Not all customers are equal, how we determine our segments manage the accountability around these segments can be very powerful towards the achievement of improved profitability, cash flow and customer satisfaction.

1. The customer
profitability story
The 4 power quadrants to improved customer
management
by Mick Holly & Andre Gien

2. The story about how we segment
our customers that enable
improved margins and reduced
cost to serve

3. The process
The
objective
Customer
profile matrix
The methodology
Criteria
definition
Power
grid
Resource
map
Accounta
bility
Performance
milestones

4. Segmentation
Segment
Customers who
we want and
customers who
want us
Power relationship
The power
between us
and our
customer is the
same
Details
Customers who
want us have a
co dependency
and value what
we do for them

5. Segmentation
Segment
Power relationship
Customers who
we want and
The power is
customers who
with the
are not necessary
customer
dependent on our
value offer
Details
Customers who
are not
dependent on us
does not mean
they are not
valuable.

6. Segmentation
Segment
Power relationship
Customers who
we don’t want and We have the
those customers power
that need us
Details
Customers who
we don’t want …
we know who
they are!

7. Segmentation
Segment
Customers who
we don’t want and
customers who
are not dependent
on us
Power relationship
There is no
relationship,
transactions
are based on
convenience.
Details
These just exist
lets make sure
they are at least
profitable

8. Customer Profile Matrix
Customer that
want us
Customers who
don't Need us
Customers
we want
1. Ideals
2. Converts
Customers'
we don’t
want
3. Exploits
4. Monitors

9. Objective
To profile the way customers
behave based on the ideal
customer.

10. Objective
Customer segmentation is
performed based on 4 key
groups




Ideals
Converts
Exploits
Monitors

11. Objective
Each segment has a unique
strategy and measurement
system

12. Objective
Ongoing management is
performed in the one page
customer scorecard.

13. Methodology



Customer criteria definition
Power grid strategic setting
Resource allocation

14. Methodology


Customer integration
management (front line
to back office)
Opportunity mapping

15. Methodology



Performance measures
Building milestones
Review process

16. Customer Profile Matrix
Customer that
want us
Customers who
don't Need us
Customers
we want
1. Ideals
2. Converts
Customers'
we don’t
want
3. Exploits
4. Monitors

17. Customer Criteria definition
Defining the ideal customer (rated 1-5, 5 = ideal)
Customer
Behavior criteria
(examples)
a
b
c
d
Price
1
5
3
5
Ability to achieve targeted margins
Volume
1
1
5
5
Volume quantity and frequency quality
Operational
1
2
5
5
Ability to “fit in” with the way we do business
Cost to acquire
4
4
Create your own criteria
1
2
..z

18. Customer Profile Matrix
Power Grid
Customer that want
Customers who don't
us
Customers
we want
Customers
"we don’t
want”
Need us
1. Power is equal.
2. Power is with the
customer
3. We have the
relationship power.
4. We have no
relationship. These are
usually convenience or
spot transaction
customers.

19. Customer Profile Matrix
Power Grid
Customer that
want us
Customers who don't
Need us
Customers
we want
1. Strategy: Invest
2.
Strategy: Increase
switching cost. Migrate
to segment 1
Customers'
we don’t
want
3. Strategy.
Increase price with
the intent of
migrating these
customers to
segment 1 or exit.
4. Strategy: Find an
alternative way to serve
these customers
Directional objective

20. Customer Profile Matrix
Power Grid
Customer that want Customers who don't
us
Need us
Customers we 1. Relationship
want
Management: High
2. Relationship
management: High
Customers'
3. Relationship
we don’t want management: Low
4. Relationship
Management: Zero

21. Customer Profile Matrix
Power Grid
Customer that
want us
Customers who don't
Need us
Customers we
want
1. Acquisition cost: 2. Acquisition cost:
High
High
Customers' we
don’t want
3. Acquisition cost: 4. Acquisition cots:
Very low
Zero

22. Customer Resource Map
Customer that want us
-
Customers who don't Need
us
1. Ideals
2. Converts
Customers we
want
Customers' we
don’t want
1. Where are the majority of
resources currently spent
today?
2. Where should they4. Monitors
be
3. Exploits
spent?
Resources may include
Sales cost
Support cost
Cost to serve
Warehouse
and inventory
cost
After sale and disposal cost

23. Customer Integration Accountability
Structure
Ideals
Converts
Exploits
Monitors
Performance
management.
Reporting
measures and
milestone
accountability
Relationship
management
Accountable for
exiting customer
growth
Sales management
Sales support if
required in
addition to
relationship
management
New customer
development
Target customer
acquisition
Product /service
management
If required

24. Opportunity mapping
Behavior
criteria
(examples)
Customer 1 Customer 2 Customer 3
Customer 4
Price
1
5
3
5
Volume
1
1
5
5
Operational
1
2
5
5
Cost to
acquire
4
4
1
2
Ideal
Convert
Exploit
Transactional
Customer
segment
allocation
Legend
Opportunity
Increase price
Change minimum quantities
Strategy
Customer
…n

25. Performance grid
Ideal
Convert
Exploit
Transactional
High
Acceptable
Low
Acceptable
New customers
Celebration
Celebration
?
?
Lost customers
Disaster
Bad news
Don’t care
N/A
Resource
deployment
High
High
Very Low
Very low
Innovation
High
High
Don’t bother
Don’t bother
Wallet share
High
Low
N/A
N/A
Best place
To Ideals
Exit or to
Ideals
Keep as long as
they are profitable
Sales Growth
Customer
profitability
Migration

26. Customer performance system
Customer that want us
-
Today
Target
Customers who don't need us
Progress
Today
Revenue
Margin
Margin
Growth existing
Growth existing
Growth new
Customers
we want
Revenue
Growth new
Wallet share
Customers'
we don’t
want
Wallet
share
Target
Progress

27. Building milestones
Ideals
Converts
Exploits
• 1st 90
days
• 2nd 90
days
• 1st 90
days
• 1st 90
days
• 2nd 90
days
• 2nd 90
days
Monitors
1st 90
days
2nd 90
days

28. Grab our free E book
Its not the
numbers it’s the
fundamentals
Creating the
treasure map to
explore and
discover
That Improves
profit, cash and
returns
http://www.financialstatementstory.com

29. Mick is Chief Treasure Hunter. Over the last 30 years Mick has consulted with the
world’s leading companies to identify and implement performance
improvements. He has discovered that behind every person and company is a
story. Sometimes it’s a rocking adventure, sometimes a comedy, a mystery, a
drama and on occasion, a tragedy. Going beyond mundane numbers and
engaging in the story is the key to helping companies and individuals build
corporate and personal wealth.
Mick Holly
Andre is our Evidence Wizard. He combines the Passion of intuition with the
Power of Evidence to weave amazing stories that reveal the secrets and treasures
that are locked within financial statements.
He has deployed the financial statement story discipline in over 150 different
companies releasing more than $500million in value and more importantly,
demystifying the financial statements for thousands of people.
Andre's favorite quote:
"If you change the way you look at things, the things you look at change"
Andre Gien