Value of a Customer
A retail department store and a regional supermarket store chain can determine the value of their customers through measurement of the size of customer purchases. A supplier of raw materials to manufacturers can determine its value through the number of new customers per year. Disney World’s value can be measured through the number of customers’ interaction with the brand across social media, texts, and emails. The customer value of a political party campaign can be measured through the number of references in social media posts and interviews.
There are numerous ways how to identify the company’s most valuable and least valuable customers. A retail department store and a regional supermarket store chain can identify them through the analysis of customer’s checks. The category of customers that buy the largest quantity of products is a key one, and the category that pays for a few products and services is not a target group. A supplier of raw materials to manufacturers should find out what companies produce the most significant number of products for which the raw materials are required.
The Disney World company has to determine what social groups often buy tickets: families, friends, couples, foreign people, and others. Speaking of a political party campaign, the party has to consider its key followers through social networks. The number of followers can help to measure how many people may come to vote or become a participant in the party campaign.
Needs Differentiation
Disney World
Customer needs:
- Children: playing, dreaming of being a part of Disney World
- Parents: playing golf, relaxing while children are playing and having fun
- Models: taking pictures in front of fascinating buildings and sights
The Green’s party campaign
Customer needs:
- Young generation: having a feeling that there is someone to trust
- Bored people: having fun and listening to music
- Vegans and vegetarians: eating vegan food
Pareto Principle
The 80/20 rule or the Pareto principle states that 80 percent of the results come from 20 percent of the causes. For example, 80 percent of sales come from 20 percent of the company’s key products or services. Moreover, 80 percent of successful campaigns will come from 20 percent of advertising. Also, 80 percent of the company’s profit comes from 20 percent of its key customers. It is crucial for a business to identify its ‘most valuable’ or key customers in order to invest more resources in their needs. The ‘most valuable’ customer does not only repeatedly use the company’s products but also bring in more customers to the company. Companies need to identify the 20 percent of its customer base that is bringing in 80 percent of its profits.