Customer stratification may sound like an odd idea in this economy where any paying customer is a good customer. But even in this climate, sales people are prioritizing their accounts. The only question is if their prioritization matches the company's prioritization; both from a near-term and long-term viewpoint. Customer stratification assures a better match by measuring how much business a customer does with (sales), how profitable they are in gross margins, how loyal they are, and how costly they are to serve (to protect net margins). Each of these dimensions should have a bearing on the sales force's decisions. Customer stratification techniques are gaining popularity, but they often are not applied correctly. This cutting-edge program focuses on customer relationships and the net profit customers provide to their distributors. The value to the customer and the manufacturer must be addressed in combination with an understanding of the complex cost-to-serve model of the distributor. That value can then be captured through both increased margins and reduced expenses also leading to optimal asset allocation.
The program will demonstrate the customer stratification model; provide exposure to customer analytics, help you understand the model and apply it to your company data and use for your business setting. You will get hands on experience analyzing customers, develop and apply a practical-best practice approach to cost-to-serve customers.
The program will also help you understand the concept of “What to do?” and “How to do?” for applying customer stratification to various business decisions such as pricing, marketing, inventory management, sales force compensation, etc. Hands on sessions to determine each of the customer dimensions – buying power, profitability, loyalty and cost-to-serve will enhance your decision making process in your business.
You will also hear success stories and steps to implement customer stratification best practice from both business and IT perspectives based on projects from various lines of trade. The SELL exercise will walk you through the process of connecting customer decisions to shareholder value through financial statements. At the end of the program you will be able to assess the customer stratification processes in your company and develop a plan of action to implement this best practice at your company right away.
- Customer Stratification
- Motivation and Trends
- Customer Stratification Framework based on four dimensions
- Customer Buying Power
- Number of Items Accessed
- Product Line Penetration
- Customer Profitability
- Gross Margin Dollars
- Gross Margin Percentage
- Profitability Trend
- Customer Loyalty
- Hits (Number of Orders)
- Order Pattern / Order Consistency
- Revenue Growth (Trend)
- Cost-to-Serve (CTS)
- Activity Based Costing vs. Surrogate Approach
- CTS Framework and Factors (21 different factors)
- Critical CTS factors (7 factors)
- Bringing It All Together
- Customer Lifetime Value - Buying Power and Loyalty
- Net Profit - Profitability and CTS
- Final Customer Type
- SERVICE DRAIN
- Customer Strategies
- Impact of customer stratification decisions on shareholder value
- Implementation and Real-World Examples
- Roadmap - A Plan of Action for Your Firm
- How to effectively classify / segment the customer base?
- Structured easy-to-understand approach
- A practical approach to determine 'cost-to-serve' customers
- Systematically maximize margins
- Leverage existing system information
- Maximize your ROI on sales resources while balancing customer service
- Optimize sales force time investment
- Effective use of IT and Human Resources
Who Should Attend
- Sales and Marketing Managers
- Business, Branch, and Regional Managers
- Pricing Professionals and Business Analytics Team
- Distribution Management Professionals
- Anyone in your firm who communicates or works with customers
"Customer stratification has greatly enhanced our understanding of our customers. We now know which customers maximize our value proposition. Linking customer stratification to our supplier and inventory systems empowers our team to quickly distill the variables affecting risk and reward so they can make better and more profitable business decisions."
Frank Flynn, President, Sager Electronics
"Customer stratification has the power to enable us to transform our company from being product-driven to customer-driven. It has helped us understand our customers in greater detail, enabling us to optimize our selling resources, which will result in an improved ROI."
Don Schalk, President and COO, C.H. Briggs Company
"Texas A&M's Customer stratification book is well organized, thorough, and well-written. Given the so-so experience of many wholesalers who engaged customer profitability in years past, it's a shame this text wasn't written earlier. For account-based actions that improve overall profitability, we can't think of anything, past and present, that is better and more useable than Customer Stratification."
Scott Benfield, Benfield Consulting
"We have found the information from the customer stratification model to be very useful, pragmatic, and quickly applicable into our business. We have realized some early wins and anticipate a greater positive impact in our business."
Art Kostaras, President (Past), Womack Machine Supply Company
"I was impressed with the overall program at Texas A&M. When I look back, I was most impressed with the Customer Stratification model."
Randy Thomas, Regional Manager, Wilson