When you get your USP right, EVERY “flow” of The Customer Factory is better. Monitoring The Customer Factory for your business tells you if your USP is working.

The Customer Factory

I learned this idea from Ada Ryland here in Austin, TX who provides consulting services to early-stage startups. She did mention who she learned it from, but I’m forgetting.

Please refer to the diagram of “The Customer Factory” below to help make sense of the following description.

In short, the revenues for every business come from three main sources:

New Customers

Repeat Customers

Referral Customers (yes, they’re “new”, but it’s a better new)

The USP you present (knowingly or otherwise) to those three groups may differ slightly. For example:

• A new customer may be initially attracted by functionality.
• A new customer may activate with a focus on ease of use.
• A returning customer may expand their needs to include visibility to activity and ability to measure productivity.
• A customer making a referral may be nudged to action by the potential for residual income from an affiliate program.

You know your USP is good when EVERY flow within The Customer Factory has a high and quick conversion rate.

Customer Factory Purpose

The main purpose of The Customer Factory is to tell you where to focus on your short-term efforts. If your conversion rate on Acquisition rate is low, working to improve your Activation rate is wasted effort. Conversely, if your Acquisition rate is good, but your Activation rate is low or severely lagging, you don’t spend time on improving your Retention rate. You’re not there yet.

Acquisition

How many times does someone visit your website before they sign up? 2? 11? You need to know this so you can test different landing pages and marketing messages to bring this number down. This is generally NOT provided neither by Google Analytics, so you need some form of Marketing Automation software that can match up earlier website visits to identities after someone provides you their name and email address. One FREE software package that can do this is the free version of the HubSpot CRM.

Activation

What is your average time lag between Acquisition and Activation? 1 hr? 3 days? Again, you need to know so you can perform tests to figure out what brings this number done.

Retention

Retention rate is how many customers come to you later to buy again. When you sell a durable product (for example cars or washing machines), measuring this can take a long time, for obvious reasons. When you’re selling a consumable item (for example food), or a subscription service, it’s much easier to measure. If you’re a restaurant, get data from your credit card processor to see how often the same credit card numbers show up. If you’re selling a software service, you implement this tracking in reverse. You track how many people CANCEL every month, and from that, you know your Retention rate.

Referral

This can be trickier to measure, but it can be done. In a brick and mortar business, ask people how they know of you. If they say that someone told them, ask them who so you can send a Thank You card (and send it). If you provide a software service, you can periodically nudge people to share knowledge of their service with their friends, coworkers, and industry associates.