Develop a Service Strategy How do you service existing customers? And how should you structure your customer service or account management function? Do you need highly skilled account managers to work with customers on a day-‐to-‐ day basis, or can you handle most of it via your website? Use this exercise to evaluate the needs of your customers and build a strategy that works. For each customer segment, think about how your average customer buys as well as the value you provide versus your competitors. Customer segment
CRITERIA TO CONSIDER
YOUR RESPONSE
Operational excellence / cost leadership Product leadership / innovation Customer intimacy / solutions
What is your primary value proposition for this segment? How frequently do customers in this segment purchase from you?
Frequent / ongoing Infrequent / sporadic
How do you handle a customer’s order – via personal contact or an impersonal system (i.e. your website)?
Personal Impersonal
What is the average lifetime value of customers in this segment (relative to other
High – customers in this segment deliver the most profit to the company
segments)?
Moderate value compared to other customer segments Low value
Very important
How important is this segment to your company?
Moderately important Low importance
Customer profile: Review your responses to the answers above, then choose the profile that best matches your answers.
Purchasers focused on cost, easily lured away by a better offer Frequent purchasers with impersonal contact Frequent purchasers who buy via personal contact High value customers with high importance, lots of personal contact
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CRITERIA TO CONSIDER
YOUR RESPONSE
Repeat the analysis for each customer segment. Next, use the table below to match your customer profile with management & retention tips that are appropriate for that profile. Once you’ve identified the important elements in your strategy, you can use customer retention and other Marketing M.O. exercises to create campaigns for those profiles. Customer segment
CUSTOMER PROFILE
Purchasers focused on cost, easily lured away by a better offer
IMPORTANT ELEMENTS OF YOUR MANAGEMENT & RETENTION STRATEGY Monitor your competition to make sure you’re delivering the best price. [Pricing can help] Have your account reps share customer comments concerning pricing. If a customer is complaining about your price, they’re probably shopping your competitor. Calculate the average lifetime value and purchase frequency for customers in this group, then run a regular analysis to see which customers have fallen behind the averages. Those customers are at greater risk of defecting; you can create a special offer that your account reps can present personally, or you can launch regular campaigns to those accounts that are at risk. [Customer Lifetime Value can help you estimate lifetime value; 394 can help you calculate purchase frequency] Use marketing campaigns to continually reinforce the value you provide and try to differentiate your product in the mind of your customers. Lock customers into long-‐term contracts to deliver a lower price and keep their loyalty. Supplement your personal relationship with ongoing campaigns to counteract those that your competitors are delivering. Use volume discounts and incentives to keep customers shopping with you.
CONSIDER? Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
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CUSTOMER PROFILE
Frequent purchasers with impersonal contact
Frequent purchasers who buy via personal contact
IMPORTANT ELEMENTS OF YOUR MANAGEMENT & RETENTION STRATEGY Educate your team about signs that a customer is shopping your competitors and make sure action is taken to keep that customer. Use purchase analysis to identify those customers whose volume or frequency is dropping and launch campaigns designed to raise their volume. [394 can help you calculate purchase frequency] Develop ways to efficiently monitor your competition without a lot of time or resources. Make sure your website is easy to navigate with very easy reordering features. Make sure you process and fulfill orders in the time promised. Use purchase analysis to identify those customers whose volume or frequency is dropping and launch campaigns designed to raise their volume. [394 can help you calculate purchase frequency] Build strong upselling and cross-‐selling capabilities into your website and phone ordering systems. Set up automatic reorder programs to eliminate the need to manually repurchase. Create a commission structure for upselling and cross-‐selling as incentive for your account team. Offer similar incentives to your customer service team to encourage customer retention. Use purchase analysis to identify those customers whose volume or frequency is dropping and launch campaigns designed to raise their volume. [394 can help you calculate purchase frequency] Make the re-‐order process easy for your customers.
CONSIDER? Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
Y
N
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CUSTOMER PROFILE
High value
IMPORTANT ELEMENTS OF YOUR MANAGEMENT & RETENTION STRATEGY Build a strong account management team with an emphasis on personalized service. These customers want to call the same person and know they’re taken care of.
CONSIDER? Y
N
customers with high importance, lots of personal contact Look back at the items you checked – they’re the elements you should include in your service strategy. Think about your overarching service plan and explain what you’d like to do below: Next steps: NEXT STEPS
PERSON
DUE DATE
DELIVERING PERSONALIZED SERVICE If you’ve identified the need to offer personalized service, you have three options: OPTION
TYPICAL SCENARIO
CONSIDER?
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OPTION
TYPICAL SCENARIO
CONSIDER?
When you have a small number of high value, important Y N customers who purchase more than once. When you need to keep selling into an account once the first purchase has been made. Accounts are When you have a large number of customers with Y N transitioned from sales moderate to high value and regular purchasing. reps to account managers when they When it isn’t critical that the original salesperson is the become customers primary contact. Customer service is When you have low-‐value customers who are buying Y N handled through a primarily on price and not on intimacy. general customer service group When customers are primarily using your website or other automated systems to repurchase, gather information, etc. When there is minimal personal selling. If you’re not sure whether to have your sales team or account managers manage existing customers, here are some of the benefits and challenges of the “account manager” option. Check those that you think apply to you: Sales reps manage their own accounts
BENEFITS
An account manager earns less than a top sales performer, so you can manage existing customers more profitably. In many industries, account management is a more routine function than sales and is better suited to a different personality profile than a sales position. By splitting the functions, you can ensure that the right person is managing the account.
CHALLENGES
An account manager typically has less sales experience and usually isn’t as successful as a salesman at growing accounts. If the salesperson stays on the account team, the customer can get confused about who to contact.
If something goes wrong with the account, the account manager may not have the business or industry experience to address and resolve it as quickly as a salesperson might.
Notes:
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You may be better off giving your sales reps the additional time to sell rather than forcing them to manage existing accounts. Use 396-‐A to help you estimate how much time it takes to manage existing accounts and how much new revenue you can gain from focusing your sales team on new business only. If you decide to use an account management team and need help setting it up, exercise 391 can help.
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