Your Customer Value – is it a Strategic Asset, and is it Really Important?
This blog originally published in Printing Impressions
The key attributes that determine your customer value go well beyond measuring their annual sales. Areas that I believe lead to enhanced customer value include (in no particular order) profitability; loyalty; number of transactions; and the costs to support those transactions, growth, vertical market, significance (them to you and you to them), retention, and let’s add lifetime value. I’m sure that I’ve omitted some obvious ones, but you get the picture. If these attributes make up the true value of your customers, what can you do to get a better handle on where you stand in these areas? After all, they are a strategic asset and you should treat them as such.
In most companies that I visit and work with, the customer metrics available are financial in nature and always include sales with a comparative view to the last period, or last year. They can often add the number of opportunities or estimates and a dollar volume. While many will also look at an overall win rate, seldom do I see it at the customer level. Moving from a basic sales overview to treating your customers as strategic assets can be a major undertaking, not because the information isn’t available. The impediment may reside in the strategic thinking that, “is this really important to my business?”
Assessing your customer value will not be for everyone. Some will say it’s not that important and others may say it’s just too hard to determine. Others may say that it is costly to acquire a new customer and that they want to make sure that they nurture and grow that business, that they learn from them and that they are able to leverage that knowledge to lower their costs of future customer acquisition and retention. Like many business decisions, only you can determine which path is the right one for your business.
If you’ve been exploring these concepts with your customers, congratulations. And if you’re thinking about it but not sure where to go with it, I’ll be adding to these posts and going into more detail on many of the attributes and why I believe they are important, and how you can act on them. Peter Drucker said, “the true purpose of a business is to create and keep customers.” Doing it in a way that leverages your unique abilities and creates a market differentiation will help lead you to a more profitable outcome.
Please share any thoughts or ideas you have on this. Good luck and remember, doing nothing is not an option.
Mike Philie can help validate what’s working and what may need to change in your business. Changing the trajectory of a business is difficult to do while simultaneously operating the core competencies. Mike provides strategy and insight to owners and CEOs in the Graphic Communications Industry by providing direct and realistic assessments, not being afraid to voice the unpopular opinion and helping leaders navigate change through a common sense and practical approach. Learn more at www.philiegroup.com, LinkedIn or email at firstname.lastname@example.org.