Marketing success starts with customer selection
In his insightful new book, Managing Customers for Profit, (Wharton, 2008) author V. Kumar argues the first step in implementing a successful marketing strategy is to select the right customers.
Why?
Two reasons.
Reason One. You have a limited marketing budget - you have to select which customers or prospects to spend your limited monies on.
Reason Two. Not all customers are equally profitable - there are customers that count and there are customers that cost. The mass of the profit comes from a small group of customers. It’s not uncommon for 10% of customers to generate 80% of profits. This means you must target these customers with high profitability.
This is of course the essence of our marketing programme Drilling for Diamonds which shows you how to grow a customer base chock full of crown-jewels.
And, the best way to measure potential customer profitability is to use customer lifetime value as your key metric.
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