Who is your next best customer?
There are two ways to interpret that question. Both are important. Both demand clear answers.
“Next best” can mean secondary, as in nearly, but not quite, your best. “Next best” can also mean who will be the best in the future.
Many companies fail to develop a growth strategy that successfully addresses and integrates multiple customer segments. The common mistake is to assume that what you do for your primary customer segment will “drag along” the next best segment. That’s rarely the case. Hyper-emphasis on your best customers usually leaves room for the competition to pick off those who feel neglected.
At Neiman Marcus, we did a great job growing our business with our top-tier customers–mainly by raising prices–while failing to hone and execute our strategy for the next tier of (quite profitable) customers. When the recession struck, we were hit unusually hard, particularly with this “next best” group.
The other mistake companies’ make is not focusing enough resources–or starting early enough–to cultivate the profitable customer relationships of the future. Of course it is difficult to know how to invest in customers who will not have an ROI for many years. But it’s even harder to try to wrestle those customers away from the competition once habits are formed and loyalties have solidified.
There are few categories where the consumers who will drive the majority of profits ten years from now, look much like those who drive current profitability. If you aren’t already working on a strategy to engage these future consumers, you might want to get started. Today.
And when in doubt, always remember: treat different customers differently.