Long-Tail Diamond Mine Discovered

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I knew it! There’s gold in them thar hills, or diamonds actually. One of our new clients took the trouble to survey their customers (some 6000) with a view to identifying where they could improve to make themselves a more attractive proposition. Nothing unusual about that and no real surprises, although they now have the ability to rapidly put the fires out – through what we call ‘action management’ (I’ll talk about that in a future blog) but in essence this gives them the means to track and follow up any customers issues that need to be resolved quickly. That by itself marks a significant improvement.

But what is of particular interest to me and which I brought up in my previous blog ”who is covering your tail?”, is that some 75% of their customers don’t spend very much with them. What they didn’t know until now was the answer to the MD’s question – ”where are the diamonds amongst these customers?”

A very smart lady in the marketing department had included a rather cheeky question; ”what proportion of your XYZ purchases do you spend with us?” Surprisingly the vast majority of customers didn’t mind telling them.

As a result this clever lady produced a graph showing revenue in descending order – from biggest spend with them down to least, which of course they got from their financial system. But then she superimposed potential revenue, now they had a rough approximation of customers total spend.

What this showed were some hidden peaks amongst their ‘long-tail’ customers. These are the ones the company will now focus some attention on. These are the hidden diamonds the MD is so interested in.

No one would have given these customers a second thought before.

Jeremy Cox
CustomerSat
Jeremy Cox leads the European sales effort for CustomerSat. He gained insights into the challenges of evolving from a product-centric to customer-focused business as a change leader in IBM during the mid- to late 199s. He lives in Yorkshire with his wife and two teenage children.

2 COMMENTS

  1. Hi Jeremy,

    What’s on the next page of the story? What did the company do and to what effect? I’m very interested to learn the process and outcome. I tend to agree with you – too many companies look at current sales and not future potential.

    Francis Buttle

  2. Hi Francis it’s early days they are at the stage of figuring out what to do, but it is likely to involve specific approaches to the individual high-potential companies to understand what it would take to encourage more spending. They are unlikely to spend any time with the zero potential. As such I anticipate they will become more productive as well as gain deeper insights into competitor strengths and weaknesses.

    By the way my son has just landed in Aus on his gap year – 3 months, before going to Durham for maths and economics – if you need some temp just let me know!

    All the best and great to hear from you Francis. Contact me directly for other info on long tail strategies.

    Jeremy Cox
    European Sales Director CustomerSat Inc
    [email protected]

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