All Customers are NOT Created Equal

Introducing the Perfect Prospect Model for Measuring True Customer Value

Quick! think of your best customer. Are you 100% sure they’re your best customer? What is it that made you pick that account? Would everyone else in your organization agree?

Over the past year, I regularly have conversations with companies about how they evaluate their customers and the results are all over the board.

The most common answer is revenue. They simply look at who has spent the most money with them and award them the best customer trophy. Other companies look at revenue and direct costs to calculate a basic customer profitability metric which is certainly a step in the right direction. And a surprising number of organizations don’t give it any thought at all — one customer is much like another and they’ll take any of them. Their hope is that the good and bad balance out over time.

Higher performing companies, however, use data and expert knowledge of products and market to evaluate and discern the good and the bad through a Perfect Prospect Model.

As I work with companies to implement a Whole Company Selling program where everyone in the organization can understand value and communicate it to their prospects and customers, a critical early step is valuing their customers.

The Perfect Prospect Model is how we evaluate and quantify the holistic value of a customer so that an organization can:

· PROSPECT BETTER | Pursue the right prospects that have the best chance to grow into valuable customers

· EFFECTIVELY MANAGE CUSTOMERS | If you have great customers, you should be rewarding them while unprofitable, high maintenance customers need to be jettisoned

· INNOVATE PROFITABLY | Make data-driven decisions around investments and innovation

· ALIGN EMPLOYEES | Clearly articulate to the entire company (especially sales) who to target and why

In the coming weeks, I’ll be sharing a whole list of variables that you can consider when assessing your customers. This includes not only the obvious monetary metrics like revenue and direct costs but also the equally (and sometimes even more) valuable partnership concepts like brand prestige, strategic alignment, innovation partnership and more. I’ll also be addressing the negatives — variables that degrade the value of a customer like complex sales processes and demanding procedures.

Ultimately, you’ll be able to craft your own Perfect Prospect Model that contains those things that matter most to your business and where you see it growing.

So, the next time some blog asks you to name your BEST customer you’ll be able to shout out the answer with 100% confidence. Alternately, you can skip the shouting and just proceed directly to selling more to those perfect prospects and continuing to grow your best customers.

Tune in next week for the second article in this series: Beyond Revenue & Costs: Calculating TRUE Customer Profitability

Julie Holmes is a sales & marketing advisor, speaker and Whole Company Selling leader. She works with B2B companies that want to sell more and increase their customer lifetime value through Whole Company Selling.

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