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Intelligence Briefings: Managing Good And Bad Customers

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Why the customer isn't always king

For years, practical marketers have suspected that the idea that the "customer is king" looks good on a motivational poster on the office wall but that it isnít always a good principle for running a business.

As competition in many markets intensifies, winners will be those companies that build a portfolio of "good" customers while avoiding as many as possible of the "bad". "Good" customers not only provide more profitable business, they're easier to build effective relationships with. Recruiting customers who are good now, or who will be good in the future, and avoiding bad customers or containing the risks of bad customers who slip through the net, will also be vital.

In our briefing, Building customer-focused data, (see page 00) we gave some practical guidelines to help companies identify good and bad customers and suggested some ways in which good customers could be encouraged to stay and deliver more value, and bad customers could be encouraged to either become good, less bad -- or leave.

In this briefing, we dig deeper into the complexities of managing good and bad customers. In particular, we:

  1. Examine some of the complex technical issues involved in evaluating the future value of customers.
  2. Suggest some ways in which companies can develop strategies for managing the mix of good and bad customers.
  3. Explain the results of our research on how far some leading companies are actually able to bring together datasets required to manage this area -- and how developed their strategies are.

This is an extract.†† Order your copy from our bookstore

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