Gold, Silver, Bronze…Priority 1,Priority 2,Priority 3……A Customers, B Customers, C Customers…… Over the years having represented or worked for numerous brands, I have been exposed to every type of customer classification system known to the sales world, however the one thing that has always baffled me is that none of my customers were or wanted to be treated like a Colour, a Number or a Letter…..

There have been many theories written about what it takes to be successful in the field of sales. In my mind the Five P’s , Planning, Professionalism, Perserverance, Perspiration and Penetration are great action words that truly relate to what it does take to succeed in the sales arena.

To me the customer relationship starts all the way back in the head office of any company. In an established business, companies have a variety of customers from new to old, from large to small and usually also possess a list of target businesses that they would love to trade with in the future.

Each of these customers, mean different things to the organisation, however in a successful enterprise the sum of all parts can often hide what I consider to be a totally impersonal approach where customers are ranked on either their sales volume or their margin return.

I believe a customer list should be separated into 4 distinct classifications with sales people trained to the minute on how each classification is determined, why a particular customer is classified in that particular grouping, and how they need to handle each classification for long term sales success.

It is also important to note that a customer should not be allocated a particular classification based solely on the high volumes or margins they provide a business. A customer centric company should also classify a customer based on their business potential. To clarify, this means the sales team must take into account territory size, the percentage of business the customer is giving you in comparison to your competitors, their payment history and their general support of the company and all of the initiatives promoted by you throughout the trading year.

Market knowledge and trading history in an area, or a similar sized region, will determine the potential of a customer to a sales team. Maximising this potential in a disciplined and responsible way is the role of the sales team. Classifying the customers into the following four categories and applying a genuine sales focus will ensure long term sales success.

The First Customer Classification is the “NURTURE” group of customers.

Typically these are customers who have been working with a company for a long period of time, they have built their sales volume to a level where growth rates are starting to plateau and they are in effect achieving their sales potential for the company. This customer classification requires nurturing because it is important for long term business success that the company continues to trade at these levels, otherwise the effect on the overall sales results are usually dramatic.

These customers must continually be reminded that their business support is valued, and that they are thanked for their continued support.

Great strategies that do not cost a company any more and will Nurture a customer are:-

1. Allow this customer classification the first right of refusal on all product releases and promotional offers.
2. Consistent communication from both the allocated sales person and sales manager.
3. Find a way to pre-sell to these customers. Being first to the market with any product, is often a great advantage for both parties.
4. Allocate more time for these customers in your call cycles so genuine business conversations can take place, sales can be maximised and future opportunities can be developed.
5. “Beef Up” any marketing material or promotional offers so that the initiative is a success for not only the customer but also your company.
6. Because most business people these days are time poor, find a way to make the ordering process as easy as possible for your customer. If that means personalising your ordering system to help your customer, then do it!
7. Find times to remind them of the success you are creating together and their increased profitability from everything you are doing for them – Although this may not seem like nurturing, just remind them that you are actually nurturing their bank account – That will put a smile on their face.

The Second Customer Classification is the REINVIGORATE (OR REPLACE) group of customers.

The customer who needs reinvigorating (or replacing) is a customer that you have traded with at a higher sales level in past trading periods, and for some reason they are no longer achieving these levels. For whatever reason, they have decided to reduce their volume of business with your company, and trust me this is not an oversight on their part. Usually the reason for this decline is related to the product offer, pricing, account issues, your competition or the existing sales relationship. Sometimes it can be a combination of some or all of these points. The bottom line is, there is a problem, and the relationship needs reinvigorating.

Most companies will understand that it takes a lot longer and is often much more expensive to establish a relationship rather than reinvigorate an existing relationship.

Simple steps to Reinvigorate a business relationship are

1. Find out honestly, exactly what the problem is and determine whether both parties are willing to work out a solution to fix the problem – If this sounds like a marriage, do you ever wonder why they call it a business relationship!!!
2. Develop a genuine solution
3. Both parties commit to working towards achieving the end solution
4. Place the customer into the Nurture Category and ensure every future experience with your company is a good as it can possibly be.

If you are wondering why I have put the words (OR REPLACE) after reinvigorate, it is because if a solution cannot be found, and you know there are other customers in the territory that can assist you in achieving the area’s potential, then you have to seriously consider replacing the existing customer with a new one – Or working with them both to achieve the sales goal of that territory or region.

The Reinvigorate (or Replace) customer classification is the most challenging of the four levels. However one positive is, it is often these customers that have shown the sales potential of an area, with the result being if you approach a new customer, they are often more than happy to tap into an existing, meaningful and developed market.

The Third Customer Classification are the “WORK” customers, aptly named because in the main, these customers usually dominate the majority of a sales person’s customer numbers and work hours.

There are three types of work customers:-

1. The New Customer – Who’s potential is yet to be determined and requires the full sales approach to ensure results are maximised over time.
2. The “Old Faithful” – A customer who supports your company at the same level, year in and year out. Your product usually fills a gap in their product or service assortment and although they have typically “pigeon holed” your companies offer, they feel like their business is important to you and expect to be treated that way.
3. The “Drop-Off” customer – One who’s business is on the decline, there may not be any other options in the area and you have to work hard to get the business back.

An interesting finding about the “work” customer classification in most sales systems, is that the total sales derived from this classification will often be very similar, from one trading period to the next. As some customers sales numbers drop off, new customers pick up their sales. The Work classification in fact provide the back bone of any business through this consistency, so the resource allocated to this group by any company, should reflect this.

The Work Customer Classification is also the birth place of the Nurture Classification. If the correct sales processes are implemented, then the transition to “nurture” becomes quite natural, and your company has found a generic form of sales and/or margin growth.

Due to the “Work” classification usually being the largest of the four in regard to actual customer numbers, diligent and cost efficient sales strategies must be implemented to ensure sales are maximised in both the short and the long term. This will be a topic for a further blog in the near future.

The final Customer Classification is the REPLACE (OR REINVIGORATE) category.

Every sales spreadsheet I have ever seen, has a smattering of customers who’s numbers are either small, or very inconsistent in comparison to the balance of the customer base. In most cases, sales people have tried to reinvigorate them, have worked closely with them, yet still their business is less than meaningful.

There is a real cost to holding and maintaining an account. The time and effort of sales calls, administration expenses and general customer inquiries have a real impact on a companies profitability and resources. When a customer gets to this classification level there are actually only two options left for a company:-

1. Start communications with other business options, where your product or service would be relevant and that may exist in the area
2. If there are no other options, make one last, conscious effort to place the customer in the reinvigorate classification. If this does not work then close the account and use your resources more efficiently.

Quite often when a customer ends up in this category the sales person also needs reinvigorating to give the process one last chance. If the salespersons attitude is not spot on then the reinvigoration of the customer will not succeed.

How a company classifies their customers from within should be the first point in any customer relationship. An active classification will provide an active result, based on a lot more than just a number, a letter or a colour.

Ian Perkins is CEO and Chief Strategic Advisor of Brisbane based strategic consulting company Blurb Consultants. Ian works with a number of sales teams on a regular basis, providing strategic solutions to ensure long term sales success. Interested? Contact Ian directly ian@blurbconsulting.com.au or 0418194123.