Is customer loyalty a strategic priority? If you are in a repeat selling business - more of the same - most likely not, but if you are in a cross selling business - a customer can access the portfolio of products we offer - then the answer is YES.
So we are interested in segmenting our customers and the best way is through two variables Satisfaction (high and low) and Linkage (high and low). Read identification as: contractual / plans, emotional).
When we relate these two variables, we can classify clients into: Apostles, mercenaries, hostages, and terrorists. The idea is to know which of our clients are located in each quadrant. This assumes studies of secondary and quantitative sources. (data mining and attributes that it values the most and how it is in relation to those attributes).
When satisfaction and bonding is high, we find apostle clients, who are the ideal clients that companies should have. If the relationship is the reverse, satisfaction and low connection, we will have the terrorist clients we deserve. This classification of customers is "mandatory" to design a plan to manage the relationship (CRM) and then interact.
It is very natural to treat all clients in the same way as if they are all the same. This is a mistake, given that among our clients we have those that allow us high margins, with relatively low commercial costs, with high consumption and we also have clients who buy little, but they generate many problems for us. Treating customers differently should not be "mistreating customers." Clients who will always be right will be those who contribute the highest margin to the Company, that is, the most profitable.
The usual thing is that although we have "terrorist" clients with whom money is lost, we do not pay attention to them, since the "apostles" clients compensate us and in the end our income statement is positive. But what if we turned all "hostages, mercenaries and terrorists into" apostles? What would be the impact on the income statement?
In a practical case of one of our clients, we find these data:
| Number of clients | % Of total billing | % Profit contribution |
| 8 | fifty% | 55% |
| twenty | 40% | 40% |
| 72 | 10% | 5% |
Does it seem logical that we dedicate the same resources to the 72 clients that represent 10% of the turnover and 5% of contribution to the profits, as to the 20 clients that represent 40% of the turnover and 40% of the contribution of the Benefits?
If we think of a company that has an activity-based costing system, there are many processes and sub-processes that are independent of the size of the order or customer, so they will be very profitable for large orders / customers and very little otherwise. Examples of these sub-processes are from a business visit, some internal logistics costs, or sales administration costs. So why not make more efforts to know and segment our customers? Clearly, it is difficult to manage individual clients and more in companies that have more than 10,000 clients, especially in cases of retail sales; therefore the concept of identifying and differentiating (segmenting) is vital.
Segmentation can be very simple based on elements such as billing, geographic area or distribution channel, or it can be more or less complex based on customer behavior. For example, in the chemical sector, we define a segmentation model based on customer needs similar to the following:
- Convenience seekers (they are concerned about service) Price Mercenaries: (price is the biggest purchase motivation). It is an interesting client for Cías with differentiation strategies in costs. Brand buyers (the brand is the main inducer of purchase). Indispensable quality (quality is its basic parameter). Relationship seekers (they seek to have a high level of relationship and fidelity). This customer profile usually has a high acquisition cost but it also has a low loss rate. Look for few providers.
In addition, it is necessary to identify the specific segments of each particular case. To validate a segmentation model, other parameters such as customer profitability, customer satisfaction, purchase frequency, average order size, price sensitivity, etc. must always be taken into account. and it can be crossed with a customer scoring system such as RFM (Recency Frequency Monetary) and the like.
Finally, we all have “Apostles” but also “terrorist” clients, so having an appropriate methodology to identify and manage them properly will greatly help the profitability of the company. - serves for direct marketing, resource allocation, relationship management and value proposition for the customer.
