- by PredictableChaos, Data Doctor
- 4/30/2013 11:39:14 PM
Breaking a customer relationship runs counter to most every instinct in buisness. I've never seen it done without overwhelming data to show why it really was a good idea.
One time, we had what might be an even more delicate situation - analysis showed that one of our largest customers was both our best and our worst. Our product business was large and important, but the service business; with the same client, was our best candidate for "walk away".
Heart wrenching. But the data was clear - it had to be done.
- by Leo Sadovy, Blogger
- 4/30/2013 10:03:26 PM
Firing customers is an unpleasant necessity that almost no one has the stomach for. It's akin to similar issues with divesting ourselves of businesses we should no longer be in, for various reasons, as the market or the product life cycle evolved. There is that famous question – Who is the best owner of your assets? Too often we don't even ask it, or if we do, we spend too much time in denial that the best owner is no longer us. I think 3M does a good job of either retiring or divesting of end-of-life products, but they seem to be an exception. Our focus on revenue over profitability drives some poor decisions. This is where smaller firms, that are less focused on growth, get it right more often. I worked with a consulting firm once that introduced me to the concept of "firing customers". They would not take any and all business – you had to interview with them in order to become their customer – they were very choosy.
- 4/30/2013 3:56:41 PM
Adding the site for the review of Island of Profit - again it's an excellent book and a compliment to analytical and business intelligence practices in a business.
I can see supply chain BI developing more and more as analytics and better database capabilties begin to spread and sync more with real time data flow.
- 4/30/2013 3:52:32 PM
Another thought: I liked how this example explained how service deliver does not have to even across resources to be profitable. Ireviewed a business book a few years ago called Island of Profit In a Sea of Red ink. The author noted that as much as 40% of a companies revenue stream can be unprofitable - in essence assymetric as the service example noted here. With analytics we are in an age where we can understand "Pareto effect" more clearly. It may not mean full elimination of the cause - as you mention, losing a customer is hard - but it can mean manage the resources better.
- 4/30/2013 3:45:55 PM
I like how the example illustrates how asymmetrical service delivery can be in practice. It runs counter in many ways to how businesses imagine customer service processes. I am willing to bet many small businesses run into this problem when they've added a large client finally, only to realize how asymetric their effort has to be in practice.
To the point about customer clusters, I think some web analytic data can be helpful to indicate customer preferences if part of the customer service is delivered through a website or an app if given the right analytic installation. Reviewing for patterns abround a site search - imagine customers looking for information - can reveal preferences or overlooked information. Visitor flow can also reveal how customer navigate througha site to get to a customer service segment.