Time to say good-bye to your customers.
When you think about your business, do you ever think “Hey, it would be good to lose some customers!”? Probably not. Business is crucially fixed around customers. Or is it? Let’s remind ourselves: Business can only survive, not if there are enough customers, but if there is enough revenue and growth.
Attracting customers alone is not the be-all-end-all. Honing-in on the right customers, however, is. Every business has a mix of customers who contribute to the overall picture, but only some of these, if lost, would really impact the bottom-line. Knowing which customers provide the most tangible benefit, understanding their needs and nurturing these through the customer life-cycle into loyal brand ambassadors is a must for any business seeking to maximise revenues and use resources wisely.
It is here that risk-aversion often hinders progress. Leaders who hold on to customer cohorts which rob their teams of time and effort with little ROI, are not doing anyone any favours. Sure, some customers can be nurtured into a deeper relationship throughout the customer life-cycle and brought on-board with the purpose of converting these to higher value customers. Too often, however, companies do not make the move away from trying to convert the hangers-on to strengthening the relationships with their prime assets.
Marketing strategies must be about the future and longevity, unless our business model is fixed around short-term wins. Marketing strategies need to evaluate input versus output per customer capita, then make focused, bold recommendations towards segmentation, not only by demographics, but by tried and tested importance to the business.
While this might seem crude, it is essential in the good stewardship of corporate finances, human resources and time. Does that mean we never look after the less-value-add customers? No, but we prioritise the effort that goes into each cohort and re-evaluate how long certain customers have been with us and whether we can move them on. We also look at whether our time and resources are best spent on higher-value customers. Value here does not necessarily mean direct financial value, but can be worth the effort due to the inherent value proposition around reputation and brand recognition through association.
Many a leader will align themselves with the 20/80 pareto principle, but yet lack the confidence to cut where necessary to actually achieve this. It is here that marketing professionals need to move away from simply being the ‘guys who produce leaflets and ads’ to adding clear, data-driven value as well as effective challenges towards the business. While they are often seen as the customer-care champions, they must be outcome-focused and dedicated to driving business and honing quality customer relationships.
Losing resource-absorbing, non-profit-bringing customers will free up your business to drive higher per-customer revenue, which, of course, frees up money for investment and growth. Not doing so, will, eventually, create stagnation and the perfect opportunity for competitors to overtake even the most renowned businesses.
So, next time you consider your customers, ask yourself: “Shall we dare to lose some?”
To find out more about our marketing audits and strategy consulting, contact Jutta on 07824 897976 or email her at email@example.com. Let’s meet to see how we can help you focus on key customers and move others further along the life-cycle.
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