Customer value

1. Recognize "good" customers and benefit

A high number of customers is an important prerequisite for success for almost every company. But a customer who generates high sales is not automatically a “good” customer. These are characterized by numerous other criteria, e.g. B. by them

  • bring high contribution margins,
  • adhere to the payment terms and deadlines granted,
  • complain only in justified cases,
  • give constructive feedback or
  • Passing on positive experiences in the form of word of mouth.

1. Higher profits and liquidity

Every purchase by a customer increases sales and in the best case also increases profit and liquidity. The more "good"
Customers a company has, the easier and faster these goals can be achieved. Conversely, the more “average” or “bad” customers a company has, the longer it takes to achieve the results because profit margins are negatively impacted. In extreme cases, losses are even generated.

Example : An entrepreneur has a customer who regularly generates high sales. However, the customer always pays only after the second reminder. In addition, he complains about even the smallest errors and irregularities with every purchase. The entrepreneur has estimated that the costs for reminders and interest amount to around 5% of the order value on average. Complaints and reworking cause it to lose roughly the same value again. In addition, he has to spend a relatively large amount of time coping with the additional work caused by the customer. This time is missing e.g. to take care of the acquisition of new customers or the retention of "good" customers. The bottom line is that, despite high sales, it is at most a “mediocre” customer.

Practical tip: The value of a customer cannot be measured by just one factor. Therefore, consider several, individual factors that you can use to determine what makes a “good” customer. Monetary variables certainly dominate, such as e.g. sales or contribution margin. But qualitative factors can also help to identify “good” customers. Usually up to five factors are sufficient.

2. Hardly any unnecessary maintenance effort

So what use are high sales or contribution margins if a customer regularly causes problems after the purchase - as shown in the example above? A “good” customer is characterized by the fact that he meets payment deadlines and only complains if it is justified, he speaks openly with the company and points out errors and possible grievances. At the same time, he reacts calmly to errors as long as they are not repeated. This gives the company the chance to implement improvements and provide even better service to its customers. This way, there is little unnecessary maintenance and the company can concentrate on manufacturing and selling its products.

Example : A wholesaler regularly buys large quantities of fittings from a shower set manufacturer. The wholesaler notes that around one in four deliveries has sanding marks and scratches. When asked about this error, the manufacturer finds that a production machine no longer reliably adheres to prescribed error tolerances due to obsolescence. The manufacturer decides to invest in a new machine and grants the wholesaler a one-time special discount of 10 %.

3. Transparency about customer structure and
deriving measures

If you classify your customers using indicators, you get a good overview of your customer structure. You not only knows the proportion of “good”, “medium” and generally “bad” customers, but can also implement targeted measures to improve the customer structure.

Possible measures for"Good" customers can be:

  • Personal and intensive support,
  • Regular discussions to find out more about wishes and requirements,
  • Creation of individually tailored offers,
  • Offering products with high margins,
  • Offer special services, e.g. Pick-up and delivery service (attention: special services must be calculated and included in the price!).

These measures may be useful for "Bad" customers:

  • Separation,
  • no active approach,
  • for orders: surcharges for small quantities, minimum purchase quantities, etc.,
  • only approach them with classic advertising,
  • insist on cash, prepayment or direct debit.

For"Average" customers It must be checked on a case-by-case basis whether it is worth developing this further.

Practical tip: Above all, talk to "good" customers regularly in order to find out as much as possible about wishes and requirements, but also contact options. These customers should be motivated by small gifts to actively do word of mouth.

4. Ten characteristics by which you can recognize good customers

A good customer has to generate more than “just” sales. The following list shows what is also important and how you can benefit from it. If it is pinned to a pin board in the office, you always have the "good" customers in view!

Practical tip: At least six factors should be selected from the following list that are particularly important for customer evaluation in your own company. Each customer can then be easily classified with the help of the factors: Good (medium / bad) customers are customers for whom five to six (four / less than four) factors are rated positively.

  1. Regular purchases: You achieve constant income and profits or contribution margins - the most important prerequisite for success.
  2. Few small orders: The larger an order, the greater the potential contribution margin or profit per order / product. Rule of thumb: add the average processing time for preparing the offer to the variable costs. The difference between the net price, variable costs and processing costs is then the “real” contribution margin.
  3. On-time payments: The liquidity situation is good or improving; the costs and workload for reminders are low.
  4. Justified complaints are openly expressed: You are made aware of possible errors in operation and have the opportunity to find out more about the wishes of the customers.
  5. Adherence to deadlines: Punctual customers help you to be punctual yourself and to be able to meet your own appointments with other customers.
  6. Understanding / tolerance of mistakes made: Opportunity to keep a customer despite mistakes made. Prerequisite: good behavior and no "repetitive acts".
  7. Flexibility and openness to suggestions: Improving sales opportunities because the customer accepts good suggestions for changes.
  8. Openness to advice: The offer for customers can be continuously improved through well-founded sales discussions and answering inquiries.
  9. Recognition for work performed:
    Motivation and incentive to continue to perform very well in the future.
  10. Networks / contacts: Assuming good work and performance, there is a chance that satisfied customers will recommend the company and that new orders will be received.

A detailed and precise assessment is often not necessary, as it is a basic assessment of the customer and an assignment to a category. However, when evaluating and assessing, two to three employees, including those from sales, should

involved in order to arrive at a realistic classification. If this describes the customer as "bad", measures must first be considered to improve this relationship before more drastic steps are taken.

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All information and details in our articles and information have been compiled to the best of our knowledge. However, they are provided without liability. This information cannot replace individual advice in specific cases.