Raman Bindra, Customer Success Manager, Sentieo
It is often said that the “customer is king”, however does this apply to all customers or just a select few?
In the current B2B (Business to Business) or SaaS (Software as a Service) business world, the story gets a twist. It’s true that we need to cater to all of our customers who have purchased our solutions, but we also need to consider customers with high potential for business expansion. Therefore, it is essential to segment your customer base in such a manner that will help you identify the strategic customers and put more resources into them so as to strengthen the relationship and set the right tone of communication.
This should not mean that you ignore your other customers, it’s just that this activity helps you free up space and/or time for the types of customers who help your business by renewing and growing.
Who is a STRATEGIC CUSTOMER?
Jon Fisher, Professor of Business at the University of San Francisco, refers to the "Strategic Customer" as one that can play a particular role in collaboration with a business. To put it more simply, a customer who can help a business grow.
Why Identify Strategic Customers?
It allows you to understand the most and least important / profitable customers for your business. However, collecting and analysing data just to understand these patterns doesn’t make sense unless you’re actually going to do something with it. Here are some valuable things you can do with the analysis:
In my experience, I have observed that a lot of organisation give additional focus to their customers using revenue based metrics to identify the Strategic Customers. Whilst that is probably the easiest approach, that’s a pretty narrow line or myopic definition that needs to be unlearnt. We need to have a pretty broader picture of customer segregation and accordingly identify our strategic Customers. Here are my recommendations of what to consider when defining your Strategic customers:
1. Size of the Organisation:
We need to understand how big the organisation is in terms of the employees. The larger the number of employees, the more lucrative are the opportunities to up-sell in that respective business to other teams/departments.
2. Growth rate of the Organisation
It’s pretty important to understand the growth with which the organisation is moving in the industry. If they are growing on a rapid rate, it will give an indication of how well the business is doing as well as give us an indication of expansion.
3. Global Presence
If the organisation has a global footprint, it opens the door to get new business from different locations/regions as well as gives an opportunity to expand globally as well.
4. Industry Influencers
Understand how important, valuable or known your client is in its respective industry. If your client has some followers in their respective industry or some really good contacts, this would actually help in getting additional business via referrals. Plus, these kind of contacts can also be invited to attend conferences or participate in webinars because they already have an audience following them who can be your potential clients.
5. Level of Product Adoption/ Usage
If the client is achieving maximum value from using your solution and is sending out feedback or support queries, then these should be treated as "Golden Clients", as they know your product inside out and actually sharing critical feedback on time.
6. Multiple Stakeholders/Contacts at all levels
Having multiple customer stakeholders (ranging from end-users to the senior (C-Level) decision makers), helps to define a Strategic Customer. If you are able to manage these contacts, then it is extremely helpful in discussing both the renewal and expansion opportunities.
7. Part of a larger Corporate Family Tree or BRAND
If a client is not contributing a lot in the ARR or MRR they might be a part of a much larger organisation or Brand. In such circumstances, we should not just judge the individual client on their current revenue that they add to your business but understand that they can be the potential referrers for your business in their respective corporate family.