How to classify its customers (A, B, C and D)
Not all customers are equal. Not all generate the same contribution, nor do they have the same expectations. But more importantly, trying to serve all customers alike can create expectations of care in practice will be unable to meet. Usually for lack of resources or because the client does not generate enough profit to invest more on. It is, therefore, important customer classification because aligns customer profiles with models viable and sustainable care company.
Despite popular belief it says that the customer is always right, in practice the customer is not always right, and not all behave the same. Some are more profitable than others while others are not profitable at all.
Why should classify customers?
Customers have different needs. These needs may include product features, requirements study, frequency cards, lines of credit and even a special profile that serves business advisor. Categorize customers into groups, identifying what is important for everyone, it allows you to serve them better while adjusting its resources to what is able to provide each profile.
While some customers may only serve them virtually, others will be “do it yourself” and others will require you to visit them in person. Their ability to customize their marketing will determine the impact achieved in each group and, therefore, the level of satisfaction and retention.
How to classify your customers
Companies usually classify their clients depending on several criteria:
- Economic contribution: Large, medium and small.
- Status Customer: Customer actual, potential or inactive.
- Geographic location: Grouping by regional location.
- Distribution channel: Distributor, wholesaler or retailer
- Using product / service: Users versus nonusers.
- Industry: Economic sector to which it belongs.
While there is no single criterion for classification, the most common is to do it according to their economic support, depending on the detail that is measured internally in the company, it may be sales, gross margin, or net income (as measured by customer).
The level of contribution and in general the importance of the customer to the company is usually associated with the classification by the letters A, B, C and D. Category A being the best customers, and D those who should not have. Some companies change the letters colors (black, gold, silver), metals (gold, silver, bronze), precious stones (diamond, emerald, ruby), status (Premium, Plus, Basic) and the like, but the principle is the same.
So a good starting point for organizing your business strategy is to classify customers into A, B, C and D.
Customers A – The best customers are loyal to their brand, pay on time and regularly buy. They buy or use more of its products and services, value, refer it and help you grow the business profitably. These are the clients that should focus, of which I would like to have more. Give them special attention and show them your appreciation cultivating long-term relationships. They are clients with whom you want to work. Are usually 15% or 20% of customers, accounting for 70% or 80% of revenues?
Customers, B – Customers are arguably those that lack one or two characteristics of A. You may sometimes not pay on time or that their purchases are not as constant. These are potential customers. The goal is to make customers B in A. The B is good customers who could work and develop to improve their performance. A customer B has the potential to buy other complementary product lines or services.
Customers C – Customers buy less and have less potential. However, when compared to the effort and investment required to attract entirely new customers, C could provide a little more to the business. They are less loyal customers who appreciate less or benefits. The price tends to be more important for this group. The idea is to try to bring them to B.
Customers D – There are only one thing worse than not have customers, and have bad customers. These are the D., In fact, should not be part of its customer base, unless you take specific actions or to improve, or to remove them. They are those in the “black list”. They are customers who do not pay on time, they want excessive profits, require lots of time, do not invest in themselves and always believe they are buying expensive. D customers are those who were forced to accept because it was recommended by your boss, a colleague, a close relative or because they desperately needed to make the sale. Regardless of the reason, customers D are a headache, constantly drawing power and no way to keep them happy. The D should be very few, for the health of your business (and your sanity!). Not to (and should not) have customers D. However difficult there are customers who have to fire.
The quality of customer defined business health
Have very few clients A and B, and lots of customers C and D, is a highly risky equation. Nothing destroys a business faster than bad customers. Have clearly identified their clients A and B, will allow you to design actions to maintain and preserve a healthy business relationship while growing profitably. They are clients that should delight and anticipate their needs.
Although it is not something to be recognized publicly, not all customers are equally important. Not all generate the same contribution, not everyone can pay them as much attention or the same benefits. Pretender serve everyone equally is to ignore the needs are also different profiles and expectations.
Sort your customers so that you can fit different models of service, service channels and marketing strategies, in line with the ratio value of each. That is as far as you can spend on each client so that is profitable and, therefore, sustainable.