I was talking with a friend recently that works the customer service phones for the company she is with. She mentioned that her company expects her to solve any customer's problem in three minutes or less. That sounds like a policy created by someone trying to save a few bucks while thousands of potential sales walk down the street to the nearest competitor. She did mention, however, that earlier that day she had taken a call from a customer that was a personal friend of the founder. After running into several brick walls with the fulfillment department she mentioned the issue to her manager and was told, "Do whatever it takes. Just make that customer happy." Apparently the policy at this particular company is "3 minutes for customers. Whatever it takes for friends of the boss."
As wrong as that policy may be, at some level every company probably needs to come up with some criteria for deciding which customers are worth saving and, more importantly, ensure that the best customers get all the attention they need. But how do you decide who the best customers are?
The chart that accompanies this post was taken from a recent article in the alumni magazine from my graduate school. The article provides some great suggestions for setting your criteria. You can read it here.
One word of caution: as you try to determine who your most profitable customers are don't limit the analysis only to past purchases. A customer who buys little from you but tells hundreds of friends can mean much more to your bottom line than a customer that spends a lot but never tells another soul. That pauper may actually be a prince!
Love that chart – really gets the point across. However there is one important point readers should consider. Is not just about customer value and profit - what about opportunity? Usually customer segmentation is carried out in terms of actual order value over time. However this can be very misleading. Of course companies who spend mega bucks with you and are profitable should be treated as ‘royalty’ but what about large corporates with massive buying power who happen to be tiny spenders with you – right now. If you do the analysis in terms of future opportunity as well as immediate revenue and profit a very different picture will emerge – try it and see.