Tag Archives: customers

Its Not A Herd: Customers Are Not All Created Equal: There are; High-Value, Less Value, Poor-Value…

Think about your customers for a minute– whether you have 10 or 10 million, it’s most likely that some have more ‘value’ than others… Also some are much more demanding than others, some are much more loyal than others, some are better references than others… But despite this reality, many companies treat all customers exactly the same. Hence message is simply– know your customers; know which ones buy more, know which ones are more loyal, know which ones have more value, know which customers are best references… then invest support resources accordingly.


Optimizing the value of individual customers optimizes the overall value of your brand, which requires an obsessive, customer-centric approach to aligning the business… It means allocating investment based upon the potential value of customers… According to Stan Phelps; when assessing how to invest a business’ time, resources… to support customers engagement, the answer should be clear; focus on the– ‘vital few’…

According to Tim Ferriss; ‘fire’ the 80% of customers who only bring in 20% of overall revenues… the rationale is that it allows a business to focus on the most profitable… and these special customers are typically represented by Pareto’s Principle or Law of Vital Few; here are a few examples:

  • 80% of company’s profits come from 20% of customers…
  • 80% of company’s sales are made by 20% of sales staff…
  • 80% of company’s new sales come from 20% of existing customers…
  • 80% of companies complaints come from 20% of customers…
  • 80% of company’s revenues come from 20% of products…

In the article All Customers Are Not Created Equal by Emily Alford writes: You don’t have a customer unless they come back and buy more than just once… Measuring ‘lifetime value’ is key to determining which customers are the loyal followers that drive the wealth of the business… and this brings up a whole new topic: What does it costs to acquire or lose a customer? This is a highly debated issue with answers that vary from; ‘it depends’, to ‘3 times’, to ’10 times’, to ‘it doesn’t matter’…

According to Alex Walz; calculating the– Average Revenue Per User (ARPU) spreads the revenue over the entire customer base… ARPU formula typically takes the form:


The ARPU metric is commonly used to guide financial projections, revealing insights into: How much an active customer is worth? How many active customers you needs to break even (expenses ÷ ARPU)? How much you can spend to acquire a customer (anything less than ARPU)? But ARPU is an overly simplified metric; for more a reliable projections, business needs all-encompassing metric, e.g,; Customer Lifetime Value (LTV), which overcomes many of the limitations of ARPU by incorporating everything known about customers and that allows the calculation of more precise metric of value… LTV formula typically takes the form:


In this formulation LTV has three components:

  • Monetization: It’s frequently expressed as ‘ARPU’– the dollar amount customers contributes to bottom line, over given time frame…
  • Retention: It’s frequently expressed as ‘1 ÷ Churn’– the level of engagement and loyalty customers exhibit, expressed in length of the average use period…
  • Virality or Referral Value: It’s the ‘value’ of referrals received from customers…

In the article Customers Value and Why It Matters by Paul Jarman writes: Companies like to say– all customers are treated equally: But is it really the case? Perhaps they should say– all customers are seen equally. According to Robert S. Kaplan; happy customers are good but profitable ones are even better… in virtually all profitability study, 15% to 20% of customers generate 100% of a company’s profits…

So what does this mean in practice? It means that each customer brings a different value to a company… Hence companies should support all customer, but they must tailor the services to specific needs and value of each customer… and by doing so they develops a more trusting, loyal relationship with the most valuable ones…


According to Accenture; companies that optimize services based on varying levels of customer value have increased revenues by 2% while reducing operating costs by 8%… And when you look at the continued rise of social media and proliferation of smartphones and tablets, it’s clear that customers desire to take control of their experience– they want on-demand service on their terms… In addition to providing the best experience possible, companies cannot afford to neglect the critical financial aspect of customer relationships– this means maximizing the ‘lifetime value’ of each customer, and minimizing the cost of each interaction…

In the article Debunking the Everyone Is Equal Myth by Lisa Barone writes: If you treat customers equally, you are shooting yourself in the foot. You’re doing a disservice to your ‘better’ customers, you’re wasting time and money trying to appease your ‘lesser’ ones… It’s probably not politically correct to publicly lump customers into– ‘good’, ‘better’, ‘best’ buckets… but since you are already doing it in your head anyway: Why not just write it down and create profiles of information that are actionable?

These should be meaningful profiles that reflect each customer type, then allocate proportional levels of resources to support the– very best (most value), to least best (least value).Trying to please ‘everyone’ doesn’t work, and by giving more weight to those who actually bring more value… builds a leaner more efficient organization… One that filters-out those who don’t represent true value of the brand, and those who would quickly abandon the brand if it meant saving a dollar… Some customers are simply worth more, have more value than others…


Treat all customers equal in terms of service, but know which ones best defines and represents the brand– the preferred voices for a brand not the ‘average’ consumer… According to Robert S. Kaplan; few companies closely examine the cost to serve a given customer... The ability to measure value at individual levels allows business to consider varies value metrics, such as; ‘percentage of unprofitable customers’, or ‘dollars lost in unprofitable relationships’… Such measures provide an important signal about value/desirability of particular engagement and how and how much a relationship contributes– greater value, higher profitability, and overall market exposure…

Value metrics provide link between customer types and improved financial performance… unfortunately many businesses are missing relevant value metrics… and as result they continue to experience valueless revenue growth… However, some business are beginning to include– ‘value scorecards’ in procedure for the allocation of customer support resources… A ‘value scorecard’ is a very simple and flexible mechanism for measuring and tracking customer value,  e.g.; value and magnitude of value of each relationships… It can focus the organization on managing for value, not just for sales… Hence, it aligns a company’s allocation/focus of resources with its financial objectives…


 Implementing a value-based scorecard is not difficult, but it does require a strategic assessment of customers data, and segmenting service levels and options into appropriately buckets, and without alienating relationships in the process… But to survive and prosper in a highly competitive environment, optimizing value of customers and the proportional allocation of service is not just sound strategy, but it’s crucial for long-term value and sustainability…

Social Media is Changing Balance of Power in Advertising: Publications–Dying? Social Media–Rising? It’s All About Community… Connections…

Social media is an ideal tool for moving people up the ‘fan’ ladder, from being a casual ‘fan’ of a brand to a loyalist, because the communication channels allow people to build stronger emotional connections with brands.

Social media advertising is the trend… and the future of advertising is social, which is very exciting. With the popularity of Facebook and Twitter, social media advertising surely has taken a new turn in the recent years. Studies show that every person (on average) has a network of around 6 to 14 people, and they share ‘ads’ with their community.

Social networks are ‘social’ and therefore respect and empathy are the minimum price necessary to earn attention… Without a genuine intent to offer value, trust is elusive.  It’s the difference between shouting ‘at’ people and speaking ‘with’ someone. Before you’re a marketer or advertiser, you’re a consumer. Bring that perspective to the marketing table is the difference between social network advertising and traditional online campaigns.

According to G. Melanson; Social media advertising is very targeted and based on information supplied by members of a social media service. While social media advertising has been hailed by some as a revolution in direct marketing, it has also brought about many privacy concerns.

The first step in social media advertising is acquiring members by encouraging people to sign up for a particular social medium, such as a social networking site. The more information the member provides, the easier they are slotted into a specific demographic for data aggregation, and subsequently targeted social media advertising.

Social Media Statistics: ‘By-the-Numbers’ by Banking.com Staff writes: Interesting statistics on social media usage:

  • $400,000,000 in ad revenue is projected for Twitter by 2013, up from $139.5 million in 2011 (eMarketer)
  • 7,432,307 job changes have been tracked by LinkedIn since 2009 (LinkedIn)
  • 68% of social media users go to social networking sites to read product reviews (Nielsen)
  • 59% of B2B purchase decision makers use a smart-phone to research potential purchases (eMarketer)
  • 58% of social media users go to social networking sites to learn about or research products (Nielsen)
  • 1,600 advertisers are now using the Twitter platform for advertising (Twitter)
  • 53% of active adult social networkers follow a brand, while 32% follow a celebrity (Nielsen)
  • 40% of social media users access social media content from their mobile phones (Nielsen)
  • $1.23 billion will be spent by US advertisers on mobile advertising this year, up from $743 million in 2010 (eMarketer)

In the article “Social Media Advertising: Does It Work… or Doesn’t It?” by Paul Chaney writes:  The term ‘social media advertising’ is, to some, an oxymoron. They will tell you it doesn’t work for the simple reason that people don’t visit social networks to view advertising, but to interact with their community. It’s a mindset issue. You may be familiar with the recent report by ‘Knowledge Networks’, which found that less than 5% of social media users say they regularly turn to social media for guidance on purchase decisions, and only 16% say they are more likely to buy from companies that advertise on social sites.

However, for every person who says it doesn’t work, there is one who attests that it does. Yet, there is empirical evidence that it is working for some. So, does social media advertising work or doesn’t it? Yes, “if you know how to use it”. According to Dana Larson: Successful social commerce marketing is about soliciting structured feedback relevant to shopping and buying, and making this feedback available to customers making these purchase decisions. It does works when the right factors are in place, and here are four key elements:

  • Understand your targeted social media channel.
  • Target the correct users with your message.
  • Ensure the advertisements are supplementing the content on the social site.
  • Have a social networking presence.

In the article Measuring The Value Of Social Media Advertising” by Robin Wauters writes:  Nielsen and Facebook recently joined forces to develop ‘ad’ effectiveness solutions to determine consumer attitudes, brand perception and purchase intent from social media advertising. According to Nielsen, the report leverages six months of research consisting of surveys of more than 800,000 Facebook users and more than 125 individual Facebook ad campaigns from some 70 brand advertisers.

Nielsen looks at advertising from a ‘paid’ and ‘earned’ media perspective, whereby the second is considered advertising that is passed along to or shared among friends. The company took a look at 14 Facebook ad campaigns that incorporated the ‘Become A Fan’ engagement unit and sliced the effectiveness results three different ways, by each of the types of ‘ads’ available on Facebook:

  • ‘Lift’ from a standard ‘Homepage Ad’.
  • ‘Lift’ from an ad that featured social context or ‘Homepage ads with Social Context’.
  • ‘Lift’ from ‘Organic Ads’, news-feed stories that are sent to friends of users who engage with advertising on a brand.

Nielsen found that the first type of ‘ads’, on average, generated a 10% increase in ad recall, a 4% increase in brand awareness, and a 2% increase in purchase intent among users who saw them compared with a control group with similar demographics or characteristics who didn’t.

According to Nielsen, that increase in advertising recall jumped to 16% when ads included mentions of friends who were ‘fans’, and 30% when the ‘ads’ coincided with a similar mention in users’ newsfeeds. Intent for purchase climbed 2% higher among viewers of ‘homepage ads’ vs. ‘non-viewers’, but went up 8% either from ‘social ads’ or when ‘ads’ appeared alongside organic mentions of the brand in the news-feed.

Brand awareness went up 2% from just a ‘homepage ad’, 8% with a ‘social ad’, and 13% when a ‘homepage ad’ appeared along with a mention of friends who were ‘brand fans’ in the users’ newsfeeds.

In the article “Getting Started Social Media Advertising on Facebook, YouTube, and LinkedIn” by Lee Odden writes:  For marketers just getting started with advertising on social media sites, here’s a quick primer on ‘ads’ for Facebook, YouTube, and LinkedIn.  As with organic social media marketing, each is appropriate according to your own goals…

 Facebook: Best practices ads:

  • Set goals.
  • Target your audience.
  • Make the product/service stand out.
  • Keep the ad simple.
  • Have a strong call to action.
  • Make sure ads point to relevant landing pages.

YouTube: Best Practices ads:

  • Keep it short; 60 seconds is a good benchmark.
  • Keep it engaging; Entertain, inform and be relevant.
  • Inspire, don’t just educate; Avoid focusing solely on being educational.
  • Deliver key messages early; Plan for user tune-out near the end of the video.
  • Include a call to action.

LinkedIn: Best Practices ads:

  • Create relevant ads.
  • Create multiple ads for each campaign.
  • Target the right audience.
  • Set an appropriate daily budget.
  • Understand how bidding works.
  • Improve performance; monitor click-through-rates,  experiment, then refine.

Twitter & LinkedIn: Continue to see strong advertisement growth, with Twitter’s revenue expected to nearly double between 2012 and 2014, according to a report by eMarketer. Twitter gets 90% of its revenue from U.S. advertisers, while LinkedIn depends more on foreign advertisers, with just 68% of its 2012 ad revenue expected to come from U.S. advertisers. eMarketer is projecting 83% revenue growth for Twitter this year, down from 233% growth in 2011, and 46.1% revenue growth for LinkedIn, down from 95% growth in 2011.

In the article “A Look At Trends in Social Advertising” by Lauren Fisher writes: We’re starting to see some really exciting and mind-blowing things being done through social advertising. I’m a huge advocate of companies combining their advertising and social media efforts, because it just makes good marketing sense.

A recent report by eMarketer looks at the renewed interest in social advertising – it comes in cycles – and finds that in the U.S. 6.7% of all online ads spending will go towards ‘social’. While the interest in social media has really been growing among companies for the past 2-3 years, the budgets have been slow to follow. This report is encouraging and shows the serious investments are being made. In another report by BIA/Kelsey; social media advertising revenue will go up to $8.3 billion by 2015, while revenue spent on social media advertising was $2.1 billion, in 2010…

The rise in social advertising, also has huge implications for companies that invest in social platforms and build their entire products around it – with the likes of gaming platform Zynga being a good example. Their ‘ads’ campaign with Microsoft certainly proved the case for innovative online advertising. It’s not about sticking in Google ‘ads’ anymore, or even leaving sections of your site open to sponsorship. Companies have to work harder to get in front of their customers, as they battle for a complete turnaround in user behavior: The future of advertising is social and the opportunities are huge…

The way corporate entities approach social media is shifting. According to Amy Jo Martin: The social media landscape will continue to evolve, as should your strategies for success… Many companies are beginning to realize that setting up Twitter, YouTube, and Facebook accounts as their only social media strategy is not going to cut it . Brands will need to seriously shift their perspective by treating social channels more like communication channels and less like an advertising channels in order to make a difference.

The year 2012 will be the year for brands to go beyond cookie cutter campaigns and really determine how it not only adds value to their company, but how it adds value for their customers. This year will be crucial for companies and social media. According to Gartner, more users will turn to their mobile devices for online purposes… It’s already happening more consumers are using their smart-phones, than laptops and desktops.

With the launch of Facebook’s ‘Ticker’, Twitter’s ‘Promoted Tweets’, and Google’s ‘YouTube’ for ‘ads’ in 2012, they will show how social platforms can capitalize on their biggest asset, which is user data. Social media advertising has gained momentum and with almost a quarter of the planet hooked-on social networking, you are bound to be noticed. According to Donny Gamble; advances in niche targeting and segmentation will increase the potency of social advertising to an excess of $10 Billion by 2013”.  Social media advertising compliments ‘brand’ and ‘brand’ sells, but only if it manages to meet the consumer’s expectation. There’s no doubt that social media advertising works, but caution is essential…

Know your market, get a strong understanding of the online social behavior of your potential customers, and communicate compelling and relevant information… don’t just rely on one network, but rather use a whole range of channels together and make sure that you are covering all the bases…

As more marketers incorporate social networks in their business, they will no longer look at them as silo destinations. Instead, they will look to increase the impact of their social network presence by linking it to other marketing initiatives, both online and offline ~Debra Aho Williamson

Know your Customer… Improve Selling: Mining Customers Annual Reports & Financial Statements…

“Show me the money!” You may remember Cuba Gooding Jr.’s immortal line from the movie Jerry Maguire, “Show me the money!” Well, that’s what the annual report and financial statements do. They show you the money. They show you where a company’s money came from, where it went, and where it is now. If you can read a nutrition label or a baseball box score, you can learn to read basic financial statements.

The basics aren’t difficult and they aren’t rocket science, and you should be able to look at a set of financial statements and make sense of them.  If you call on large business accounts, you have at your disposal an extremely powerful sales tool: the customer’s annual report. An annual report provides a wealth of information about the issues that are most important to the customer, the company’s values and many other clues as to what will make them buy from you.

In the article “Mining For Treasure In Annual Reports” by Art Siegel writes:  One of the most valuable tools in any salesman’s arsenal, and one of the least used, are companies’ annual report. Not your own company’s, but for each of your corporate customers. Annual reports contain some of the best information you can find on what makes a customer’s company tick and the major issues inside that company which can help you get the sale.

At the beginning of every annual report is a letter from the CEO or Chairman which typically summarizes the past year and makes commitments to the shareholders for the year to come. Few corporate documents receive as much care and scrutiny as this letter. It is the corporate equivalent of the President of the UnitedState’s State of the Union address.

There are two principal things to look for in the letter which can provide you with important clues on how to sell to this company:

  • First is the word ‘challenges’ or equivalent word(s) that show up in most annual reports. The company says something like: “We encountered unforeseen challenges in our software re-engineering project…” In other words, they planned to accomplish something, and now they are embarrassed to report that they failed to achieve their goal.
  • Equally important are statements of future goals: “In the year ahead, we will develop two new…” If these announced goals are not met, they will show up in next year’s report as more embarrassing ‘challenges’.

Both the challenges and the future plans represent the innermost heart and soul of what the company’s top management thinks about on a daily basis. If you can think of a way that your company’s products or services could address either of them, you have a basis for writing an introductory letter to a senior executive suggesting you have an idea that they need to hear.

Another feature of just about all annual reports is a description of the nature of their business. This may be as simple as one page describing the company’s core business or as extensive as several pages on each of their divisions. At a minimum, these sections give you valuable information you need before any sales call about what they do at the company.

You can use this information to tailor your presentations, as well as deciding which of your present customers to use as references. Another thing to look for in this part of the annual report is anything that is changing? Do they talk a lot about a product line that has not been a major contributor to sales in the past? If so, this tells you the direction in which the company is evolving. They are more likely to spend more space on solutions that relate to the growth areas, than parts of the business which are being de-emphasized.

The financial figures always include quarter-to-quarter and year-to-year comparisons for total revenues and expenses, as well as for various line item categories. How valuable these numbers are depends upon the amount of detail provided. What you are looking for are clues that some area has a problem that you could help fix. For example, are selling expenses rising faster than gross sales?

If so, does your company offer a service that might reduce cost or improve sales productivity? What about administrative expense? Do you sell a product that could help there? For each line item which shows either a reduction in revenue growth or an increase in expense, then ask yourself whether you could make a case why your company could reverse these adverse financial trends.

Finally, at the end of most annual reports, you will find lists of the company’s directors and executives. Needless to say, the executive list is most valuable in telling you who heads each key area of the company, and it is likely to be more accurate than any mailing list you can buy. As for the directors, most of them probably sit on the boards of several companies, you might consider sending out an introductory letter to each of them as well…

In the article Reading Your Customer’s Annual Report (Really)” by Jack Malcolm writes: There’s gold in those reports… Sophisticated sales professionals know that long term profitable relationships at high levels depend less on price and product discussions than on showing your customer’s high-level decision makers how you will help them meet their business objectives and being able to speak their language.

You’ll find information about both in their annual report. The key to getting useful sales information from your customer’s annual report is focused reading. If you know what to look for, you’ll know which sections to pay close attention and which to skip, and things will seem to magically pop out at you as you read. Four main things to look for:

  • Where are they going?
  • What are their strategies and initiatives to get there?
  • How are they doing?
  • Key language and phrases you can use in your sales discussions.

Where are they going? Read the Chairman’s Letter first. This is the section in which the company is telling you where they’re going, what they most want you to know, and probably includes the major themes that senior level decision makers think and talk about in their daily work. Know what these themes are and you will speak their language.

What are their strategies and initiatives to get there? So, now that you know their major theme, it’s time to get more specific. Continuing on, they tell us their ‘growth imperatives’, which is their way of saying how they’re going to get there, including launching new products, growing services and software, leading in growth markets…

How are they doing? Interpreting your customer’s financial statement is more than you probably want to know, but you should have a general idea of how sales and profits have trended, as well as a general sense of how big they are. You can skip most of the fine print in the ‘Notes to Financial Statements section’, although if you deal with just a specific segment of a company you might find it useful to see more fine-grained detail about their various operating segments in this section. Pay particular attention to recent acquisitions, which can be clues about the direction the company is pursuing and can be new markets for you within that company.

Key words or phrases: Speaking their language can get people’s attention. One method to get appointments is to use company-specific phrases in your subject line when sending an email to your customer. It shows you’ve done your homework and separates your message from the usual spam.

The most important thing about annual reports is; just read them. Every salesperson I know is aware that they should read their customers’ annual reports; but very few actually do. If you take the time now you will definitely be ahead of your competition.

In the articleReading Financial Reports For Dummies by Lita Epstein writes: Reading a corporation’s financial report is never the easiest thing to do, and annual reports can be especially daunting. You may be relieved to know that you don’t actually need to scour every page. The following parts best serve to give you the big picture:

  • Auditor’s report: Tells you whether the numbers are accurate and whether you should have any concerns about the future operation of the business
  • Financial statements: The balance sheet, the income statement, and the statement of cash flows; where you find the actual financial results for the year
  • Notes to the financial statements: Details about potential problems with the numbers or how the numbers were derived
  • Management’s discussion and analysis: The higher-ups’ breakdown of the financial results and other factors that impact the company’s operations

The rest is fluff However, it is important to understand how financial ratios can be used to measure the performance of a business. This has never been more urgent and important; when corporate frauds and corporate governance are high on the public agenda. However it is also important to understand how they can be used positively to maximize value and success in a business.

In the article “Reading Annual Reports Made Enjoyable” by Ernest Nounou writes:  Here is a simple but not exhaustive set of rules to follow in reading annual reports. They may not convert you into a Wall Street analyst, but will help you obtain far more worthwhile information, knowledge, and insight into your customers.  Rules for reading an annual report:

  • An annual report and financials represents a snapshot at a given moment. By the time it is mailed, an annual report is more history than news.
  • Reading history, look for trends over a reasonable time period of at least 3 years.
  • Good management will likely get things right over time and will not turn stupid. Of course the inverse is also true.
  • If you can’t understand language used to describe normal company performance, it’s not you; it’s them.
  • Successful performance is traditionally measured by level and growth of sales and real profits from operations. Everything else is commentary.

So now that you have all this terrific ‘annual report & financial’ information, what should you do with it? Here are some definite musts when it comes to reading an annual report: Review the company’s financial statements and look for trends in profitability, growth, stability, and dividends. Read the report thoroughly to pick out hints that the company is poised for explosive growth — or on the brink of disaster.

Places to look closely for such hints include the letter from the Chairman, the Sales and Marketing Section, and Management Discussion and Analysis Section. Carefully read the letter of the Certified Public Accountant (CPA) firm’s opinion to be sure that the firm (CPA) agrees that the financial statements are an accurate portrayal of the company’s financial reality.

Carefully read any footnotesto the financial statements. These footnotes often contain information about company assumptions that can be critical to a full understanding of the financial statements… ’Mining’ customers’ annual reports and financial statements will significantly enrich your knowledge of your customers, which will contribute to improve sales…  

Of course, there are also the traditional sources of information to keep an eye on customers; business press, Internet search, company website, news alerts, analyst reports, conferences, trade shows, newsletters, competitive reports, traditional and social media…

“In an annual report, you’ll have a great deal of information that is of value, some that has some sort of value, and some that is worthless” ~ Richard Loth