Treat your customers differently – Strategically!

Different customers require different levels of service.  Some customers are just louder than others.  They may not follow your standard processes; they may want customized product or special services.  Ultimately, they require significantly more time from your operations, sales and / or customer service team.  Often the loudest customers are the customers that get more.  This is not a strategic way to allocate your limited resources. 

Develop a customer value strategy to strategically allocate your customer service resources and develop a framework for how you will interact with different customers. 

A Customer Value Strategy allows you to align the extra value you provide to customers with the value customers provide to your business.  This means some customers (lower value customers) will receive less, which enables you to provide more to your most valuable customers.  Prioritizing resources to high value customers has been proven to increase profitability. 

To enable customer prioritization, we need to determine who are our most valuable customers.  Many companies rank customers based on revenue, but this does not give the entire story.  Other metrics need to be considered: profitability, returns, payment history, growth etc.  The metrics will vary depending what is important to your business.  Some metrics you can consider are:

We can incorporate the relevant metrics to calculate a Customer Performance Value Score.  This score allows you to rank your customers and understand who provides the most value to your organization.  This information enables two strategic/tactical decisions:

·         Customer Performance Improvement

·         Strategic Resource Allocation

Customer Performance Improvement

With clear metrics and understanding of customer performance, you can enable your sales team to have meaningful conversations with your customers.  You can extend their conversations from focusing on products, and buying more, to improving their days-to-pay, reducing their return rate, or whatever is relevant to that customer. 

We have seen clients experience dramatic improvement to their customer metrics, just by highlighting and sharing the information with their sales reps so it can be communicated with their customers. 

Strategic Resource Allocation

While the loudest customers often get the most resources or value-added services, they might not be one of the most valuable customers to your business. 

To strategically allocate your resources, you need to understand what current services you offer (for free or with a charge).  You should also consider what additional services you could provide if you had additional resources. 

Once you have this you need to decide which level of customers get which services.  You will need to reduce the services to your bottom tier customers to free up resources to provide more to your top tier customers. 

We have a client going through this process.  They will be charging “C” customers for some previously free services.  This is opening up resources for them to partner much more closely with their A+ and A customers.  They will be providing their top tier customers with some of the services shown below.

These changes improve profitability with their top tier customers.  The impact to the bottom tier customers is minimal, and they often see significant performance improvement in there middle and bottom tier customers. 

Please email me at stacy@pricingvelocity.com if you could like to speak more about Customer Value Strategy.