The High-Value Customer of Tomorrow

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John has been in sales for years. Until a few years ago, he spent about two-thirds of his time on the road wooing clients. John’s travel partners — hotel chains, airlines and his credit card company — all showered him with special treatment to earn his loyalty. Then John was promoted. Although he still travels frequently, more often people now come to him.

One of John’s travel partners monitors their high-value customers carefully, but they made a mistake. When John’s travel costs declined, they decided he was no longer as valuable to them. The personal touch disappeared and his benefits were yanked with an impersonal “to serve you better” note.

As the senior sales executive, when the time came to evaluate the quality of potential long-term partners, John had little trouble assessing whether this company would rise to the top, or fall to the bottom. As so many companies do, they defined high-value customers by looking at spending trends today. By narrowing their definition to the most obvious data, they missed John’s whole company’s high-value customers of tomorrow.

Who is The High-Value Customer of Tomorrow?

Certainly, you want to be as profitable as you can be today, but not at the expense of tomorrow. Where are the high-value customers of tomorrow? You can get a foothold in realizing who they are by looking at today’s.

Start by seeing where today’s high-value customers came from, especially those who recently joined the list and those who are falling off, to gain insight into finding your most profitable customers of tomorrow.

  • Where did your current high-value customers come from? Are they from a particular marketing channel or a promotional effort? Did they begin with a different product or service? Test your findings to get a better understanding of whom you’re most likely to convert and how. When you have a solid understanding of what attracts them, consider testing parallel groups with similar needs to expand your pool even further.
  • What do less profitable customers have in common with your high-value customers? Do you have occasional users or influencers in your existing customer base that can be converted? Is one of your smaller customers taking over competitors — perhaps competitors using alternative suppliers? Consider why your high-value customers consider you as their best alternative. Then mine your existing customer base for others that have the potential to realize the same value.
  • How did today’s customers become high-value? Many probably didn’t start their initial relationships with you as high-value customers. Identify the primary paths your high-value customers have taken. Should a change in customer contact name trigger activities that maximize sales growth under the new manager? Do currency fluctuations beyond a certain level or certain trade policy changes create greater opportunities? Or do shifts between certain products or services signal early signs of growth? Identifying tomorrow’s potentials and building your relationship today will require far less investment than trying to woo back a former customer tomorrow.
  • What about yesterday’s model? What has happened to yesterday’s high-value customer? Why aren’t they high-value any more? Has the customer entered a new age in their lifecycle where they just don’t need us anymore? Was it our pricing? Our service? Have we been displaced? Perhaps they decided to take our function in-house? Did they eliminate it altogether? Whatever the transition point, consider what it can teach you about your current high-value customers, and those of the future. What can you change, and when is it time to stop investing?
  • What is the potential impact of product changes? When you add or modify products, consider where it will significantly increase or reduce the value you’re providing to your clients.

Reading the Future of Bar Codes

As an example of how technology affects high-value customers, consider the bar code reader. Once, they were all similar to the ones at your local grocer’s check-out counter: a stationary reader over which you pass the item’s bar code. Everywhere bar codes were used, the product had to be brought to the reader. The manufacturer assumed the market for its new portable reader was the same as that for its old stationary reader market. They didn’t think about the many new possible uses for the portable reader.

This simple oversight of the new feature’s impact ultimately carried a great cost to the company. Priced too low for the dramatically increased demand, supply chains were not protected for their most valued customers, and even those who received the product were disappointed by the quality of a manufacturing process pushed beyond capacity to meet demand. Quality, reputation and relationships in tatters, the company’s ability to fight off new competitors was significantly weakened and its long-term profits irreparably lowered.

  • Predicting the road ahead. Now that you know what a future high-value customer looks like, what can you do to increase the likelihood that they’ll be yours? What traits tell you who is most likely to convert? Not all predictors are equal. Consider what traits are simply correlated versus those that signal a change. Be mindful of your assumptions; what changes might make that relationship cease to exist? How predictive is your measurement: can these traits predict historical customer behavior? If not, can efficient small-scale tests help validate and prioritize investments? Early identification and special treatment for future high-value customers can produce far greater returns on your investments than simply applying the same great tactics to your customer base as whole.

Using Your Discoveries Effectively

Identifying your high-value customers reveals more than who has the largest sales volume. It simultaneously provides the means to accelerate your growth and reduce your costs. As management guru Peter Drucker once said, more often it’s about what you need to stop doing, not what you need to start. Identifying your high-value customers of both today and tomorrow:

  • Defines what elements of your offering provide the most value, and those that provide the least
  • Reveals your biggest advocates, and what could change their minds
  • Identifies your most effective marketing messages, channels and tools, and the brand perceptions that support them
  • Creates a more complete and nuanced view of who your best customers are, whether today or in the future
  • Provides a rubric for prioritizing your efforts.

So don’t settle for simply determining who generates the most revenue, or which accounts generate the largest profit margins. Instead, aim to understand the bigger value equation. It will be one of the highest value activities you perform.


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