WestWon have three strategic goals this year, one of which is to have over 10,000 live clients. In this blog article, we review why this is of significance, what does it mean, and how do we get there?
What is a client?
Firstly, we should review what is a customer, or what we call an end user client?
This is a company/organisation in the UK that has undertaken a lease or loan agreement via our company or a company we have acquired. Their lease agreement may have well expired or been terminated, however we still internally call then a client.
Interestingly, we speak to many other leasing companies who classify a client as a company they are talking to even though they have never done business with them before.
Secondly, we remove companies that have gone out of business or are what we call “red flagged.” These are companies where something has gone wrong such as defaults or a general breakdown in our business relationship. Thankfully, these numbers are low.
How do we know the number of clients we have?
This might sound a stupid question; the answer should be obvious surely?
We speak to leasing companies, suppliers and customers every day. I cannot remember the last time someone accurately told me exactly how many customers they have. Sales Directors and business owners talk in general terms and round up to the nearest 100,1000 or in some cases the nearest 1m!
When we press a button on our CRM system, it does give an exact reading of customers, however is this a true number?
We have recently been through an extensive de-duplication exercise. As an example, one client was on our system three times. Once via an acquisition, then again from a lease deal we have done. As the client changed their company name, by accident, a third lease agreement was loaded on. In summary, three leases for three companies which happen to only be one customer.
Nearly every company record on our database will have a company registration number against them. We have run a routine to check for duplications via registration number, postcode, website address and telephone number.
Prior to loading on any more data onto our database, we will always check to see if we already have a relationship with the company.
Our yearly client audit.
This is something we do in Q1 every year. Cocredo, our credit information data provider – an amazing company by the way – run an automated routine matching up company credit information to a company registration number we give them. We can then see quickly, how many of our customers are still trading.
Why have we set a goal for 10,000 clients?
Some companies will lease, others will not. It can be as simple as that. This often comes down to the culture of the management team and their strategic goals. There are hundreds of thousands of company owners that will just never look to borrow money or lease equipment. However, the vast majority of UK companies will use leasing to finance asset purchases.
Over the years our clients will come back to us for their leasing and asset finance needs. 10,000 live clients is a target we’ve set internally. Achieving this would mean high organic sales plus some major acquisitions of other leasing companies.
Lifetime value of a client
We have not developed a complex algorithm to calculate the lifetime value of a client. However, we do analyse our sales numbers to see on average, what will be the lifetime financial value to us for every new client we bring on board. This has to be an average figure and clearly can be affected by us recruiting a new supplier program, where for example we might be doing lots of small lease deals or a few number of large ones.
All companies should – or do – look at what is the average lifetime value of a client.
I heard once how Sainsbury’s said on average every client will spend £250,000 with them in their lifetime. It helps them focus on how important their customers are.