Optimize Customer Lifecycle – how well do you really know your customers?

Thou shalt love thy customer as thyself. Give way to the corporate commandment of the 21st century. But in our endless strive to achieve more loyal customers, let’s not forget an important truth: not all your customers are created equal and do not deserve equal treatment.

A series of blog posts about Differ’s portfolio of solutions. During the fall we publish five blog posts with a deep dive into the areas that are key in order to obtain sustainable growth. This time: Optimize Customer Lifecycle.

Remember the Pareto rule? It states that 80% of the results comes from 20% of the causes. This also applies to your customers – a small part of them are likely to account for a large share of your profits. These customers have a disproportional effect on your performance – do you know who they are? Surprisingly few do. Without this piece of insight, you will underperform on the most important aspect of running a business – allocating scarce resources where they matter the most.

You should strive to keep your most valuable customers, grow the ones with most potential, and minimize the resources spent on the least profitable ones. To achieve this, the first step is always to get a firm understanding of your customers and classify them based on the value they provide to your company. Unfortunately, too often we see companies starting in the wrong end – investing in new trends and technologies before laying a solid foundation of customer understanding. These efforts then run the risk of doing more harm than good.

Spread the word…

In our experience, questions about customer value get the most attention in the CRM department. But it shouldn’t be that way. Customer understanding has the highest value creating potential when it is spread throughout the entire organization. These insights should be leveraged when developing new products, prioritizing sales efforts, personalizing communication, and differentiating service levels.

The importance of finding the most valuable customers have been known for a long while, and it begs the question whether anything has changed at all? Today, customer value is most often defined on a purely transactional basis and identifying this surely takes you a long way.

“However, customer value today is much more than just financials.”

Not all about the money…..

Let’s say that Customer A provides twice the amount of margin compared to Customer B. It certainly looks like Customer A is a better customer and should receive more attention from you. The problem is that customers can provide value in a magnitude of ways apart from their transactions. Let’s pretend that Customer B talks well about you on social media or provides you with feedback that helps you improve your products and services. The value of this could be tremendous and losing this customer would consequently mean losing more than just her revenue.

Until recently these indirect ways of providing value were much harder to identify. But exponential data growth and new technology has enabled us to get a far more detailed view of our customers. By combining direct and indirect value we can achieve a more accurate representation of true customer value. The core problem of finding your most valuable customers still remains the same, but we are now better equipped than ever to answer this question truthfully.

Watch out for our next post on our second solution area, Transform Frontline Processes.

Want to know more? Contact Karolina Ehrlen or Robert Kasjö.

Differ support companies and organizations on their journey of sustainable growth.
We work within all topline related disciplines. We understand how to build a brand, what creates a positive customer experience and the driving forces behind revenue generation. In this blog series we will present our point of view, our experiences, trend observations, and more, related to sustainable growth: Design customer experiences, Boost brands, Innovate offerings, Optimize customer lifecycle, and Transform frontline processes.

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