What does a good customer look like?

Businesses all too often chase numbers – more customers and bigger orders - but both can be calamitous unless you anlayse your real sources of profit.

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It is easy to suppose that anybody, individual or company, who spends money with us, is a good customer; and the more they spend the better customers they are.

Businesses all too often chase numbers – more customers and bigger orders. Both strategies can be calamitous as companies overreach themselves; blinded by the sheer scale of activity, without calculating the costs of servicing ever more customers, and convinced that they can keep discounting for volume and if there are sufficient zeros after the pound sign it must indicate a profit.

Just think back to the internet bubble of the nineties or look at the overloaded call centres of the current decade. Too few businesses stop to consider what makes a customer a good customer.

Given the enormous cost of customer acquisition, through marketing, sales, advertising, direct mail, exhibitions and the raft of other costly activities undertaken with this one objective, it is perhaps time IT contributed to, or even started, this debate.

Why is all this the IT department’s concern? Because IT has the computing power to analyse, profile and identify good customers and good customers take up less computer time in file storage, queries, complaints, call centre records and so on.

IT also has the systems capable of delivering the quality and immediacy of response that the organisation needs to give and the customer wants to receive.

As the offerings to customers become more complex, with ever greater choices, and customers become more sophisticated in the making of their choices, IT can offer the information needed and in an accessible format to enable customer service agents to persuade more customers to become good customers.

Reducing churn, the often unnecessary loss of customers, particularly good customers, is often a matter of ensuring that the system can deliver the responsiveness they require so that their dealings with the company at every point are satisfying.

While IT is part of the interface with the customer (call routing), it is also the driver of the human capability to respond; by enabling customer service agents to access the information they require with ever more refinement and speed.

The best customer is probably an existing customer. Not every existing customer, it is true, but a good many of them. Most businesses invest far more heavily in customer acquisition than retention. Yet, with an existing customer, the cost of acquisition has already been written off and the cost of retention is usually fairly low. Inertia can be a wonderful thing.

Consider our own reluctance to change brand as a consumer or to change supplier as a business, often even in the face of an unsatisfactory experience and attractive competitive offers.

Despite the value and inherent loyalty of the existing customer, we can fall over ourselves to woo and impress the new customer, often at the direct expense of service to existing customers, or even alienation as they get a worse deal than the new customers (just look at the banks and building societies).

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