Notice I didn’t say unfairly. I said unequally. Unfairly isn’t nice (and isn’t good for business). Unequally is good for business. Why? Because at the end of the day some customers are more valuable to your company than others. This isn’t a new concept for either marketing or sales. Both segment customers all the time in order to know how to be the most effective in their jobs. But sometimes, as small business owners or entrepreneurs, we forget about these basic concepts and end up spending too much time with the wrong people.
Retention vs. Acquisition
Acquiring new customers is much more costly (in both time and money) than retaining current customers. So, from a business standpoint it makes sense to make sure that your current customers are happy. Spending resources on good customer service is vital to happy customers (some of which will share their happiness or unhappiness with their own network).
Customer Lifetime Value
Certain customers (or types of customers) will have more lifetime value to your company than others. For example, if you have a variety of products, some of which are one-time purchases and others are sold on a subscription model, there is a different lifetime value for each type of customer. Generally, customers who are loyal and repeat customers are more valuable to your company than those who will only purchase from you once. This distinction is important because keeping loyal, repeat customers happy is more important than spending a ton of time keeping people happy who will only purchase once (which isn’t to say that you shouldn’t try tactics to turn one-time customers into repeat customers).
Customer Influence
There really isn’t any way to get around it: certain customers have more influence than others. These people have larger networks where more people listen to them. Celebrities are used in advertising because they have a great deal of influence over people who like them and listen to their recommendations. The same is true for any company. There are certain customers who have more influence than others. Giving these people just a little bit extra (attention, specials, etc.), can go a long way to improving your bottom line.
Segmenting by Value
Understanding the value that certain customers bring to your company is vital for effectively allocating resources for the best return. This isn’t to say that you should treat people like numbers, but it is important to recognize that different customers have different wants and needs. Some customers are perfectly happy to buy from you without very little effort on your part. Some need more handholding. It just makes sense to recognize when you’re spending too much time on the wrong person who has no intention of buying from you again or who you’re spending more on than you will ever make (aka, when it’s time to fire that customer).
What are your thoughts? Do you treat all your customers the same?
(photo by LifeSupercharger, on Flickr)