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Welcome to the latest edition of 5-Minute Insights, the e-mail newsletter from Steve Wills and Sally Webb at Customer Insight Solutions (CI Solutions). We hope that in the few short minutes that it takes to scan the key messages, you will find snippets that are both informative and stimulating. If you want to find out more, we have provided links to longer articles for some of the insights.

INSIGHT IN PRACTICE

PARETO: CUSTOMERS IN THE SPOTLIGHT

This month, we turn our attention to how this principle can be applied to customers. Do you regularly review the value of your customers in relation to the cost of serving them? The Pareto Principle suggests that for most businesses, the top 20% of customers will deliver around 80% of the profit or value. Once you’ve identified these customers, you’ll be much better placed to ‘cherry pick’ so that you can develop future business more effectively.

However, you still need to be careful who and how you target:

• All areas of your business may decide to target your top customers – who may end up being bombarded by communications and offers
• There may be more value from the next layer down - the ‘marzipan’ layer*. Is there real potential for serving these customers better or selling them more?
• Alternatively, use your knowledge of your top customers to find others like them who would benefit from what you have to offer.

The same principle can be applied to cutting costs. Focus on your least profitable areas, whilst looking after your best customers.

For more details of how to apply the Pareto Principle to customers, please click here.

* Borrowed with pride from Andy Green of Reap Consulting.

MORE POWER TO YOUR ELBOW

Customer data reinforces the importance of insight.

If you think that insight has a fairly low profile in your organisation, take heart. The competitive advantage of well-used customer insight has never been stronger – and there’s plenty of evidence to back this up. For instance, many of the most successful businesses are ones that are expert users of customer data.

If you want to ensure that customer insight plays a full and effective role in your organisation, consider the following points:

• It’s up to you to ensure that insight is translated into competitive advantage - and that the customer voice is included in your decision-making.
  
• This means focusing on the right internal relationships and making sure that you are invited to the table.
  
• Don’t let insight remain as a back-room function. Raise its profile, and get that consumer voice heard!

For more information on key companies turning customer data into competitive advantage, please click here.

I'VE STARTED SO I'LL FINISH....

Encouraging customers to join loyalty schemes

Did you know that you can increase customer take-up of loyalty schemes by getting them started with a bonus?

In a test, loyalty cards were given to 300 car wash customers. They had to collect stamps and then exchange them for a free car wash. Half of them were given a card that required eight stamps. The other half were given a card which required ten stamps, but two were already provided.

The second group saved more stamps and also reached their goal more quickly. This is because people are more motivated to complete something that has already been started, rather than if they have to start something from scratch. 

Try it out…

The same principle applies to business: people can often be encouraged to engage in a task if they feel that they are already making progress towards its completion. Why not try applying this principle yourself? To find out how, click here.