“What do you know about the demand of your most profitable customers that your competitors don’t know?” (I came across this question in a new book: How Companies Win by Rick Kash & David Calhoun. I’m going to write a review of it soon – great book!)
When you can answer this question clearly, you can take action to keep your business healthy and stay competitive. If you understand who your most profitable customers are, you can better anticipate their unfulfilled needs. Now, THAT’s a competitive advantage!
I love this core question because it asks tough customer questions:
1) Who are your most profitable customers?
2) What is their underlying and emerging need?
Let’s dive in a bit deeper into these 2 subquestions.
Part 1 is a tough question (who are your most profitable customers). Do you segment your customers today? If not, now is a good time to start. When you have customer segments you can better meet their needs and send them more relevant communications. (Which will get you more sales or referrals.) Customer segments can be defined by buying cycles, by buying levels, by industry, or other demographic or psychographic information.
What makes a customer profitable to you? Your most profitable customers may be those who buy more than X times a year and never call customer service. Or perhaps they’re customers who renew annually for over 5 years?
It’s important to come up with your own definition of which customers generate the most profit. Don’t just look at revenue gained from your customers – think pure profit. For example, if you have a segment of customers who regularly buy from you but also require a high level assistance – customer service or otherwise – they may not be your most profitable customers.
Part 2 (the underlying and emerging needs of your most profitable customers) is also tough because you have to find out the best way to keep learning about your customers.
You may have heard of a “learning relationship”. It means you need to continuously learn about the person you are in a relationship with. The more you understand their unmet needs, the better you can address them.
How are you listening to customers today? Sure, your business may conduct surveys – but are you mining them for insights about untapped customer needs?
Here’s a quick way to get to the heart of ideas that could make your customers love you even more! I’d suggest gathering together your most profitable customers and talking with them. Listen to what they say about their lives, their needs, how they make purchasing decisions and how you are helping them today. They know more about your products (and your competitors) than anyone else.
Here’s the crazy thing: You’ll discover that your best customers love to talk. They relish an opportunity to share their insights and ideas to help a business they like. In my experience, an effective forum is a breakfast meeting with food. You end up listening for a few hours and you’ll be surprised at the ideas they will suggest. In turn, they will be appreciative that you’re listening to them and solving more of their problems/ needs.
An example from the book, tells the story of how Sears held a customer session years ago with their top customers and learned that their customers cared most about the minimum payment on their Sears credit card (shown in the monthly statement). This is where the low minimum payment strategy was introduced to the credit card industry. Talk about a big idea that has been profitable for many credit card companies – born from a customer session.
With more information and insights about your customers, you can think about the hidden opportunities that no one is serving. Seize the chance to stay ahead of the pack by staying closely aligned with your most profitable customers.
