Train your customers to be profitable
Posted on January 20, 2014 by Nina Segura, One of Thousands of Leadership Coaches on Noomii.
Increase your awareness of these customer behaviors and gain profits along the way.
Did you know that one of the best ways to create customer value is to have your customers create it for you? In effect, you can train them to exhibit even more profitable behaviors.
Based on my years as a business owner, and now business profitability coach, I’ve identified three types of profitable customers. Increasing your awareness of these types and their behaviors will give you the knowledge to train your customers to exhibit more of these profitable traits.
The 3 Essential Customer Types
1. “Loyal Royals.” These are customers who purchase repeatedly over time, who may be considered high-priority customers. But keep in mind that “loyal” or “best” does not necessarily mean they are the most profitable (i.e., just because they keep coming back to you doesn’t mean you make the most money from them).
How to train: When someone inside or outside your company uses the phrase “best customer,” ask yourself what that means. What actions specifically make him or her a best customer? Then ask yourself what draws this type of customer to your business. What is it that we do, or can do, that adds consistent value for them? On a different note, consider whether you are overproducing in an area that these customers do not find to be valuable.
For example, we recently created a business interaction model for a customer service group that advertises free overnight shipping. By breaking down their sales process from beginning to end from the customer’s perspective, our client learned that not all of its “best” customers needed nor wanted overnight delivery. This company now offers its “best” customers several delivery options, thereby reducing unnecessary internal costs while still providing customer value.
2. High Rollers. These customers spend significantly more than average on a consistent basis. However, one large buy that pushes up the average is not what you’re looking for if you want to stay in business. High rollers expect our time and attention. Further, they expect that their request will be fulfilled exactly the way you said it would be. So even if these customers’ invoices are consistently high, they may take a toll on your business by complaining too much or taking up too much of your time. As such, you’ll want to ensure you know all you can about what motivates their actions. Then you have an opportunity to determine what you can do in order to create fewer headaches. And if you lose them down the road, you now have a better idea of how to replace them.
How to train: Stack and rank all invoice amounts for the past three months and determine which are above the average spend. Without creating a long statistical analysis to predict future purchase patterns, ask yourself what factors led your customers to these purchases. For example, was product availability a factor? Are these seasonal purchases? Is a common sales person consistently involved? These answers will also lead you to understanding what cross sell, upgrades or pre-order offerings you can offer.
Finally, if you can’t provide their desired experience, ask yourself what the next best thing is that you can do? Where might other customers, with similar needs to theirs, be found?
3. Advocates. These customers refer others to your business. But they may not be your most profitable customers. A referring customer may not necessarily be a loyal customer. If this sounds counter-intuitive, think about this example:
In my hometown, there is a Mexican restaurant called Baja Café and for many in my town, it’s spoken of as the “best Mexican place in Boca Raton.” I don’t like Mexican food, but my family does. So if in the course of my business or personal networking, I’m talking to someone interested in good restaurants or Mexican food in particular, I will confidently recommend Baja Café without hesitation. I’m a great referral source—based on the referral of others!—but I’m not a loyal customer.
How to train: Following the sale of your product or service, you can identify advocates by asking them, “Based on your experience would you recommend our product/service to another?” If they say yes, make sure you follow up with them to understand how you can make it even easier for them to refer others, perhaps through a “refer a friend” or “two for one” offer. You could also try an easy-to-remember URL, a Facebook fan page or a “family and friends” shopping day.
Remember that “advocates” or referral sources may be among the hardest to identify yet the most important to train.
By taking the time to identify profitable customer behaviors, you can train your customers to add more value to your business and even learn where to find more of them.
