How to discover who your most profitable customers are

We all have those customers. You know, the ones who are impractically difficult to serve. The ones who exploit your policies. The ones who take up precious time with problems they could easily find a solution for themselves. The customers who are late to pay, will leave your services at the drop of a hat for a ‘better’ deal or are unreasonably dissatisfied no matter how hard you try.

Yes, businesses are becoming more customer-centric than ever and providing the best service you can is critical. But it’s also true that your organisation could be responsible for attracting bad customers in the first place. You could be paying £50 for a pay-per click campaign targeting shoppers who only spend half that with you. You could also be wasting money on promotions for customers who would have spent with you regardless.

So why should you keep them?

Bad customers take resources away from the customers that are valuable – so why squander time on those whose cost-to-serve exceeds the return you get from them? Sacking your least profitable customers may sound controversial but if you treat every customer like a king then don’t be surprised if some start to abuse their power.

As our old pal Pareto and his principle revealed, 80% of your revenue is likely to come from 20% of your customer base. So, your marketing department needs to focus on those who deserve their crown: namely, the frequent purchasers and the loyal customers with a high lifetime value and the highest ROI.

Customer segmentation reveals all

To make smarter marketing decisions, you need to assess your customer base and place them into groups, segmenting them by how much revenue they bring to your business.

Customer insight and modelling services, like our Money Map, will reveal several customer segments, the most exciting of which will be your “treasures”.

These big spenders, while a modest segment in size, deserve the lion’s share of your attention and building up your relationship with this group comes with the largest rewards. Better still, once you have profiled these VIPs, you’ll have a better idea where to find similar prospects.

That’s not to say that you should ignore the others and if the thought of giving any of your customers the boot fills you with fear, a Money Map will provide you with the insights you need to tailor future campaigns – and their budget!

Download your free copy of ‘Using Customer Insight to Find your Next Profitable Prospects’

To find out more about how a Money Map could revolutionise your marketing, download our “Using Customer Insight to Target Your Most Profitable Prospects” eBook to learn more about Blue Sheep’s Money Map and how to:

  • Build longer lasting relationships with your most profitable customers – and acquire new ones
  • Discover which customers are costing more to serve than the revenue they return. Sack the “avoids”! 
  • Tailor your marketing spend and campaign tactics to different customer segments