Segment your clients

Today I want to talk to people who describe their activities as business-to-business. People like me who think of themselves as serving clients rather than customers.

When you offer a professional service, it is very important to segment your customers in terms of the benefit they bring to your business in exchange for the effort they demand.

The benefits to your business obviously include revenue potential; the value of retainer income; future growth opportunities; potential for positive case studies and of course referral.

Balancing those we have the physical and emotional stresses that client relationships impose on your business. Demands for attention; wrangles over pricing; collecting money; abusive behaviour; reputational damage and corruption.

All these conditions exist, but you’re unlikely to find them all in a single client relationship. Especially if there is mutual trust at the highest level.

Bertie Forbes, the Dundonian business writer who went on to found Forbes magazine was perceptive man. In this particular context, he once wrote: “If you don’t drive your business, you will be driven out of business.”So, the issue business-to business enterprises must focus upon, just as strongly as their B-to-C cousins do, is customer relationship management. By which I absolutely do not mean “doing everything the client tells you to.” Instead, you have to manage your behaviour and theirs in order to find a way that works for both of you. Or doesn’t, in which case you should part company with good grace.

Much has been written about the Customer Loyalty Ladder. Moving customers gradually up a conceptual framework from Prospect to Advocate. It makes sense, and should indeed be a part of any relationship management strategy. But the bit we always forget, until the relationship has begun, is the bit about us.

Years ago, I decided that the best way to address the many threats posed to suppliers by malign Procurement Teams was go on a Procurement Management course. I learnt many valuable things; not least that Procurement is meant to create a win-win sustainable relationship for both parties. (Not an opportunity to put a thin gloss on institutionalised corruption).

I also learnt how Procurement professionals segment their suppliers into four categories, dependent on the likely benefits accruing to different levels of engagement.

On two axes, one of ‘effort to manage’ and the other ‘financially important to our business’ we were taught to divide suppliers into Develop; Maximise; Minimise and Eject. Harsh terms, but clear enough for anyone to follow.

The overall point being that you need to focus your efforts on developing relationships that are critical to your business success or have the potential to be so in future. Prioritise your efforts on likely returns.

 

 

Chris Harrison leads The Brand Inside in Africa.

 

www.thebrandinside.com

 

 

 

 

 

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