Profitable Customer Focus

Profitable Customer Focus

Customers are neither equally profitable nor are they similar Value drivers, Revenue Drivers and Cost Drivers vary across customers/ segments. 4D Quadrant ™, classifies customers/segments under four categories of Defend (whom to protect), Develop (Whom to nurture to grow), Deliberate (Who are those “Loss” leaders and what to do for them) and Dare (to drop). Focus on enhancing the value for the customer and serve them better for improved profitability

Profit “&” Loss Account (not “or”)

Not all Customers are profitable  Some are more profitable than others; while some are loss making  Can we “Sweep” all losses under the carpet of Strategy?

Profitable Customer Focus
– 4D Quadrant of Customer Focus

Segmentation

• Who are the personas?
• What are the Value drivers and Revenue drivers?
• What is the Service cycle for the customer?

Profitability Measurement

• What are the Cost Drivers?
• What is the desired profitability?
• What is the “Entry level” profitability?
• What is “That” profit to be measured and when?

4D Quadrant”

• Classifying customers based on desired action
• Clarity on Dimensions of customer focus
• Graduating the customer thru the four Quadrants

4 D Quadrant TM Methodology:

  • Segment customers/ markets on sales potential for defined period
  • Measure Customer profitability using Activity Based Costing
  • Create visibility of Cumulative Customer Profitability (Whale Curve)
  • Create 4D Quadrant of Customer Grid and brainstorm on actions
  • Making 4D Quadrant part of the Strategy formulation process and MIS system

Profitable Customer Focus:

  • Process of 4D Quadrant helps in creating specific strategies to the specific personas
  • Rethinking Value Delivery, Pricing and Fulfilment cycle enabled by Customer Profitability Potential
  • Prune the unwieldy customer base and lead towards Value focused Smarter Marketing Efforts

Enabling Customer Value and Profitability:

  • Sensitise the Marketing and Operations on concept and application of Customer / Segment profitability
  • Deselect customers/ downvote segments to help focus on the Potential Profitable customers/ segments
  • Approach customers with Value proposition and enhance price realisation
  • Streamline processes to fulfil customer requirement and enhance profitability