Again our assessments reveal generally low levels of capability in this area.

94% of all companies do not appropriately welcome different types of customers

15% do have an information capture strategy

93% do not have development strategies for their high-value customer groups

94% don't have customer segment development plans

Only 10% of companies can measure cost to serve at a customer level

These are just some of the key approaches you can deploy to improve performance in this area:

In many customer bases, 1% of customers account for 40% of margin. By understanding current and potential value distribution, we can more effectively plan the 'allowable cost to serve' investments (and differentiating treatments) for each customer group, with a view to efficiently improving customer satisfaction, retention and cross-selling rates for those customers which really count. A major utility realised that within their 800,000 small-medium enterprise (SME) customers, there was a small group of 20,000 that were either profitable or had high potential to be so. The utility changed its reactive management approach and allocated these SMEs to a number of proactive account managers and gave them the resources and tools to get to know and establish relationships with these customers. The change was stunningly successful, both from a customer satisfaction and the revenue growth standpoint.

A North American retailer realised that the best customers in one channel tended to be their multi-channel customers. It then started actively combining its channels to great effect. The re-branding and inclusion of catalogues in retail stores generated the incremental 'sales equivalent' of a mid-size store, with no capital investment; whilst the introduction of 'retail flyers' with in-store phones direct to the call centre, delivered the additional sales of a new catalogue, again with no extra investment.

A North American Bank identified a group of unprofitable customers that were low in value but using high cost to serve transactions and channels (e.g. cheques and call centre). Having looked at these customer motivations they developed a new service package which encouraged these people to use the Internet channel. Despite a drop in fee income, the removal of cost turned the group into profit – and the customers loved it too!

A traditional approach, focusing on revenues alone, would never have discovered such a simple and effective solution.

Again, three guidelines to improve your performance in this area:

In a highly competitive market place, a cable and satellite TV company in the UK realised that the retention of existing customers was rapidly becoming as important as the acquisition of new customers. They developed 'intensive care' strategies aimed at identifying why customers were leaving and then intervened with appropriate communications. This resulted in retention rates some three times greater than its major competitor.

Our experience shows that if you ask this simple question, "What can we do to get you to stay?" you can normally save 15-25% of those customers that say they want to go elsewhere.

Improving effectiveness is possible in all companies – all you have to do is look.