eBook: Customer Lifetime Potential
 

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A new measure is emerging to help B2B organizations answer this question – Customer Lifetime Potential (CLP). Businesses that measure, and more importantly, maximize the lifetime potential of their ...

A new measure is emerging to help B2B organizations answer this question – Customer Lifetime Potential (CLP). Businesses that measure, and more importantly, maximize the lifetime potential of their customers have a distinct competitive advantage over those who do not. In today’s increasingly global and competitive marketplace, customers have more options available to them than ever before. Strengthening customer relationships is imperative for business success for one simple reason: Loyal, long-term customers drive profits.

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eBook: Customer Lifetime Potential Presentation Transcript

  • 1. Measure and Deliver Maximum Profitability©2013 Zilliant Incorporated, All Rights Reserved Worldwide Make Your Numbers™
  • 2. 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. New Measure of B2B Sales B. CLP is Not a One-time Assessment C. Why Should I Care D. Growth Strategies E. Transforming Potential into Hard Dollars F. Using Science to Drive CLP G. Customer Relationships Grow or Shrink Penny J. Merian H. Maximizing CLP Director of Product Marketing I. Value Imperatives and Measures J. From Insight to Foresight K. Power of Science to the Art of Selling©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 3. 3 Customer Lifetime Value (CLV) is used to calculate the lifetime value of a new prospect to determine if the acquisition costs outweigh the overall value that the prospect will deliver. In other words, it measures the profitability of customer acquisitions. What about after you acquire the customer – how do you measure the value of the ongoing relationship as a function of wallet share? Customer Lifetime Potential (CLP) is a customer’s potential monetary worth relative to the expansion in breadth and depth of the relationship over time. CLP is a powerful business metric that helps drive what a customer will do – not just a forward-looking indicator. It is a guide for account executives to focus where it will pay the largest dividends.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 4. 4 It is a continuous ‘what else?’ indicator of a customer’s potential to maintain and increase spend – known as “Performance to Potential”. It is a strategy for holistic sales penetration by answering these questions: • How has a customer’s spend changed over the past quarter? • How much of the change is within new versus existing product categories? • What level of spend should be expected and could be achieved next quarter? • What “potential trajectories” will continue to grow a customer’s spend? • What customers are beginning to defect or spending less in specific categories? • What customers should I target for specific programs? Businesses that measure, and more importantly, maximize CLP have a distinct competitive advantage. In today’s increasingly competitive marketplace, customers have more options available to them than ever before.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 5. 5 A recent study by Bain and Company found that it is six to seven times more costly to acquire a new customer than to retain an existing one. 6 to 7 50% 95% Number of times more Amount customer Amount of increased costly it is to acquire a attrition if left dormant profits that can come new customer than retain over a 5-year period from boosting customer an existing one retention by as little as 5 percent Given your customers are of such strategic importance, your program to maximize CLP and more importantly, extend this way of thinking throughout your sales process is critical to maximize the value of your customer base.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 6. 6 What is your strategy for growing revenue this year? • Acquire new customers, or • Grow your existing customer base “You’re either growing or dying! ” Anonymous For most B2B companies, it’s the latter, which makes customers – not products – your company’s most valuable asset. Going beyond your initial efforts to acquire new customers and focusing on Products and services may be easy for a identifying and retaining profitable competitor to copy, but a company that customers to increase their value over excels at creating customer loyalty is less time requires the anticipating customer vulnerable to competitive attacks or needs and presenting attractive offers in customer defection. the right way, at the right time.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 7. 7 Customers buy when the perceived value-to-price ratio of your product or service is greater than other alternatives. 1. Establish Potential (CLP Index goal). Growing existing customer value, cost effectively and efficiently, requires a focus on cultivating your relationship and tailoring your outreach to their specific needs. For companies with large product catalogs and customer bases, this is a complicated process, requiring a unique approach to: 2. Reverse the churn. Customers • Understand buying patterns of your don’t typically make a snap decision to best customers, beyond traditional stop buying a product. They gradually segmentation stop buying over time. By recognizing the • Proactively offer the right products for patterns that lead to customer churn cross-sell and upsell opportunities early, you can take proactive and • Have strategic and profitable conversations preventative measures to stop defections©2013 Zilliant Incorporated, All Rights Reserved Worldwide before it’s too late.
  • 8. 8 To establish a sales culture focused on “Potential to Performance” that utilizes CLP to extend long-term value creation, you need to include steps one and two discussed on the previous page. By applying science and technology to your transaction data, you can deliver automated, predictive guidance that focuses sales reps or distributors on the customer opportunities with the highest probability for expansion and growth, and retain existing customers.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 9. 9 Have your competitors ever raked in Companies with a deep understanding profits from customers you failed to pay of their customers can focus sales reps on attention to? This is a costly mistake. the highest potential growth opportunities. Move beyond intuition and opinion to predictive guidance to understand how to: • Profitably grow revenue in every customer tier • Pinpoint cross-sell opportunities and effective cross-sell rules • Align sales territories through buying pattern-based segmentation and demand profiling • Create targeted product programs focused on the right set of customers • Move customers along a potential continuum by aligning demand creation strategies with focused sales execution initiatives©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 10. 10 It’s far more cost effective to grow sales from existing customers than to attract new ones. Maximizing the lifetime potential of your customer base is challenging, but In a recent IBM Global possible. Based on extensive experience Survey of CEOs, with a wide range of getting closer organizations, Zilliant to the customer has identified Five ranked as the top Value Imperatives that priority among comprise a customer’s CEOs in CLP Index Score. companies Leading organizations that the survey use these best practices identified as to maximize Customer “standout” organizations. Lifetime Potential.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 11. 11 Value Imperatives Measurements Maximize recurring revenue and look for new business within • Customer growth rate your customer base through targeted cross-sell and upsell • Number of products/ offerings. Targeting programs to customer micro-segments which categories purchased have a high propensity to buy based on similar spend is much • New product category spend more impactful. Customers respond to sales reps that truly understand their world. You can’t just outsell competition, you have to “out learn” • Insight score (value of them. But you need to do this as efficiently as possible, balancing insightful conversations) selling time with research. Proactively drive increased retention by identifying early • Retention rate indicators of competitive poaching and/or defection. • Churn rate Base your customer strategy on predictive purchasing profiles • Purchase Pattern Profiling™ derived from past purchasing behavior, current behavior, product • CLP effect curves affinities and business segmentation. • Demand shaping©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 12. 12 Having a system support methodology to progress customers along the CLP continuum, takes you from a product view to a framework of actionable information. Maximizing CLP through sales force and/or distributor utilization will determine the ultimate success of your company. Global manufacturers and distributors are constantly looking for ways to make their operations more agile, efficient and profitable. Innovative companies are applying that mindset to maximize CLP for each customer across their entire books of business. Business success requires a new depth of customer insight to efficiently maximize CLP in a customer economy.©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 13. 13 You are spending today on sales initiatives. If you could increase your opportunity conversion rate 35-55 percent and increase customer loyalty for as little as $1.40/day per sales representative, would you? It is possible to gain these insights using science to maximize Customer Lifetime Potential and focus your sales reps on the best growth opportunities Contact Us Today©2013 Zilliant Incorporated, All Rights Reserved Worldwide
  • 14. 14 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 www.zilliant.com.©2013 Zilliant Incorporated, All Rights Reserved Worldwide