Rainmaking Secrets

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.

Popularity: 5% [?]

Diamonds show no sign of falling into the commodity trap.

Forbes reports, Guess clothing co-founder just paid $16.2 million for a 84.37 carat white diamond at a recent Sotheby’s auction.

Sotheby’s also sold a 2.26 carat purplish red diamond for $2.7 million to jeweler Laurence Graft.

It seems colored diamonds are all the rage.

Popularity: 7% [?]

The following exchange took place on Craigslist, the New York community message board.

“What am I doing wrong?

I’m tired of beating around the bush.

I’m a beautiful (spectacularly beautiful) 25-year-old-girl. I’m articulate and classy. I’m not from New York. I’m looking to get married to a guy who makes at least half a million a year.

I know how that sounds, but keep in mind half a million is middle class in New York City, so I don’t think I’m over-reaching at all.

Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips?

I dated a businessman who made around 200-250K. But thats where I seem to hit a roadblock. $250,000 won’t get me Central Park West. I know a woman in my yoga class who was married to an investment banker, and lives in Tribeca. She’s not as pretty as I am, nor is she a great genius. So what is she doing right?

Here are my questions specifically:

• Where do you single rich men hang out? Give me specifics - bars, restaurants, gyms.
• What are you looking for in a mate?
• Is there an age range I should be targeting?
• Why are some of the women living on the Upper East Side so plain? What’s the story there?
• Lawyers, investment bankers, doctors. How much do those guys really make? And where do the hedge fund guys hang out?
• How do you rich guys decide on marriage vs just a girlfriend? I am looking for MARRIAGE ONLY.”

An Investment Banker’s Response:

“I qualify as a guy who fits your bill- I make more than $500K per year.

Here’s how I see it: Your offer is a plain and simple crappy business deal.

What you suggest is a simple trade: you bring your good looks to the party and I bring my money. Fine, simple.

But here’s the rub, your looks will fade and my money will likely continue into perpetuity - in fact, it is very likely that my income will increase, but it is an absolute certainty that you won’t be getting any more beautiful!

So, in economic terms, you are a depreciating asset. In Wall Street terms, we’d call you a trading position - not a buy and hold. It doesn’t make good business sense to ‘buy you’ (which is what you’re asking) - so I’d rather lease. The deal that makes sense for me is dating, not marriage.”

Popularity: 9% [?]

What is your value proposition?

Bill Wilmot, the co-author of Innovation: The Five Disciplines for Creating What Customers Want has an elegant definition which can be reduced to NABC.

A value proposition if the statement of an important unmet customer and/or market opportunity
(Need)
that proposes the way to use resources
(Approach)
to deliver superior customer value
(Benefits per costs)
when compared to others in the market
(Competition and/or alternatives)

NABC is a simple but elegant formula. I like the way it starts with the market need. Wilmot’s NABC definition is practical and insightful.

Popularity: 16% [?]