I’ve noticed something I find both disturbing and frustrating that will help you craft an effective customer marketing strategy. People seem surprised when they learn the majority of activity comes from the minority of participants. This, even though we are surrounded by examples:
- Go to a party and watch the crowd. Most of the activity swirls around a few party monsters.
- Pay attention to the weather. Most of the activity swirls around the center of the storm.
- Recent reports suggest that 90% of activity on Twitter comes from 10% of users.
- Deutsche Bank reports that in ’09 smart phones, while only 5% of mobile phones, generated 58% of profit.
- Experience with Quick Serve Restaurants has taught me that 80% of volume comes from 20% of consumers.
Facts like these shouldn’t surprise anyone, but they seem to.
It’s important that business leaders understand this simple truth: the majority of company revenue and/or profit comes from the minority of customers.
If you were to analyze your customers you would see that what I’m saying is true. I know. I’ve done the work. I showed a major bank that 120% of their profit was coming from 10% of their customers. There are no exceptions. It’s fundamental. Customer marketing, when focused on this select group, will generate a significant ROI. Not sometimes, not once in a while, every time.
Hip Shots
- Focus customer marketing on your best customers. Start by understanding profit contribution by customer deciles? Now dive deeper. Do you know where your best customers live and shop; how they use media?
- And your best customers are probably heavy category users as well. They have a significant need or desire for what the category offers. Do you understand what they are looking for; how they view their options? Do you know how much of their need your product is satisfying?
- They are also very knowledgeable about what the category offers. They’ve tried it all and, even if they are a heavy users of your product, they are still using what the competition offers. So what are you offering, what specifically are you offering, that sets your product apart from the competition? Are you communicating these specific benefits to heavy category users? Do they care?
- Companies with disproportionate share of heavy category users are leading companies. With your new found knowledge of your best customers you can write a marcom strategy that drives more effective customer marketing and watch you revenue and profit grow.
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