Identify Customer Purchasing Behavior to Optimize Resource Allocation

For the first time in the history of the automotive industry, Toyota Motor Corporation recently surpassed General Motors as the largest supplier of motor vehicles in North America. This achievement in large part represents the fruits of creating a pervasive culture of customer intimacy throughout the organizations functional areas (sales, service, marketing, design and manufacturing). Toyota was among the first to understand the difference between customer relationship management (CRM) and customer experience management (CEM). Toyota learned to capture and respond to customer experience insights in a powerful and results producing effort to overtake their considerable competition and cement a differentiated market share position & brand reputation.

In this the third installment of our Building Your Brand Identity series, we will examine the value of an effective customer experience classification system and how to identify and capitalize upon customer purchasing patterns that are impacted by the level of “customer relationship intimacy” between your organization and its’ customers. By understanding the subjective experiences that drive your customers’ purchase and migration patterns, an effective resource allocation plan can be developed that corresponds with expected future revenues and profits.

As we have discussed previous, the most valuable asset any company has is its relationship with current and future customers. Important measures of the nature of these relationships are often characterized less by what you know about your customer (CRM) and more based on how your customers think and feel about your company (CEM).

FIGURE 1

Measuring customer experience is incredibly valuable as it reveals any gaps in your organizations customer relationship nurturing and maintenance performance, and identifies target areas for improvement initiatives. A customer experience measurement process should be designed to collect and monitor information patterns either immediately at or after the point of contact with a customer. For example, one market-leading rental car company has trained their service team to ask every driver returning a car “Would you rent from us again?” Toyota sends a personalized e-mail questionnaire from the dealer service representative to their customers after every vehicle service appointment. Both examples are simple techniques to capture the quality of the customer experience immediately at or after the experience occur. In both cases, this creates a steady stream of customer feedback that can be analyzed to identify gaps or patterns where improvement should occur before negative consequences develop.

Similar focus should be applied to understanding the extent of customer migration (increased spending by happy customers or decreased spending by unhappy customers) to more effectively manage sales and marketing resources, modify promotion vehicles and campaigns, and quantify the financial impact of the results of positive or negative customer experiences (see figure 2).

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The table in figure two illustrates three dimensions of customer behavior on the basis of the level of attention they require and deserve. The horizontal axis measures the level of customer “intimacy” or the degree to which your company’s positive relationship has evolved with the customer. The vertical axis illustrates the amount of current business the customer is purchasing in the form of billed revenues. The size of the circles on the table illustrates forecasted revenues as either orders placed but not billed or potential orders that have been forecasted.

Customers with high billings and significant forecasted revenue but low satisfaction (as in customer one) are high-potentials to migrate elsewhere and require immediate intervention by sales and management teams. Efforts to understand the root causes of their dissatisfaction and to initiate corrective measures should begin at once. Customers with low billings, high satisfaction, and high forecasted revenues (as in customer two) represent good potential future business that has been unexploited, usually due to the lack of appropriate human resource allocations. Sales management should review the level of resources allocated to the account and ask that team to periodically present their account strategy. Any gaps should be identified and management should develop a resource plan to further support the sales team. Customers with low satisfaction, low billed revenues and low forecasted revenues (as in customer three) should be evaluated to determine if sales coverage & resource allocations would yield better results if assigned to another customer.

Customers with high billings and significant forecasted revenue but low satisfaction are high-potentials to migrate elsewhere and require immediate intervention by sales and management teams.

Negative customer experiences occur every day. As a result, some customers decrease the amount of business they do or switch off altogether. Even worse, customers often share the story of their negative experiences with co-workers and influencers who then repeat the story to others. People love to share and talk about their poor experiences and bad stories, its human nature to do so.

Although most companies know quite a bit about their customers buying patterns and payment history that help to classify them, they often know little or nothing about customer thinking, emotions and thought formations that result from interactions with your companies products, services and brand. Unless your company can establish a steady stream of customer experience data for subsequent analysis, your limited resource allocations will never be optimized to achieve maximum revenue and negative customer migration patterns will continue unabated.

About the Author
I am an accomplished advanced and disruptive technology analyst. I help organizations manage their overall marketing strategy and efforts including market analysis, identification of business opportunities and risks, strategic alliances and partnering, systems engineering and customer requirements, business development programs and marketing, advertising and communications initiatives & plans.

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