How to extract the most profit from your existing clients
Consistency is often credited as a key contributor to sustaining business success, but making all stakeholder interactions as predictable and uniform as possible is not an effective strategy.
What do they need from you?
Taking clients as an example, each individual does not require equal attention. Some people will need an extremely low level of interaction, where you provide them with your product/service alone. Others, will require a far higher investment in time and energy, wanting additional support services and more regular contact with your company. It is important amongst this diversity of relationships that you first understand what they specifically need from you, but also, how each relationship suits your business.
What do you need from them?
To make your organisation as profitable as possible, I advocate identifying these three client groups within your existing audience: those with the greatest needs, those who provide the highest revenues, and those with the most promising growth potential. By focusing your attention on these segments, you will maximise your financial resources, both in terms of how much you can extract from them and utilising your available funds.
Determine your clients with the highest Customer Lifetime Value (CLV), so you can direct more investment towards them. This means finding those people who are likely to deliver the biggest profit over the course of their total (lifelong) interactions with your business. To achieve this, you will need to gather and analyse the relevant data. It may take some time to establish the proper measuring tools, but will certainly reward you in the long-run.
In the 21st Century there is a huge variety of ways to measure and record each interaction with a client. This might be as large an event as making a considerable purchase, or as small as clicking on a link in your newsletter. Consider what data is most important to your company and tailor your future marketing material or offering delivery to compliment the information gathered.
Time to segment
Now you have the relevant numbers, you can begin to segment your audience, grouping them by interest, demographic, or demand. This again may take some time to decide on the most effective groupings, but once integrated, will make your client messaging far more efficient, as well as extracting a greater return. Segments you might consider include:
1. Maximised clients – whom you have extracted the greatest possible profits from and revisit your company regularly; maintain this engagement
2. Engaged clients – those who engage periodically, but whose relationship has the potential to be stimulated; take them to the next level to deliver more value
3. Peripheral clients – they sit on the fringes of your audience, matching your target client persona, but only engaging rarely; in need of maximisation
4. Unsuitable clients – a group of unideal relationships, that produce little-to-no profit and do not have the potential to develop; try to off-board these relationships
Maximising Customer Lifetime Value
A good way to cultivate the relationships of groups 2 and 3 (above) is to have a clear and concise FAQ facility. This might be represented by a diligent client support team, or more simply as a section on your website. Something as small as providing base level support, demonstrates that your business has considered the needs of its audience, moving beyond a practical transaction.
The dilemma at the centre of utilising your CLV is finding the balance between more generic efficiency and more engaging personalisation. Sending out a uniform offer to your audience each quarter will likely be quick and inexpensive. Producing a variety of offers, specifically tailored to the interests of your clients, as calculated by their engagement to this point, will likely cost more, but will stimulate more sales. You just need to find the right middle-point for your organisation, somewhere between the generic and the bespoke.
There is often pressure to go out and hunt new clients, to invest in your marketing and get the most possible people through the door. However, I would suggest that maximising the income from your existing client base is sometimes neglected, but always vital for profit.
Don’t forget the clients you already have.
If you would like to discuss any of the topics covered in this article, please book a FREE, no-commitment discovery call with me.