Customer Valuation and Maintenance
One obvious indicator of customer value is profit. Both the amount of money you have made in the past from a customer and the amount of money you anticipate making in the future are important, but they are not the only indicators. The number and quality of leads you receive from a customer, for example, may also be important. Once you have identified these indicators, you will be able to measure your customers against them, ranking their value to your company. You may still need to use your best judgement, but a systemized approach will give you a much better indication than you would have without it.
We’ll begin by creating three or four basic categories into which we will place all of your current and future customers. For example, you could have Bronze, Silver, and Gold level customers. A truly outstanding customer could be ranked Platinum. Of course this will depend on your business. If you run a retail store, for example, you may wish to simplify the process by dividing your customers into “regular” and “VIP” customers.
Over time, your relationship with your customers will evolve. Some will do more business with you, some will do less business with you, and some may disappear. Consequently, it is important that you review their status from time to time. If a customer moves up from “gold” to “platinum,” for example, this should be noted and the customer treated accordingly.
While you will be designing a method for quantifying your customers' value to your business, keep in mind that to a large extent this is still very much a subjective exercise. As a result, it would be a mistake to be too rigid in applying the standards. If you feel that a customer should be a Gold customer when your system has identified them as a Silver customer, then by all means, go ahead and rank them as a Gold customer.
Customer Valuation System
Design your Customer Valuation System. This will identify who is responsible for valuating your customers, how they do this, when it happens, and any other details that may be necessary.
A lifelong customer is worth a great deal more than one sale, but how much more? When you factor in all of the variables, it may surprise you to know that even your smallest customer is probably worth more to you than your largest sale. This shows the tremendous value of nurturing your customer relationships.
One of the keys to developing and maintaining lifelong relationships with your customers is regular communication. Unfortunately, not only do you have a lot of customers but you and your employees are busy. As a result, you may be tempted to leave this vital activity in the hands of your customers, assuming that if you do your job well, your customers will be back. Certainly there is some truth to this philosophy, but leaving the responsibility of maintaining your relationships in the hands of your customers is a risky proposition. As much as they might appreciate you, the less contact your customers have with you, the less loyalty they will feel towards your company. As the saying goes, “out of sight, out of mind.” So if your customers are important to you, you need to take the responsibility for your ongoing relationships into your own hands.
The solution is your Customer Maintenance system. By following an organized plan, you can easily and effectively maintain any number of customer relationships to a level well beyond your competitors, and in doing so, solidify your customers’ loyalty. The trick is to find valuable reasons to put yourself in front of your customers on a regular basis.
“My florist has a great way of making each customer feel important. Her customer files are set up as such to remind her to call each customer at the beginning of each month with reminders on what they sent to whom last year. This not only helps the forgetful customers of upcoming important dates, but also gets her the repeat orders, making lifelong customers.“
Your goal is to become your customers’ primary resource regarding your industry, without sacrificing an inordinate amount of time or resources. If you run a hair salon, for example, your customers should come to you for advice when purchasing a new type of shampoo. They may buy it from you or they may not, but if they consider you their best source of advice concerning their hair, you can be sure they will continue to use your services for a good long time.
"One of the most important lessons of business - the value of concentrating on the customers you have."
Customer Maintenance System
To design your Customer Maintenance system, begin by making a list of all of the ways you might communicate with your customers. This could include anything from monthly phone calls, to quarterly newsletters.
“The Xerox Corporation started systematically surveying customers. Jan Hess, manager of customer satisfaction management system, said, "We realized we were meeting internal specifications such as copy quality and speed, rather than customer standards." After finding out that fewer customers were satisfied than they thought, the company redesigned its copier and also developed an ongoing system to gauge customer satisfaction. They now send out questionnaires to about 50,000 randomly selected customers monthly. The goal is to solicit feedback from all users.“
Next, come up with a maintenance system that will deal with each of your customer categories (i.e. bronze, silver, gold, and platinum) in relation to their value. For example, you may wish to budget more money or time for your more valuable clients.
And finally, simply drop each new customer into your system. Keep in mind that you don’t need to be the one who does all of the work here. Anyone can send a newsletter, for example.
Read through the following methods of staying in contact with your customers. What could apply to your business? Add any additional ideas you have at the bottom.
- Follow-up calls to sale
- Feedback forms
- Update your customers on new products or services
- Special occasion calls, cards, etc. (e.g., birthday, holidays, end of the year)
- Thank your customers for their business (or referrals)
- Corporate gifts
- New catalogues
- New products
- New services
- Upcoming seminars
- Magazine or newspaper article reprints
- Sending referrals
- Newsletters (or blogs)
- Quality checks
- Servicing reminders
- Magazine subscriptions
|Corporate Gifts||N/A||N/A||$100 value/yr||$500 value/yr|
|Newsletters||Hand out or email||Send quarterly||Send quarterly||Send quarterly|
|Customer Satisfaction Calls||N/A||Annually||Semi-annually||Quarterly|
|Sales follow-up calls||After all sales over $1000||After every sale||After every sale||After every sale|
Be sure to categorize your clients and initiate your “customer maintenance system” as soon as the sale is made. It is important to reinforce their decision to purchase from you. Not only will this remind them that they made the right choice, it will have the side benefit of showing your clients how organized you are. Organization helps to instill confidence and trust; two major factors regarding customer relations.
In this chapter you should have designed, shared, and made a plan to review your:
- Organizational Structure for Sales. (Updated as necessary)
- Customer Maintenance System.