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Do You Really Know Your Customers?

Jennifer AnayaBy Jennifer Anaya

Nothing – not even low price – trumps relationships when it comes to winning and keeping business customers. This is not just wishful thinking. I hear it often, including in words of wisdom from a CIO who spoke at CompTIA’s recent annual member meeting. It’s good advice for solutions providers to take to heart, especially as they shift to selling cloud, digital and managed services that customers can’t see or touch.

Don’t set it and forget it, or your customers may forget about you. Instead, pay extra attention to relationships — what you mean to them, and what they mean to you.{ad}

And don’t just depend on longevity of relationships. If you’re like most solutions providers, your average customer has been with you for seven to 10 years, says The 2112 Group. Certainly, that’s enough time to get to know them, right?

Not unless you can answer these questions about each customer:

  1. What do you know about their business? What does the company sell? Who are their customers? Why do customers buy their products and services? How will their company continue to deliver value going forward? It’s important to understand each customer’s business on a deep enough level that you can help them leverage technology to meet challenges and opportunities today and in the future. And remember, their business is evolving, too. If the last time you paid attention was a year or two ago, a lot may have changed.
  2. Who do you know in the company? Do you talk only to the IT director, or do you also know the C-suite leaders — CIO, CEO, CFO, CMO?  Do you speak regularly to line-of-business leaders? Do you know the purchasing agents? IT managers are no longer making decisions about technology on their own; other business and technology users are driving and/or influencing the process, so you need to get to know as many stakeholders as possible.
  3. Do the business decision-makers know you? If they were asked in a blind survey to name their top technology provider, would they list your company as No. 1?  If you are not your customer’s go-to provider, you’re probably also not part of the long-term technology decision process. You could be cut out all together or brought in at the eleventh hour when parameters, pricing and preference are already set. Ideally, you want to be the trusted adviser who is influencing your customers’ plans as they are being made.

If you don’t know your customers quite as well as you thought, don’t sweat it. Instead, get to work using these simple tactics:

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  • Do your homework. Research your customer’s company and industry using readily available (and free) information, such as their website, their industry trade publications or even Google Alerts. If your customer is large enough, you may also get information from a paid resource like Dun & Bradstreet.
  • Ask and then listen.  Don’t overlook the obvious source. People are generally more than happy to talk about themselves, especially to an interested listener who might be able to help them. If you’ve done your homework, you can ask intelligent questions via live interviews, online surveys or better yet over lunch.
  • Initiate quarterly technology reviews. Invite your customer’s key stakeholders to attend these meetings, so you can find out more about their needs and recommend enabling technology solutions. In addition to ensuring you have a regular dialogue with your customer, these meetings are an opportunity for the decision-makers and influencers to get to know you and your company as their trusted adviser.

Which Customers Are the Most Valuable?

Regardless of whether your company has hundreds or thousands of customers, the prospect of getting to know all of them intimately may be daunting. It’s important, then, to evaluate your entire customer base and find out which accounts are the most valuable so you can focus your attention there — and work on finding more customers like them.

If you’re like most solutions providers, you segment your customer base by revenue, investing the most time and attention to the big customers at the top of the pyramid that pay you the most money (see chart, above right). Below them is a second tier of companies that aren’t as big and don’t spend as much. You devote less time to working with them than your top customers.  At the bottom of the pyramid are your small or new customers, which understandably don’t get much attention since your resources are limited.

If this is the beginning and end of your analysis, you’re doing it wrong.

A more strategic way of segmenting your customer base is to focus on profitability. Instead of a pyramid, create a matrix with revenue on the Y-axis and contribution margin on the X-axis (see chart, above left). Go through this exercise; you may be surprised at …

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… where your customers land in the matrix. It will likely give you better guidance on where to focus time and energy.

The most profitable customers — and the ones you need to focus on — are those in the top right quadrant.  At the opposite bottom left quadrant are low-revenue and low-margin customers that you should either consider firing or create strategies (like charging more) to nudge them to the right side of the matrix.

Customers in the top left likely are generating a lot of revenue for you, but you might look at ways to reduce the costs of serving them, bundle in some profit-rich services or, again, just consider charging more. Those in the bottom right have the potential to be highly profitable if you can grow your wallet share with them.{ad}

Don’t stop there. Take a closer look at your most profitable customers in the top right quadrant. Who are they? What business or vertical are they in? Why are they more profitable than other customers? It may be that they align best with your company’s strengths as a solutions provider. Or, you may be able to deliver greater value to those who are willing to pay. Let your findings here guide future sales and marketing efforts.

Understanding your customers is key. At the micro level, it helps you develop those trusted relationships that are more vital than ever as customers raise concerns about security, privacy and reliability as they migrate to digital and cloud solutions. And, at the macro level, it can help you grow your business by optimizing where your team focuses resources.

Jennifer Anaya is vice president of marketing for Ingram Micro North America. In this role, she is responsible for directing the activities of Ingram Micro’s marketing organizations across the United States and Canada. With nearly two decades of marketing experience, 11 of which have been spent working with and for Ingram Micro, Anaya is regarded as one of the “Most Powerful Women in the IT Channel” by CRN Magazine. Her career accomplishments include leading the development of Ingram Micro’s Partner Smart brand and spearheading several strategic communications initiatives that included successfully launching the company’s award-winning Agency Ingram Micro (AIM).
LinkedIn: linkedin.com/in/jenniferbaieranaya
Twitter: @jenniferid8

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