Optimizing Your Customer Portfolio: Who’s Covering Your Tail?


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It makes perfect sense especially in B2B environments at least, for the ‘Key Accounts’ to get the lion’s share of resources and focus. It is obvious why. Any defection leaves a nasty hole to fill and we have all heard the mantra about finding new customers costing half-a-dozen times more than keeping existing ones sweet.

So what you will see in companies is a typical customer pyramid – fat and wide at the bottom, thinning to a point at the top.

But what about the ones near the fat end of the pyramid?

If anyone has had the pleasure of waiting for a London bus, you will have been struck by the way, long after it was due, that suddenly three turn up in convoy! Well, I had a similar experience the other week but instead of buses, it was people asking me about using customer feedback to keep connected and relevant to their ‘long-tail’ customers.

One example was that of a European bank. It had a pyramid of customers which it segmented from A (at the top end) to D (at the bottom). Conventional wisdom was leading this bank to sell off its ‘D’s so that it could concentrate its resources on the bigger spenders within its portfolio of customers. However, first of all it audited its customer base to look not just at revenue, but also profit contribution.
What amazed this bank was that the tens of thousands of smaller spending customers collectively were worth a huge amount and contributed greater profits than the fewer bigger spending A’s B’s and C’s. The bank decided it ought to keep hold of these D’s, and not sell them. The trick though, was how to keep connected to them without substantially increasing costs?

Another example was a services organisation. The managing director told me that they know very well what is going on in their large accounts, but only find out at contract renewal time whether or not they have done a good job with the smaller ones who get the occasional visit only. Very little additional effort or thought goes in to identifying high potential customers for the future, leaving the ‘long-tail’ at risk.

I had similar conversations with two other very different organisations, both of which recognised the vulnerability of their long-tail customers. Given the current economic uncertainties this makes me think that we ought to invest some of our attention towards these customers, and figure out how we might serve them better without incurring higher costs or diverting resources focused on the larger opportunities.

As a start, I’d recommend using touch-point feedback as well as the annual or bi-annual relationship surveys, in order to keep a close eye on customer concerns and issues. Real-time analysis and alerts are essential components in being able to save ‘at risk’ customers.

In large account situations, you would expect the account or customer relationship manager to immediately react to any low score. For smaller accounts this might mean a phone call to clarify the customer issue and explanation of the process for getting it resolved.

Strategic analysis will also identify the big levers to fix in order to address common issues.

Whatever the answer, this begs the question – ‘who is covering your tail?’

Jeremy Cox
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.


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