Know-How Exchange : Customer Behavior

A good CRM system. will classify your prospects and help identify your best customers. Package features a MS-Access CRM Database for Marketing Management of tracked customers.

-------------
Poongodi

[URL deleted by staff]

Dr. Michael,
Typically when business people talk about sorting their accounts by ABC they are refering to sorting them by quality of customer.

For example lets say we have just 6 customer...
Company 1 Revenue Generated 100K
Company 2 Revenue Generated 110K
Company 3 Revenue Generated 50K
Company 4 Revenue Generated 45K
Company 5 Revenue Generated 5K
Company 6 Revenue Generated 8K

In this example Company 1 & 2 are A accounts
Company 3 & 4 are B accounts
Company 5 & 6 are C accounts

Great companies take it a step further. They have a mechanism for targeting future business. And, a plan for measuring accounts with high revenue but higher service requirements.

Hope this helps. In addition to these items there are a number of other pointers that need to be addressed in a CRM System. My book TelesalesProspecting digs into the meat of this matter on an "in the trenches level". You can access this via my website.

Great question Dr. Michael. CRM software only gets as "smart" as you allow it to be. The attributes used to rank customers as an A, B, or C depend heavily on what line of business your client is in, what type of clients they want to attract, the selling cycle and which key performance metrics are most indicative of a strong commitment to your client.

A few metrics that come to mind are listed below; I’m sure you’ll come up with others.
- Revenue
- Profit or contribution margin
- Recency of order
- Frequency of orders
- Purchase of premium services
- Length of time as a customer
- Sales potential (in terms of dollars or market influence)
- Other indicators of loyalty (customer satisfaction score, reward program membership, e-news subscription, etc.)

Keep in mind the rating system has to be simple - easy for everyone in marketing, sales, customer service and senior leadership to understand. The concept won't be embraced throughout the organization if it's too complicated.

For instance, you could start with the three attributes most important to your client's business and score each on a 3-point scale; so an A account = 7-9 points, B = 4-6, C = 1-3. Most companies run many reports on single metrics. It’s the combination of a couple key metrics where a CRM system really starts to add value.

It is important to refresh the score periodically, based on cycles that make sense for your client's business. For instance, update the score quarterly, based on the previous 12 months of data (maybe longer/shorter depending on seasonality, life cycle, etc.)

Your strategy should be to migrate customers up the scale over time by crafting different levels of treatment, attention, offers, etc. And conversely, address why customers move down the scale.

Hope these thoughts help!
Kevin