Customer Lifetime Potential - Part 2

Customer Lifetime Potential - Part 2



In Part 2 of our 3-Part webcast series, the author digs into the importance of measurement to maximize customer potential from day 1. Bain and Company reports that a 5% increase in customer retention ...

In Part 2 of our 3-Part webcast series, the author digs into the importance of measurement to maximize customer potential from day 1. Bain and Company reports that a 5% increase in customer retention can increase profitability by up to 95%. Measuring CLP is critical in order to move beyond intuition and generate predictive guidance to profitably grow every customer’s spend.

Listen to Part 2 of our Customer Lifetime Potential webcast series today.



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  • I am Penny Merian, the director of product marketing at Zilliant.In this session, we will review the importance of maximizing customer lifetime potential as soon as a prospect becomes a customer, why measuring customer lifetime potential is so important to your business, and review the four 4 value imperatives to track to get the most out of each customer relationship.
  • In the first webcast of this series, we discussed how we generally have two ways to grow spend in our customer basesProspect to acquire new customers, andSell more to my existing customers.When we prospect, many of us will calculate the lifetime value of a new prospect to determine if the acquisition costs outweigh the overall value that the prospect may deliver to the business. But What about after I acquire the customer? How do I systematically grow wallet share or spend of the ongoing relationship? That is where CustomerLifetime Potential (or CLP) comes in. CLP is a model for shaping customer behavior such that they engage at a level to realize their full financial potential. It is a guide for account executives to focus on where their efforts will pay the largest dividends. It helps reps think differently about how the grow wallet share of their customer base to leverage resources (e.g., data, people, systems) to impact performance for both developing relationship and growing share.We all know that is much easer to retain an existing customer then to acquire a new one – as much as 6-7 times. Given your customers are of such strategic importance, maximizing CLP is critical to maximizing the value of your customer base. You may be asking yourself, with a large customer base and a large number of customers how can I do this systematically and efficiently?
  • It starts with measurement. We all know that we can’t manage what we don’t measure. It is an old management adage that is accurate today. Unless you measure something you don't know if it is getting better or worse. You can't manage for improvement if you don't measure to see what is getting better and what isn't. So we collect data (measurements), determine how those will be expressed as a standard (metric), and compare the measurement to the benchmark to evaluate progress. For example, when we track sales behavior, we measure the number of calls they make, the number of prospects in each stage, the value of the deal, etc. We compare each rep's metrics against their quota, and we compare each repagainst each other’s performance.Shaping customer behavior is no different. Measure those activities or results that are important to successfully maximize each customer’s potential and overall corporate goals. Key Performance Indicators, also known as KPI or Key Success Indicators (KSI), help an organization define and measure progress toward its goals. But you want to keep it to a manageable but representative number of indicators so that you can easily measure and adjust as needed. We have found that there are four KPI’s that align data, behaviors and give pathways to performance that proactively drive the engagement of sales reps and customers toward actualizing their full potential.We will introduce the four key metrics to measure and the important characteristics of each.
  • The basic question is how do we systematically go from reactive customer potential management to proactive customer potential measurement?We start with demand shaping - Identifying your top performing customers, creating an ideal profile and matching similar customers to the ideal. The key is to go beyond just traditional market or geo segmentation tactics, and enhance by matching based on purchasing behavior. This gives you insight into what customers should be buying and how much they should buy, as compared to your ideal customers. But what about what they are buying from other companies they should be buying from you? By understanding the relationships between products, you know what products in what ratios you should offer, further enhancing your value to the customer. We call this the Product Spend Score. It measures both the breadth and depth of the customer spend relationship. Best of all, understanding these relationships are within your reach – in your transaction data. Just as important is to understand what customers were buying they may not be any longer. We call these Early Warning Signals. The earlier we detect signs of defection the better the chance of reversing the trend. We have found that the opportunity cost of taking no action is significant. In this example, we saw that in just 9 months, the value of what could be regained was 55% less than if the issue had been addressed earlier. Next we look at the value of an informed conversation with the customer. How do we anticipate the relational and strategic needs of our customers? We use the results from demand shaping and our early warning signals. These identify exactly what customers are likely to need and want. The provide the roadmap for a meaningful conversation. Some of our customers who use this approach have said that these types of insightful conversations help each rep not only exceed quota, but al look more professional and knowledgeable to their customers.Demand Shaping, early warning, product spend score and informed conversations together give you everything you need to detect and manage the customer behavior shaping process.
  • It is possible to gain these insights using science so that you can build a plan for every customer every month to move them along the CLP continuum.

Customer Lifetime Potential - Part 2 Customer Lifetime Potential - Part 2 Presentation Transcript

  • Measure and Deliver Maximum Profitability©2013 Zilliant Incorporated, All Rights Reserved Worldwide Make Your Numbers™
  • 2 With over 20 years of experience, Penny has worked closely with sales organizations to align revenue and product objectives with market needs. She has defined, developed and executed global marketing and product initiatives for manufacturing and distribution companies enabling sales teams with tools and programs to exceed market and corporate expectations. Table of Contents A. That Which is Nurtured Blossoms B. Managing Customer Behavior C. Value Imperatives Penny J. Merian Director of Product Marketing©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 3 A marketing prediction of the net profit attributed to the entire future relationship with a customer It’s used to judge the appropriateness of the costs of acquisition of a customer©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 4 STRATEGIC RELEVANCE RELATIONAL RELEVANCE Breadth of engagement over time©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 5 November 2011 August 2012  $92K annual revenue - recovery  Average spend $11.2K/month  Spend dropped to $3.6K/month  Identified $51K annual recovery  Average spend $6k/month  Spend dropped to $1.8K/month Opportunity cost: $41K revenue potential 55% decrease in 9 months©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 6 In Webcast 3, we’ll cover the key CLP Index calculations that you can put into practice immediately Interested in learning how SalesMax can help you maximize CLP? Speak with a member of our team today at (512) 531-8503©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 7 Zilliant provides B2B companies with data-driven guidance, enabling smarter pricing and sales decisions to help businesses make their numbers. The Zilliant optimization platform uses advanced science in its price optimization applications to enable companies to overcome the massive complexity in their businesses. Our flexible SaaS model allows customers to quickly and confidently improve their financial performance by integrating into existing systems and processes. Learn more about how Zilliant helps companies price more profitably and sell more effectively at©2013 Zilliant Incorporated, All Rights Reserved Worldwide