Some people might think a commodity business has no opportunity for differentiation. Those people would be wrong – and the story of Volterra Energy is proof.
A “commodity business,” by definition, is a business whose products and services are interchangeable. In the words of Neville Ravji, CEO and co-founder of Volterra Energy, electrical service is the ultimate commodity. If you flip a light switch and the electricity comes on, they’ve done their job.
Well, not so fast.
Neville reached out to me after checking out my book, Keep Your Customers. In this fascinating conversation with Neville, he shares the exact steps his company took to improve customer retention in his commodity business.
With mind-blowing results.
Applying the Method
In the world of Texas electrical companies, customer turnover is relatively high. In fact, half of all customers churn in this sector each year. A full 50%! By contrast, at Volterra Energy, customer turnover was a scant 20% annually.
This didn’t happen by accident. Neville and his leadership team took consistent action steps to ensure satisfied customers.
Here’s just one example: Each month, Neville took members of his customer service team to lunch at the restaurant of their choosing. No limits. At lunch, he simply chatted with them and got to know them as people. He let them get to know him. And he shared his vision for the company.
That internal action produced employee loyalty that translated to customer satisfaction.
Neville shared a slew of specific steps he and his team took at Volterra Energy. He spells them out in the video below.
Those steps, applied consistently, turned into big financial returns, and ultimately the acquisition of the company.
For Volterra Energy, satisfied customers translated directly to the bottom line. In Texas, people choose their electrical carriers online. The higher the rating, the more customers are inclined to choose the company. Companies that are more highly rated can charge a premium, which adds up.
The company was able to calculate that a single customer complaint cost the company $60,000.
That amount sure makes the cost of a monthly lunch pale in comparison.
When you can calculate the cost of turnover and then take clear, specific action steps to prevent churn from happening, it saves companies money. Even better, it earns high-value, long term customers.
Putting Action to Words
Check out the video to hear Neville’s fascinating story about the value of customer retention:
And remember – these are outcomes from a commodity business! If your company enjoys the benefit of product differentiation, imagine the results you can enjoy.