To Juao Maya<br />I dedicate this presentation to Juao Maya, who is a virtual friend. His comments reveal his inner positive emotions and first class thinking<br />
The Risk of Customers<br />This presentation attempts to draw attention to the risk of customers on the organization by drawing risk maps<br />
Risk<br />Risk is defined by the equation<br />Risk Severity = Impact of Risk*Frequency of Risk<br />Can we extend this equation to accommodate customers’ risk?<br />
Risk Mapping<br />To visualize the risks from customers we opted to put risks factors on a grid and a monograph <br />
Risk Mapping- 2<br />Not all customers are the same. Some customers do not visit you frequently; yet they spend a lot without being demanding. In contrast, frequent customers might be very demanding and less profitable<br />
Gerald Nanninga Observation<br />This observation was supported by a recent elegant post by Gerald Nanninga. He observed that heavy users are not necessarily your best customers. Their activity tends to make them more demanding and more likely to leave. By contrast, the lazy customer may buy less, but be more profitable to serve and less likely to leave. <br />
My Comment on Nanniga’s Post <br />This post is a sheer beauty. Slow, but steady customers are more profitable than hasty and riskier customers.I enjoyed the Kellogg example. It fits beautifully with the value-laddering technique that promotes heart-moving approaches. Dispensing with the double-coupon strategy and replacing it with the targeted strategy of approaching lazy customers by offering them fast check out service is a timely shift. Address profitable customers by fulfilling their emotional needs is the strategy to go for.<br />
The Impact Dimension<br />Several factors influence the impact of a customer<br />His lifetime value<br />His influence (how much of an influencer he is)<br />Intangible value- how many people would turn into customers following the customer’s advice<br />His “table bill” on each visit<br />Fast or slow customer<br />
Heat Maps<br />Denis suggested that one of the best ways to visually represent risk is to use a Risk Heat Map. <br />Denis suggested that one of the best ways to visually represent risk is to use a Risk Heat Map. In this map, vertical axis represents the probability of a given risk occurring. Horizontal axis depicts the impact that the risk will have on the project or program should it materialize.<br />See the next slide- the assigned color of risk may change depending on the risk appetite of the management<br />
Risky Employees<br />Risky employees are among the most significant liability for a company but are among the hardest risks for a firm to identify and manage.<br />A risky employee dealing with a high-risk customer is an ingredient for burning fire<br />Read more: http://www.jamaicaobserver.com/business/Manage-risky-employees-or-lose-millions_8241741#ixzz1NcEoaMKR<br />
In Summary<br />Risky external customers might trigger the stressed internal customers to misbehave; the risk of losing customers increases sharply<br />As the impression of first visits are impacting, demanding customers might draw high risk by antagonizing the employees serving them<br />It is extremely important that employees with the right profile deal with difficult customers<br />
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