What every growth-oriented company needs to know about customers

Growth, real growth, comes from making bold moves.  Without confidence, bold moves are unlikely to happen, and confidence comes from reliable data.  To generate confidence, an organization must have outside-in, focused market intelligence, and part of that market intelligence is about current and potential customers.  So, what does a growth-oriented company need to know about its customers?

The GrowthDNA framework offers tools and processes necessary to acquire and analyze the Market Intelligence that builds ConfidenceDNA. Since the market intelligence is focused on external trends and information, there is a significant amount of data around customers involved in the analysis.  To get you started, here are fourteen things you should know about your customers:

  1. How much revenue each contributes
  2. Rank of customers by revenue
  3. Rank of customers by unit volume
  4. Number of customer orders and trends (ordering more, less, same?)
  5. Average revenue per order (hint: frequent small orders are often unprofitable)
  6. Average number of units per order (perhaps you can get them to bundle bigger ticket items that are more profitable with smaller items)
  7. Customer profitability
  8. Customer ranking by gross margin %
  9. Customer ranking by gross margin $
  10. Customer base changes-new customers vs. loss customers, increasing revenue customers vs. decreasing revenue customers
  11. What criteria profitable customers use to select their vendor
  12. How you perform on that criteria relative to the competition
  13. Definition of target customers by observable characteristics
  14. Definition of target customers by qualifier criteria

Now what to do with all this information

Not all customers are created equally when it comes to contributing to your business. Align resources with the customers who can contribute to your future. The first twelve items on the list should provide some eye-opening data about your customers. For one thing, customer profitability alone may be surprising. Typically, only 40% of your customer are profitable, masking the loss of margin on the rest according to Jonathan Byrnes in his book Island of Profit in a Sea of Red Ink.  From this data, determine the answers to #13 and #14. Let us know if we can help!

 

 

 

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