This is the 1st part of a series on 'Customer Energy' - go to part 2.
Maybe it’s better to think first about the Right Customer …
How carefully do you organise your marketing, sales and account management systems to make sure your business attracts, retains and delights the right customers, not just any old customers? This is important – it’s way easier to please and grow with the right customers rather than customers that don’t fit with what you do. The wrong customer can have a terrible effect on your business, the right customer actually improves your business.
We categorise customers into A, B, C and D grades like this:
‘A’ grade Amazing customers love what you do, help you improve, are happy to pay for the value you deliver and actively promote your product or service every chance they get.
‘B’ are your Basic customers, your bread and butter. They buy from you and come back time and again, they might not be your best referrers but they like your product or service and wouldn’t look elsewhere unless you gave them a reason to.
‘C’s are Complex. You may have to adapt your product or service just for them, they may demand different commercial terms or be too price focused. They’ll generally cost you more to serve and will frustrate you from time to time.
‘D’ grade customers actively hurt your business. They don’t pay unless you chase repeatedly, they demand unreasonable concessions and cost a lot to serve. They take up a disproportionate amount of time and business resource and you will be losing money every time they order.
Most businesses I first speak with can think of a handful of A’s, a few D’s and then the bulk of their customer base is a mix of B’s and C’s.
So what do you do with this? Well, think how good it would be to have more A(mazing) customers. To have the time to work with them, to continually raise the bar of what you do. To encourage them to refer you to other potential A’s.
So why don’t businesses focus on their A’s more often? Generally, it’s because the D’s and the C’s make all the noise and most of the business’ resource goes into servicing them. The A’s and B’s are generally quiet because they’re happy.
As an aside for the C’s – this doesn’t necessarily mean they’re bad companies or customers, it just means they don’t fit what your business does right now. Often you can convert a C to a B by spending a little time working out how to make the fit better. But if you can’t make it work, it may be worth considering the value of that customer to your business. If they’re happy to pay for the complexity they need, they could still be a good customer …
… unlike the D’s who are not good customers and can’t be converted. The best thing you can do with D grade customers is have them move on (or gift them to your competitors). Generally a substantial price increase will do the trick. It can be difficult for businesses to work this through, especially if the D in question is one of your largest customers, but in the end it’s worth it to stop the Destruction.
Replace the D’s and C’s with A’s and B’s and your business will thrive. Learn how to attract more A’s and B’s and your business will truly be able to reach it’s full potential.
This is the 1st part of a series on 'Customer Energy' - go to part 2.
