This article is for those who are responsible for customer relationships, experience and satisfaction. Benefits of reading this article are to get insight on how should you value your customers. I will share also some ideas on how to receive more business benefits from valuable customers.
Not all the customers treat your business equally; therefore you need to focus on listening to voice of those customers that are the most valuable for your business. This article will give you a tool to evaluate which customers should have the “loudest” voice in your business.
An important consideration to your voice of customer strategy is value. The goal of a loyalty programs is not to MAXIMIZE customer experience, but rather to OPTIMIZE it and that is why all customers are not treated equally. Net Promoter program should reflect your business, including its goals.
For B2C businesses, value is typically operationalized according to profitability, spend, tenure, and other characteristics– resulting in specific customer segments. However, it may also reflect your strategic goals– customers you wish to target– or strategic opportunities. In fact, Net Promoter can be a powerful tool in creating a customer segmentation– by linking loyalty data to customer characteristics, you can better understand who your happiest customers are, and how to focus your business to maximize your growth within that demographic. So, a random sample of your customers is not necessarily a good goal. A targeted listening of specific customer may work better, taking into account customer characteristics, buying capabilities, and the like.
The goal of the voice of customer strategy should be to listen according to value, giving emphasis to leveraging the feedback of high value customers. This means insuring their representation in the sample, segmenting the data by value, weighting the results– which make it possible to understand and create specialized customer strategies for your most important customers.
For B2B businesses, there is typically more than one dimension of value at work; there is the value of the “capital C” customer in terms of overall revenue contribution. There is also value expressed in terms of decision-making power or influence associated with specific individuals (“lower case c” customers) within the account.
The goal of the strategy is the same– to voice according to value– but there is an additional layer of complexity. The sampling strategy should emphasize obtaining and leveraging the feedback of high value individuals (small c customer), and high value accounts (large C). This permits segmenting the data by respondent influence and revenue impact, making it possible to create specialized customer strategies for your most important customers– and to arm your sales force for more effective account management across the spectrum.
Let’s discuss briefly how you can listen to most valuable customers in a practical way.
You can start by combining the CRM customer information with NPS customer feedback. Then you can use the existing information to understand the total value of the customer, which will benefit also from calculating the average customer lifetime value for each segment. Once you have done that, use the financial information to prioritize the customers so that you can listen to those carefully, who are most valuable for your business. In some cases you may need to take action to depart those customers who cause loss continuously… But many companies don’t even know, which customers are profitable. I hope you do!
If you focus on all the customers on the same level, then your non-profitable customers will consume the profits created by the profitable ones. Customers do not treat your business equally compared to competition, so you need to focus on those customers who are more likely to stay and create more revenues over time (by being loyal).
Remember, not all customers are good customers. Some of them might pay for your services, but at the same time they are telling to numerous people to stay away from your business. That kind of customers will cost you much more money than what they pay for.
Therefore, design your business around those customers who are the best fit for your company and you will get more of that kind of customers.
Let’s take one real-world case example. This is an insurance company from United States. They wanted to evaluate their customer base on optimize it by finding customer segments that are not profitable. They used couple of different customer experience methods to identify over 50,000 non-profitable customers. Those customers caused almost 80% of their claims! So, what they wanted to do is to get rid of those customers in the nicest possible way to start making more money. They approached their competitors and came up with a deal, which lead a competitor buy those bad customers. This had a huge positive impact to their finances, because they made some of the lost money back and also got rid of future claims. And don’t understand them wrong; it’s not that they don’t want claims because they are an insurance company. These customers were causing fraudulent, reoccurring and otherwise non-standard claims in continuous basis.
Get free online training on Customer Experience Management at http://bit.ly/cebepmchannel
By Janne Ohtonen, EPM Channel Contributor
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