Alan Joenn
posted by Alan Joenn on February 1, 2013
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This week’s CRM Whiteboard video is part one of a two part series looking at how to define your customers within your CRM tool. From most profitable, to most growable.

Transcript

Hello, and welcome to this CRM video whiteboard session. Today we’re talking about customer classification in CRM. This video is number of a series of two, and concentrates on financial analysis for customer classification.

Now, there are various ways of analysing customers in terms of financial spend, but this method has great merit in our opinion.

The first thing to do is to rank your customers into groupings against the potential spend they might have. Convention would normally say these are A, B, C and D group customers, and within each of these ranking you can now track the actual spend, the revenue generated by people within these groups, measured in whatever way is relevant to the way you do business – on an annual basis, or a lifetime spend basis, however breaking this up into quartiles will obviously give you the ability to 4, 3, 2, 1, rank A1 customers as being here, they are already spending with you the maximum amount of money they could based on products and services that you provide.

Now, if you look at Pepper and Rogers and their analysis of 1 to 1 marketing that would put this group of customers here the A1, A2 and B2 customers as being your most valuable clients. The people who are committed to the products and services ,they’re either spending no money that they could be spending with you with competitors, or only a little of the money that they could spend with you is being spent with your competitors. These people you will drive with your CRM programme towards ever increasing levels of customer satisfaction. You might have programmes which measure the levels of customer satisfaction and feed that back into improving the services that you deliver to them. And certainly account retention and preventing competitive invasion into these most valued customers will be your goal, and that can be reflected in the way your CRM activities drive contact with these people.

Down here however, are the organisations that Peppers and Rogers would describe as your most growable customers. They’re either target clients spending zero with you at the moment, or you have small levels or expenditure with them in the lowest or low middle quartile which could be developed in this way. Now your CRM programme for you most growable clients, is not focused on customer satisfaction and long term retention, it’s focused on growth and competitive knock out. Therefore the way you use benefit analysis, the way you use return on investment calculations, the way you use case studies and examples will be different here from the way you deal with your most valuable customers.

So these classification enable you to drive your CRM programme and it might be that as you get down to your C and D spending customer groupings, you might take the decision that you will reduce the cost of dealing with these people by for example exchanging regular face to face meetings with these people, replace them with telephone account management, replace bespoke communications by email, with bulk email that goes out using email marketing services and generally being more telephone and digitally based with these C and D tier customers.

So classification in this way can take some time, it can take a little bit of work to get it together in the first place however the benefits in terms of the way the CRM system works for you and your customer touching teams can be immense and we recommend that this analysis is at least worth investigation.

We hope you’ve found this video interesting and worthwhile, there’s more hints and tips on collierpickard.co.uk and in our blog, and thank you for watching today.

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