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Customer flow leads to cash flow and paying customers

How many times have you heard it?

"Cash is King"

"You must have a cash flow statement"

And the definitions:

"A measure of a company's financial health"

"The actual movement of cash: measuring cash inflow minus cash outflow and the sources and application of funds"

"An analysis over a period of time revealing the availability, or lack, of cash"

And it is all true. But what provides the cash?

That's right, paying customers.

Customer flow leads to cash flow.

So when was the last time you heard anyone talk about a customer flow statement?

We define customer flow as:

• the measure of a company's long-term prospects;
• the actual movement of customers: measuring customers gained versus customers lost;
• the "lifetime" of those customers with the organisation and their lifetime value.

Also what about the process of obtaining and retaining satisfied customers and how effective that process is?

Our guess would be that you have heard 'customer flow' but rarely. Yet it is customer flow that creates cash flow and still many (if not most) organisations have no idea of:

• the sources of their customers
• the importance of one source relative to another
• how much it costs to obtain customers from each source
• how long customers from each source stay with the organisation
• how frequently they buy
• how much they spend
• what they buy
• when they buy
• why they buy
• where they buy
• how they buy
• why they leave or stop buying

There are 12 measures of customer flow in the list above and that's not completely detailed or exhaustive. To how many does your organisation know the answer?

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