Monday, November 27, 2017

If customers are so important, why don't we know more about them?

[Editor's Note: In an age where there is so much talk about the being close to the customer, why is service so bad, leaving customers feeling more estranged than ever from providers of products and services. CRM, customer-friendly, customer intimate, and customer-centric language abounds. Could it be that company resources are stretched, trying to please too many customers? Perhaps we would have better performance if we focused on our best customers. - dpm]
  •  KNOW WHO YOUR BEST CUSTOMERS ARE. All customers are not created equal. Research indicates that it is not unusual to find that over 50% of a typical company's customers are unprofitable when all cost factors are considered. In some companies, over 85% of the profit may come from as few as 10% of the customers. Start by ranking your customers by net profit generated. Include all costs of doing business - direct product and service cost, handling, order processing, administration, delivery. What are the patterns? Which customers present the greatest opportunity for profitable revenue expansion?
  • DON'T TREAT ALL CUSTOMERS THE SAME. You can't be all things to all people. Once you have determined your best customers, focus on deepening the relationship. Gaining additional share of a customer's business is usually much more profitable than finding a new customer. Offer meaningful services that demonstrate their status. Such services as a priority position in the manufacturing schedule, priority delivery, access to training, etc. need not add much cost to your operation, but can clearly bring your "best" customers closer to you.
  •  CHOOSE YOUR CUSTOMERS. Develop profiles of your best customers. Are there common characteristics?  Once the profiles are developed, go out and find more customers just like your best customers. Use market research and on-line tools to develop targets so that you focus your resources.
  • MAKE YOURSELF INDISPENSABLE TO YOUR CHOICE CUSTOMERS. Make it your business to learn your customer's business. Find the pain in your choice customer's business and look for ways to help him solve it. Do that a few times and you will be perceived as not only valuable, but indispensable.
  • MAKE "KNOWING YOUR CUSTOMER'S BUSINESS" PART OF YOUR CULTURE.Create special programs that identify your best customers to all of your employees. Make it every employee's job to find ways to better serve the choice customer. Make certain that compensation and reward systems recognize the importance of pleasing the key customer. 
  • ALLOW OTHER CUSTOMERS TO "OPT-IN". Companies that have adopted this "choice customer" strategy have been pleasantly surprised to find that many of their other customers select them and opt-in. Although these customers may pay slightly higher prices and have different service levels, they find the customer-centric culture appealing. Many companies have developed different tier priority service designations for these opt-in customers, but find additional ways to demonstrate superior relationships.
We help clients think differently. The Mead Consulting Group helps clients develop a process to identify net profitability by customer and product and then to develop strategies and tactics - and the cultural norms needed - to increase the client's share of the most profitable business. If you would like more information on how this might be applied in your organization and how we might help you and your company accelerate the process of adding value and moving your company to the next level of performance,  please contact me by email or (303) 660 -8135.

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