Determining Customer Value
How Valuable Is Each and Every Customer?
Are all customers one and the same? Not in the eyes of many companies. In search of the most loyal customers, they divide their customer base into different categories. What at first sounds like additional work makes perfect sense. Because companies that differentiate between which customers make an increased workload worthwhile, act more purposefully. With such information, they can use their marketing budget more profitably and build long-term customer relationships.
But which customers should companies pay special attention to? In order to answer this question, there are several factors to consider. Because if you only evaluate customer relationships based on potential sales, you sometimes think far too short-term. In this article, we show how brands recognize the true potential of their customers and what segmentation options there are.
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What Role Does Customer Value Play in Customer Relationship Management?
Companies that want to increase the value of their customers rely on maintaining relationships. If a company actively contacts its customers, customers feel seen. A long-term customer relationship can develop. Customer relationship management (CRM) can promote this. It summarizes all strategies and measures the systematic design of the relationships and interactions of an organization with existing and potential customers.
In the context of CRM, for example, all customers are evaluated. They are classified based on their potential that is of use to the company. The analysis of customer satisfaction is also an important task of customer relationship management. As already described, customer satisfaction is directly related to customer value: The more satisfied the customer is with the company or its products, the higher their value for the company.
The Role of the Net Promoter Score® in CRM
A popular key metric for getting a general picture of customer satisfaction is the Net Promoter Score (NPS®). It is determined from a single question:
What is the probability that you would recommend our company to a friend or acquaintance?
The customers give their rating on a scale from 0 = very unlikely to 10 = very likely. The participants are then asked to give reasons for their opinion in an open answer field. Based on their answers, the participants can then be segmented into three categories, with which the Net Promoter Score can be calculated:
- Promoters: They marked a 9 and 10 on the answer scale and are fans of a company.
- Indifferent or passive: You are neutral towards the company and have marked this with a 7 or 8 on the answer scale.
- Detractors: Detractors are the critics of a company. Your willingness to recommend is between 0 and 6 points on the answer scale.
The NPS method is a real asset for customer relationship management. It enables companies to conduct a survey with a large number of participants with relatively little effort and to segment the participants at the push of a button. In this way, companies can design customer relationships even more individually.