ali:
Yeah, there's a great case study from a company called ClusterTruck and they are a food delivery company, but they're unique because they actually own the entire value chain. They, they make their own food, they source their own ingredients. They make their own food. And they deliver it directly to the people that they are serving. So they, they own the whole process. And the CEO, Chris Baggott, is a guy that I interviewed in the book, and he shares a story about his initial mantra for the kitchen, which is "don't ship maybes." And originally that was used to make sure that every order was excellent. And if any order, if any food came through the kitchen, that wasn't great. If it was a "maybe" then pitch it and do it over again. And what ultimately happened and what he shared was that this idea of don't ship maybes became more than just a mantra for food, it became a real mantra for the company. "Don't ship maybes" became sort of a catchphrase for hiring. So if you're interviewing somebody and you really need to fill that role. Hey. Is it a "maybe" because we don't do "maybes" and Chris even has "don't ship maybes" tattooed on him. That's how… that's how seriously he takes it. And that's what consistency can do, is it gives everybody in the company a way to align and aim for a singular bullseye.

Pat:
Great example. And more companies should have a slogan like that.

Ali:
It's a good one.

Pat:
And so all of that has to be within the right culture, right? Inspired by the right leadership and middle management has to have the right attitude. Do you see that a lot in working with companies that there has to be some adjustments made?

Ali:
There are adjustments that have to be made, but generally speaking, the companies that get it, get it and the companies that don't: if there isn't somebody who is owning this, then it is just going to become another flavor of the month initiative. And that's one of the things that makes me so sad; that's the last thing I want. This is lasting change and my clients five years on will come back to me and say, "man, I made a couple of changes five years ago and they are still reaping benefits." I think that's another piece that people don't necessarily know, is that it doesn't have to be a huge change. Those small changes that are made and consistently implemented inside of companies can make a huge difference over time.

Announcer:
We're giving away a free copy of Ali Cudby's book: "Keep Your Customers." Send an email to podcast@walkerinfo.com by Tuesday, November 12th and let us know how you're enjoying all the helpful advice from CX leaders and practitioners. One listener will be selected at random to receive her book. That's podcast@wakerinfo.com.

Pat:
You know, you've… you've hit on something that I think is, is pretty important. And I guess I would summarize and saying "leadership" – that that's kind of what you're saying is this can't just be kind of an ad hoc thing. It has to be something where somebody is in charge, somebody is being a leader. You're hitting at the heart of our podcast. You know, we didn't want to call it the CX professional. It's… there was an intentional nature to the "CX leader" because we think CX is an area where you need to be a leader. And I guess how important do you see leadership being and CX today?

Ali:
It's incredibly important. It works best when it comes from the CEO level or the C-suite level. But I've seen incredible success when a leader who may not be at the top of an organization but has the authority to make change and implement change inside a department or division or even a special project, take the initiative and run with it and see great results.

Pat:
Leadership can happen at all levels. It's just people stepping up and doing their job…

Ali:
Exactly.

Pat:
…and doing it well. So, you know, I also find it interesting that you teach. Right? You teach an entrepreneurship program. Tell us a little bit about that and how it might relate to all of this.

Ali:
So I teach entrepreneurship at Purdue University and I teach undergraduates. It's a upper class undergraduate class that is the class where you start with a business idea and you end up with a business plan at the end of the semester. And it's really fun and fascinating. The students are so smart and engaged. And so it… it's great to see the way that they think. And also, it's a great reminder of the fundamentals for me. As I sit there and teach, I'm often saying, "oh, wait, how can I do that better in my business?" So it's a it's a good balance.

Pat:
And do you find that you weave in some of these same concepts from what's in the book to your students as well?

Ali:
Absolutely. There are a number of teachers who another… a number of professors who teach the same class within Purdue. And everybody has a different take on it. And I tend to be a little less "Shark Tank" and a lot more customer driven.

Pat:
Yeah. Yeah, it takes me back to when I was getting my MBA, I had a professor that every time – I was going part time – so I would bring in, you know, maybe a brochure I was working on, and his standard question was, "what do your customers think? Like, you didn't ask them?" And, you know, it's a lesson that has stuck with me and it's certainly relevant for business today is your customers have a lot of the answers and getting their input and their perspective on things makes a big difference.

Ali:
One of the things that I do for the class is I interview different executives, the little recorded videos and play them. And I always ask about what are some of the most important lessons and that is one that comes up over and over again. Test, test, test. And your idea is nothing until you put it into the marketplace and actually see the results.

Pat:
Yeah, and it's so easy or tempting, I would say, at the pace of business today – we go with our gut feeling so often. And yet our businesses today have so much data on our customers, employees, etc.

Ali:
Well, I think there's a balance. Some of the testing is doing. You can… you can put things out into the market and see how it flies and ultimately that is kind of how you find out what customers think.

Pat:
Right.

Ali:
Focus groups are interesting, but they can be skewed and there's no better data than testing in the actual… the living marketplace.

Pat:
Yeah. Yeah. Excellent. OK. We've hit the point of our program where we ask the standard question, this is kind of the hallmark of The CX Leader Podcast and that is what we call the take home value question. And Ali, give us one piece of advice that CX leaders that are listening today might be able to put into action very quickly.

Ali:
The fastest and most important takeaway – and it's in the book and it's in everything that I do – is truly that business is personal. You have to have that emotional connection and marry it to that consistent process in order to see results. It's not "either-or" like I said, it's both.

Pat:
Excellent advice, excellent advice, Ali Cudby is the leader of the company, Your Iconic Brand. In addition, she teaches entrepreneurship at Purdue University and has just released a new book called "Keep Your Customers." Ali, tell us how, if people want to get in touch with you, whether it's LinkedIn or your website, and definitely tell us where they can get the book.

Ali:
You can reach me at my website: youriconicbrand.com or the book's special website: keepyourcustomersbook.com. You can also go to any of your favorite booksellers and buy a copy now. If you want to reach me, you can find me on LinkedIn. I think I'm pretty much the only Ali Cudby out there. But even if there is at least another, I'm pretty easy to find. Or you can just e-mail me at "ali" – And that's A, L, I, @youriconicbrand.com. [ali@yourionicbrand.com] Being that I am a customer relationship kind of person, you can just get directly in touch with me.

Pat:
Great. Well, Ali, thanks for joining us on The CX Leader Podcast today.

Ali:
It's been a pleasure. Thanks for having me.

Pat:
If you want to talk about anything you heard on this episode or how Walker can help your business customer experience program. Feel free to email me at pgibbons@walkerinfo.com or you can contact Steve Walker at steve.walker@walkerinformation.com, or give us a call here in the U.S. at +1-317-843-8890. Don't forget to subscribe to The CX Leader Podcast, you can go to walkerinfo.com/podcasts and you'll find links to iTunes, Spotify, iHeartRadio, Google Play, and on our YouTube channel at walkerinfo.tv. Thank you for listening to the CX Leader Podcast, which is a production of Walker. We're an experience management firm that helps our clients gain a competitive advantage by delivering an exceptional experience for their customers. Find out more at walkerinfo.com. Thanks for listening and we'll see you next time.