How do you decide which customers are most important?

Summary:

In large organizations, leaders rarely have any influence on how customers are acquired and served.

Customer Profile Dimensions

This chart details Customer Profile Dimensions. Few sales people have the time or interest to bother with this and other customer value guidelines.

If you run your own company, some customers make you happy, some make you groan and others just blend into the background. Although success or failure depends on how you treat them, it is your business; you treat them how you please and live with the consequences.

The way large organizations treat different customers (now depersonalized and called segments) impacts profits and survival. Ironically, as companies get bigger and more successful, people ever lower on the org chart assume responsibility for managing customer relationships. How can that be?

What’s a politically correct CEO to do?

Politically correct CEOs of publicly traded companies must proclaim: “Our customers are the lifeblood of our business. Each and every one of them is just as important as the other.”

Behind the scenes, one or more of these activities are happening:

  • Marketing departments and-or consultants have systems weighing Customer Lifetime Value (CLV), Customer Referral Value (CRV), Customer Influence Value (CIV), Customer Knowledge Value (CKV), Customer Engagement Value (CEV), the 80/20 rule, the 20/200 rule, etc.
  • “Loyalty” programs, major deals, quotas, sales cycle and other factors assure that some customers get more favorable treatment than others.
  • Salespeople — with varying degrees of formal guidelines and-or supervisory leadership — make decisions on what business to pursue during their available work time.
  • Advertising, direct response, trade shows, promotions and other marketing efforts fill the pipeline with leads that may be qualified or assigned automatically through the CRM.
  • Unforeseeable (perhaps unavoidable) supply chain issues require focusing extraordinary resources on certain customers, no matter how much they spend or how profitable they are.
  • The company does not have the people, time and other resources necessary to address every customer equally.
  • Sales people are human; they continuously prefer certain customers consciously, subconsciously, rationally or irrationally.

Climbing a wall without rope or ladder

Putting aside (for now) the leadership-at-the-top issue, few sales managers are looking for universal truths or consensus “best practices” to balance the conflicting needs of meeting immediate goals and sustaining a large, healthy, happy pipeline of prospects/customers. Those who do are climbing a wall without rope or ladder.

A salesman and his customers

By getting to know his customers, this salesman will know how important they are.

Who is responsible for deciding how to value and treat each customer? How are those decisions managed? The answers illuminate the vast chasm between sales and marketing.

A while back, I asked the question How do you decide which customers are more important than others? on the business forum Focus. A lively discussion resulted in 31 posts by more than 15 professionals. The consultants/marketers who commented were virtually speaking a different language than the sales people. They did not disagree. They seemed to be living on different planets.

In the end, the person who wins (or loses) the sale decides

While the marketers/consultants offered valuable input on “targeting/segmentation,” “R/F/M analysis,” “expectancy theory” and other high-level considerations, the sales people — just as intelligently — addressed the practical factors that dictated what needed to be done when. The salespeople emphasized that experience and instinct, would continue to be more helpful than statistical guidelines in determining which lead or opportunity to follow.

Who decides which customers are more important? For businesses of every size, it is the people who are in direct contact with the people who buy and use their products.

When that happens, large organizations inevitably risk tremendous erosion of CLV, CTV, CRV, CKV and CEV. In many cases, they are too big to care.

The solutions include combining top-to-bottom leadership, intelligent sales processes and 21st century sales and marketing technology tools. I will offer details in an upcoming post.

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