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New Value, Same Customers

New Value, Same Customers

Once you know the revenue and the cost to serve specific customer accounts, you can align sales-force incentives around customer profitability, as opposed to customer revenue

Companies such as Microsoft also recognise the importance of "elite" customers and enthusiasts. Microsoft seeds its new products like the Pocket PC and Tablet PC with these elites, and bets that word of mouth or mouse will take over. Beth Goza, who manages the elites and enthusiasts program for the mobility group at Microsoft, doesn't share numbers, but says the returns from this seeding program have exceeded Microsoft's expectations. Microsoft has even succeeded in converting Jim McCarthy, an expert reviewer of Palm devices, to such a Pocket PC enthusiast that he now runs a Web site dedicated to the handheld device (www.pocketanywhere.com).

Five New Approaches to Customer Value

So when you think about focusing on your most valuable customers, make sure that you value customers based on:
  • 1. The total value of their relationship with your company
  • 2. The potential value of their relationship
  • 3. The profitability of their relationship
  • 4. The insights they can provide your company
  • 5. The influence that they wield over other customers

By thinking more insightfully about what your customers are really worth, you can focus your resources on attracting and keeping the right type of customers. This focus, in turn, will improve the productivity of your CRM efforts and will position you better for innovation and growth.

Mohanbir Sawhney is the McCormick Tribune Professor of Technology at Northwestern University's Kellogg School of Management

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