A friend I’ve known since high school is a corporate strategy consultant (who I’d recommend highly, by the way). One of his favorite sayings:
Spend time or money on things that create value for the BEST customers, but not the worst. . — Robert Bradford.
Like many great quotes, there’s a lot of great thinking behind Robert’s. In fact, I work with clients to operationalize this exact principle, but I’ve never seen what I do worded so compactly. Let’s unpack this saying together:
My readers know how passionate I am about understanding value and creating more. Remember, value is in the eyes of the customer, so understanding and creating value needs to be a contact sport. Learn how to have the kind of conversations that help you understand value in dollar-denominated detail, manage those conversations carefully, measure value, and talk freely & transparently about your value with your customer. Learn how your customer makes their money, and figure out how you can help them make more of it.
For your BEST customers.
Your best customers aren’t always your biggest, but your biggest customers are pretty darn good. There are two kinds of “best customers”:
- 1) those who are the best fit. These customers value your relationship, and often welcome stronger, deeper relationships.
- 2) the ones that are critical to the ongoing success of your company. This means your biggest customers and strategic smaller customers (technology development partners, pilot customers for a new product, etc.). These customer relationships need to be made more defensible, or the future of your company could be impacted.
Delivering value for your best customers provides the most value to you.
Spend time or money.
With key accounts, you don’t just work to make more sales. You also work to add value around the sale. This may mean providing marketing support, dedicated sales or customer success resources, or even doing R&D to support anticipated future value. I have even seen companies acquire key capabilities via M&A activity as part of a proactive customer strategy.
(As part of a joint plan).
This wasn’t in Robert’s quote, but adding it now helps provide perspective. You and your best customers should purposefully grow your relationship together – in a mutually agreed direction. You can let customer relationships (personal ones too, as it turns out) evolve on their own, or develop them in a deliberate direction. Doing the latter means you are less likely to wake up one day and ask where your (customer) relationship has gone.
But not the worst.
What about the worst customers? Why do you NOT spend time and money on them? Some of your worst customers try to consume your most important resources, and do so for the least return. If you are investing purposely on your best customer relationships, you are directing resources where they will do you the most good. Endlessly diverting resources into low return customers is bad for your company, short-changing your best customers, and is often not valued by your worst customers. Why would you keep doing that? While you may not always be able to part ways with bad customers, you do have to be strategic about these relationships. Can you stop bundling unappreciated service – can you discontinue any resource-diverting support programs? Can you raise prices? Sometimes this makes bad customers leave, sometimes they stay …at higher prices.
What do you think? I’d love for you to share your thoughts on this post below. IF you’d like to learn more about how I help my clients operationalize this great principle, feel free to contact me.
As always, to your success!