Who are your most profitable customers? Its the purpose of data CRM integration software within your company to tell the answer. But what about who do not have properly established CRM system, for achieving most of business objectives it is extremely important to identify and interact with the most profitable customers. These are not the customers who spend large amount of money, rather provide you ways to build business profits by advocating on your behalf and generate more customers.

Who are the Diamonds?
If you find difficulty in identifying follow the Pareto’s (80-20) principle, for a brief recap its the principle that suggests 80% of the revenue comes from 20% of your customer base. This small group of customers pay a fair price and recognize the value you bring and when you are successful in satisfying this segment of customers they pass on the benefits to others and you sit to reap the benefits.

In short they are the most important customers for they are the high volume repeat buyers that are receptive to new products and services, and a happy advocate on your behalf.

Thoughts to Ponder
  • What is the breakdown of customer profitability segments by channel?
  • What are the most profitable customers buying?
  • Who are our least profitable customers?
  • Which products are most often purchased (of our most profitable products)?
  • What services do our most profitable customers use?
  • What are the tangible costs of servicing least profitable customers (i.e., taking inordinate amounts of your   staff’s time, unwarranted credits)?
  • What are the intangible costs of servicing least profitable customers (i.e., abusive to support staff and general aggravation)?          

Now if you have a customer management system, going deep into the customer data would determine where all the profits come from past purchases to identify demographic trends, consumer spending patterns, buying characteristics and lifestyle behaviour that are most likely to drive growth.

So if you cannot identify common patterns that are constantly changing that you end up allocating resources to customers, offers or issues that may or may not add value – to the customer of the organization.

Identify the profitable 20% and then plan to develop a targeted email nurturing and retention strategy, cross selling and/or up-selling to build and maintain long lasting relationships.