Proformative, the online provider of talks, resources, and webinars geared toward the business profession and finance professionals, has gifted us with yet another informative webinar, this time focusing on customer stratification. Titled, “Using Customer Stratification and Cost to Serve Information in Your Sales Efforts to Maximize Profits,” the webinar covers customer stratification in great depth and outlines methods for implementing it effectively within your organization. The webinar is centered on a talk by leading authority on stratification Dr. F. Barry Lawrence.

Dr. F. Barry Lawrence, PhD, is a Leonard and Valerie Bruce Leadership Chair, Industrial Director of the Industrial Distribution Program, and Director of the Global Supply Chain Laboratory at Texas A&M. He has extensive experience in finance and sales, as well as an in-depth understanding of global markets throughout the world. He’s more than qualified to speak on customer stratification as it pertains to corporate growth and success.

Customer Stratification

                Customer stratification is a sometimes-controversial topic when it comes to business. Essentially, it describes the idea that certain customers are more valuable than others for a variety of factors, even if those customers might be paying the same amount for your services. There are several factors to consider when determining customer stratification:

Buying power—This is the most pure form of customer stratification—who has the most potential to buy from your company. The truth is that customers who have greater potential to buy should be considered priorities when time and resources are limited for serving customers. These are the big-guns, your top clients, and often your most profitable clients.

Brand loyalty—This factor takes into consideration the long-term relationship associated with a client. While one customer might not have as much buying power as the second, the first might be more likely to remain as a dependable source of income for your company. This should increase their perceived value in terms of stratification.

Profitability—Going beyond potential buying power into concrete dollars spent, these are the customers who have proven to be the biggest revenue sources for your corporation. Whether through a few large transactions or consistent, smaller transactions, these are your most consistent and profitable clients and customers.

Service Cost—While some clients or customers might be big spenders, they can sometimes cost so much to take care of that their value decreases in terms of revenue for your company. Clients with high service needs fall into this category.

Lawrence stresses that while any customer might seem like a good customer in the current economic climate, a company with finite financial resources might not be able to commit 100% of resources to each and every client. The factors listed above must be taken into account in decision-making to answer the following two questions—Who can your company count on to make an order and pay for it in a timely manner, and who has proven in the past to be a significant source of revenue for the company?

Customer Stratification and Pricing Optimization

                Dr. Lawrence references in his webinar a study that his program completed that deals with pricing optimization. They brought in 10 companies considered to use best-practices effectively and studied their pricing optimization models. They found through their study that customer stratification was the deciding factor in over 50% of pricing decisions, which flew in the face of prevailing ideas that stratification was only a minor concern in most aspects of business.

Dr. Lawrence then goes on to say that effective customer stratification comes from being able to take a genuinely unbiased look at each and every customer. He discusses how average client and customer relationships with a company are often defined by built-in biases, including emotions, relationships, and feelings toward individuals. Essentially, the only way to see customers purely for their value is to look at them from an informational perspective—to look purely at the data and analyze what it means for that customer means to your company.

However, that data is useless without a system in place for storing, sharing, and organizing it in a way that allows for its implementation as a best practice throughout your company. This is where content management can become a huge boon to your company’s effectiveness in managing stratification.

Analysis and Content Management

                Achieving effective customer stratification simply cannot occur without proper analysis and data management. To collect information about your customers and accurately assess their value, your company should have some sort of document management software system in place in order to gather data in a unified, secure and easy-to-access location. This organized approach to digital filing will allow all customer information and your own analysis to be readily available to call upon whenever stratification becomes a concern.