In our latest Customer Engagement video on customer value, John Strabley – Quaero’s Director of Professional Services Consulting – discusses how you can obtain customer insight and in turn drive additional customer value and increased revenue.
What is customer value? We can derive customer value by looking at several factors: historical value that the customer represents, expected value over time (what we can expect from this customer going forward) and the unrecognized value (difference between expected and total potential value). We can see what percent of spend we are capturing vs. potential share of wallet and look at which sources drive high value customers.
From here, we can begin to tier customers by value. Pareto’s 80/20 rule typically applies. Your top customers typically generate 80% of your revenue; you want to retain them, understand who they are and acquire look alikes to improve your customer mix and grow the overall value of your company. With this information and the right strategy, you can begin to determine how to grow the tier 2 customers into tier 1 customers and how to make the bottom tier more profitable.
Many companies struggle with where to start. This is an evolutionary process. We start with the data that is on hand, looking at both qualitative and quantitative information. You will never have a perfect data set but you can look at what you have and evolve from there, moving from a transaction level of data to the financial level of data. From there, you can build predictive models – forecasting of expected value. This can help drive programs to capture additional customer value.
