Video – The Importance of Categorizing Your Customers

The importance of categorizing your customers is something most business owners aren’t even aware of.

You probably heard the phrase – the customer is always right.  Well maybe that’s not quite right. Perhaps it should be rephrased and what we should be thinking about here is — the RIGHT customer is always right.

There’s a subtle difference there.  I think the difference is that not all customers are equal. Not all customers fit your business model; and yet, our observation is that very few businesses actually categorize their customers. That’s understandable when you start your business or you acquire a business. Sometimes there’s pressure to put bread on the table and so we end up taking any customer with a checkbook who will pay your bills. But, there comes a time in any business where it’s important to review where you are at, what sort of customers you’re dealing, with and whether or not you should be still dealing with all of them.

• Who are they?
• Where do they live?
• What size are they?
• How long have they been dealing with your business?

Once you have done that sort of analysis, the next thing to do is to think about what are the criteria that make a really good customer for your business – a relatively simple thing to do, if you think about what an ideal customer would look like. You can list out those criteria. They could be things like:

• How large is the customer?
• How active are they?
• Are they a once a year or a once every three years customer?
• Do they buy something from you every month?
• What’s that product usage like? Do they buy just one thing from you, or do they buy several things from you?
• To what extent do they refer new customers to you? (That could be important to you)
• How easy are there to work with?
• How profitable are they as a customer?

Not all these criteria may be equal so you might want to weight those criteria and once you do that, you’ll come up with a list that is most important and a list of those that may not be quite as important but we should still take them into consideration. Once you’ve gone through that process, what you’re able to do is to create a report which will essentially rank your customers by importance. Once you have that report you’ll then be able to make better decisions on your customer base.

A lot of what we talked about in this video is very process driven and that’s where we can help. We can help you with analysis, rankings, and scoring to put a report together so that you get a really interesting view of what your customer base looks like and how you can then serve each segment.

We’d love to talk with you about this if you feel it’s something that will be of interest to your business. Please get in touch and let’s schedule a time to talk.  Give us a call at 559.924.1225.