Customers come in all forms. Some are delighted, others are dissatisfied. Some are devoted, others are detached. Consultant Andy Hanselman suggests there are actually 10 categories in which they can be placed, and it’s vital to know which customer goes where.
Mr. Hanselman, who counsels a variety of fast-growing businesses in Sheffield, England, initially worked with them to divide customers according to whether they had low or high expectations and whether the quality of their experience with the business was low or high. That gave him a matrix with four quadrants, each starting with a “D”: delighted (low expectations/high experience), devoted (high expectations and experience), disappointed (high expectations, low experience), and disaffected (low expectations and experience).
While that is an excellent starting point, he believes you can go even further in segmenting your customers by applying the 10 Ds:
They don’t want what you are providing. And that’s not necessarily a bad thing. Successful companies are focused on customers who desire their product, while unfocused companies lurch at anyone. “It’s okay to have some customers who aren’t interested. Don’t waste your time and effort trying to change them,” Mr. Hanselman said in an interview.
You won these customers, but they lack loyalty. They see you simply as another supplier who at times can help them. They are actually reasonably happy, but have no buy-in. “The result is customer churn and the constant fight to attract new business. Truly customer-focused businesses identify these customers and work hard to build on the relationships they’ve started to create,” he wrote on Management-Issues.com.
You have exceeded expectations with these customers, usually through the personal touch, although he notes that in some sectors, this may mean simply providing things on time with a smile. But delight can dissolve, even when you have put great effort into tending to customers. Expectations grow and you may not be able to meet them.
These folks have high expectations and consistently get a great experience, so there’s no reason for them to go elsewhere. They come back to your company, spend more and tell others about you. The key here is consistency. You need to create a culture of customer service, as Zappos, Amazon and Apple have managed to do.
When things go wrong, you can end up with a disappointed customer. You may have provided great service in the past but flubbed it, or maybe your product isn’t on a par with other companies they patronize. He urges you to establish a process to deal with them when their disappointment emerges, as Ritz-Carlton Hotels does by allowing front-line staff to spend up to $2,000 to fix a problem. To find these disappointed customers, he suggests asking the question: “Are you completely happy with what we are doing?” If they aren’t, find out why.
The disappointed customers you do not deal with can become aggrieved and start to tell others about their experience, as Canadian musician Dave Carroll did through a widely viewed YouTube song when United Airlines broke his guitar. “Avoid creating disaffected customers at all costs. Deal with disappointment and do it quickly. And watch out for them online, in forums, on ratings sites and social media,” Mr. Hanselman writes. But he warns that sometimes such customers will be so disaffected they won’t pay attention as you try to woo them back.
These people were good customers in the past but drifted off. They represent an opportunity if you can create a dialogue with them, rather than simply sending them formulaic marketing materials that they will likely ignore. This group can be a challenge, but usually it is easier to lure them back than to gain a new customer from scratch.
These customers are unprofitable, draining money as well as time and energy. That makes them an important group to recognize, but Mr. Hanselman notes that research from KPMG suggests half of businesses can’t identify their most profitable customers, products or services. Before walking away from draining customers, try to make them profitable. Are there things you are doing for them that you don’t need to do? Can you raise prices? If not, you need to dump them.
It’s fine to get rid of customers as long as you have clear criteria. For example, tell them you can’t deliver the level of service they want at the price they currently are paying. Don’t be afraid to fire customers; in fact, keep asking yourself whether there are other draining customers you need to offload.
These are the customers you want and need to consciously seek. That means determining who they are, what their needs and preferences are, and how you can attract them.
Mr. Hanselman concludes that understanding who these ideal customers are – and those of the other nine categories – provides a framework for your marketing efforts.
Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter