We’ve all heard that old saying that 80% of your revenue comes from 20% of your customers. And, for the most part, that old saying is very true. That’s why it’s so important to work closely with your existing customer base – especially your best customers.
You should always keep existing customers informed of new products or services, or any new opportunities and/or ways to do business with you. At the least, simply communicate with them on a regular basis. This makes for a healthier and more profitable relationship.
But how do you determine which customers are your best customers? When working with Challenger Brands, we like to use a proprietary rating formula that helps our clients identify which of their customers are actually their best, and most profitable, customers.
This model is called the Gumas Best Customer Profile. This formula weighs specific customer performance activity, such as when they last bought, how frequently they buy, how profitable they are and how easy they are to work with, to create a model of your “real” best customers.
Here’s how we do it.
We rate each customer from 1 to 4, with 1 being the lowest score and 4 being the highest. We provide each customer with a score for the following:
(A) When they last bought (1 – 4),
(B) How frequently they buy (1 – 4),
(C) How profitable they are (1 – 4), and
(D) How easy they are to do business with (1 being difficult and 4 being easy).
Add the scores together (A + B + C + D) to get a total for each customer. The highest total scores suggest which of your customers deserve your most attentive service.
Give this simple system a try. It will help you identify those customers who are truly your company’s most valued and profitable customers.