The Importance of Categorizing Your Customers

The Importance of Categorizing Your Customers

You probably heard the phrase the customer is always right, well maybe that’s not quite right. Perhaps it should be rephrased and what we should be thinking about here is, the RIGHT customer, is always right.

There’s a subtle difference there, I think that difference is that not all customers are equal. Not all customers fit your business model, and yet, our observation is that’s very few businesses actually categorize their customers. That’s understandable when you start your business or you acquire a business. Sometimes there’s pressure to put bread on the table and so we end up taking any customer that’s going, any customer with a checkbook who will pay your bills. But, there comes a stage in any business where it’s important to review where you are at or what sort of customers you’re dealing with and should they be still dealing with your business.

  • What’s important here is to analyze your customers.
  • What are we working with here?
  • Who are they?
  • Where do they live?
  • What size are they?
  • How long have they been dealing with your business?

Once we’ve done that sort of analysis, the next thing to do is to think about what are the criteria that make a really good customer for your business – a relatively simple thing to do, if you think about what an ideal customer would look like. You can back into those criteria so you list out those criteria. They could be things like:

  • How large is the customer?
  • How active are they?
  • Are they a once a year or a once every three years customer?
  • Do they buy something from you every month?
  • What’s that product usage like? Do they buy just one thing from you, or do they buy several things from you?
  • To what extent do they refer new customers to you? (That could be important to you)
  • How easy are they to deal with?
  • How easy are there to work with?
  • How profitable are they as a customer?

Not all these criteria may be equal as well, so you might want to weight those criteria and once you do that, you’ll come up with a list that is most important to me and the others, well, may not be quite as important but we should still take them into consideration. Once you’ve gone through that process, what you’re able to do is to create a report which will essentially rank your customers by importance, and when you have that report you’ll then be able to make better decisions on your customer base.

A lot of what we talked about in this video is very process driven and that’s where we can help. We can help you with analysis, rankings and scoring to put a report together so that you get a really interesting view of what your customer base looks like, and how you can then serve each segment of that customer base.

We’d love to talk with you about this, if you feel it’s something that will be of interest to your business. Please get in touch and let’s schedule a time to talk.

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