Strategy #3: Identify Your Most Profitable Customers. Who are your most valuable customers? It may not be the client who buys the most goods. If you can analyze when purchases were made, the frequency of orders, and the revenue generated by these orders, you can segment customers according to value.
Being able to identify not only high-revenue customers but also those who incur high costs (through service or support) can help you determine which customers are really most profitable. Imagine a customer who purchases substantial volumes of your products each year, generating a certain amount of revenue for you. But if this customer also requires exceptional support or service, that generated revenue is offset by the costs you incur to satisfy the customer’s post-sales needs.
5 Ways to Leverage Your ERP System to Build Better,Stronger Customer Relationships (Part 2)
Another customer who buys less but requires no additional service may be more profitable. Understanding profitability is the first step to cultivating relationships with your best customers. Once you can identify your best customers, you can design processes or programs to give them special attention or rewards for their loyalty. You can use an ERP solution to segment and cluster customers and determine likely behaviors based on predictive modeling tools that can help you anticipate customer requirements and provide efficient, effective service.
Strategy #4: Deliver Only Superior Service. Another satisfaction-enhancing strategy is to ensure that you make and meet your promises for goods and services in a timely fashion. Only when you have visibility throughout your supply chain can you determine whether you have the inventory levels, manufacturing capacity, and shipping availability needed to meet demand.
When a customer places an order, sales personnel should be able to quickly analyze the product requirements against inventory and capacity. By analyzing these variables in real time, they can make accurate promises and deliver superior service to customers.
ERP software that integrates with your inventory and supply chain erp applications can help you create and manage customer orders, generate quotes and proposals, check product availability, and track orders throughout the order fulfillment process. These integrated tools can be used to automatically calculate prices using customer-specific information, such as contracts and price lists, and perform available-to-promise checks at the sales-item level .
With software like this you can make superior service a reality. Having supply chain visibility can help you avoid missed promise dates and product misallocation, even as cycle times speed up. You can enhance forecasting accuracy, reducing stock-outs and improving your ability to meet your delivery commitments. In fact, the supply chain insight enabled by ERP software can help you optimize production and order processing time and meet your goal of perfect order fulfillment.
Strategy #5: Maximize Customer Lifetime Value. By using ERP software to execute the first four strategies, you can begin to enhance the value that each customer can deliver over the course of your business relationship. But there is more you can do to maximize customer lifetime value.
By analyzing your interactions with specific customers, you can isolate issues that drive up service costs. With greater insight, you may be able to make process or service adjustments that reduce or eliminate the need for additional services, instantly improving customer profitability and your bottom line.
You can analyze payment history, using the results to identify customers that routinely delay or miss payments and compromise your cash flow. By offering these clients incentives to pay more promptly, you can receive payment sooner, reduce your days-sales-outstanding metric, and make each client a more valuable customer.