Determining How Much A Customer Is Reallly Worth To You

It is a familiar and well known fact that most companies experience a gross deviation in its customers' value contribution. The 80/20 rule holds that 20% of a company's customer base contributes 80% of a company's profits. In some industries, such as the car rental business, 0.5% of customers rent some 25% of the cars according to Peppers and Rogers Group. With value distribution so lopsided, why are companies not rushing to adopt a customer value focus? After all, understanding and acting on customer value insight will help determine everything a company does, from what programs to invest in, to attracting and retaining the right customer, to predicting Return on Investment (ROI) from marketing and sales investments.

Well publicized case studies have demonstrated how a few innovative companies, predominantly those that focus in the business-to-consumer space and deal in large transaction volumes, have adopted a customer value focus. To date, fewer B2B companies, defined as those focused on serving a predominantly business clientele, seem to leverage customer value management as a strategic tool.

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