Boosting B-to-B Customer Retention (1,185 words)
by Mary Ann Kleinfelter
Customer profiling and segmentation have never been more popular, and the reason is simple: We are all in search of more customers who look and act like our very best customers. The data you glean from customer profiling and segmentation is also an essential first step toward understanding and improving customer retention. It is categorically true that different segments of customers are retained differently, and that you should invest more or fewer promotion dollars per segment in the hope of a return any time in the near future.
A customer profile is a snapshot of how your customers look and behave.
There are at least five ways you can build a business customer profile:
1. You can use data you gathered through the process of taking and fulfilling orders, also called transactional data.
2. You can further segment customers beyond transactional data by purchasing and appending additional data, such as what type of industry your customer is in.
3. You can (and should) profile customers by looking at their buying behavior separately from their company's buying behavior, known as individual vs. site profiling.
4. You can use information you captured from customer feedback, both quantitative and qualitative to profile your customers.
5. You can choose to build a model from a wide range of options to profile
customers or simply to re-affirm the assumptions you have derived from previous customer profiles.
The activity of segmenting customers into groups based on past performance, like characteristics, predicted performance or other factors you choose is at the heart of profiling. You define the segments. That is why it is often easier, and cheaper, to start with your own transactional data and segment based on RFM—Recency (how recently a customer bought), Frequency (how frequently a customer bought) and Monetary Value (how much a customer spent).