Customer lifetime profitability how to grow and manage your best customers

This article is an extract from Performance, Volume 7, Issue 2, February 2015. The full journal is available at
ey.com/performance
prospects,” says Richardson. “Up-selling
and cross-selling opportunities are also far
more likely when customers are happy.”
The message is clear: for businesses to
obtain the greatest commercial advantage
from CLP, they have to transform not
only their management systems, but also
their attitude toward their customers. Are
businesses still in the transformational
stage of their development? Or are some
already reaping the rewards that CLP
offers?
We find that the businesses that are
taking customer strategy and customer
targeting seriously are the ones that are
rapidly developing and implementing
CLP. Because CLP requires a business
to transform many of these functions,
it can take several months or years to
move that business to the point where
it can see tangible benefits from a CLP
implementation. What is important is that
CLP isn’t adopted by just one department —
customer service, for instance — as this
will not deliver the required levels of
cost reduction and profit increases. An
organization must have a holistic approach
to how it changes in order to adopt CLP.
The area that tends to take the most
time to implement is organizational change
management. Improving the service
experience that customers have means
changing how these relationships are
managed. The business philosophy and
brand values of the company have to be
clearly communicated — something that
is often overlooked. CLP demands that
the customer-facing aspects of a business
must be clearly defined and focused on
high levels of customer service, as this is
the foundation for long, lucrative customer
relationships.
It is vital to ensure that CLP is developed
with all customer touch points and business
strategies implemented together. CLP will
fail if there is a disconnect between its
stated goals within a business and the way
this is actually delivered to the customer.
Again, a holistic approach is critical to the
success of CLP and the business strategy
that underpins it.
When businesses understand their
customers at an attitudinal, functional and
geographic level, they can start to develop
new products and services that will speak
directly to these customer groups. This
is the essence of CLP and the tangible
delivery of improved levels of profit with
reduced costs. And, of course, businesses
can begin to get ahead of the market with
What is important
is that CLP isn’t
adopted by just
one department —
customer service,
for instance — as this
will not deliver the
required levels of cost
reduction and profit
increases.
new products and services, which then
deliver a massive commercial advantage in
their sectors.
CLP is a measure of how effective a
business is at delivering customer needs.
All businesses want to be customer-centric.
CLP enables a business to measure how it is
delivering its services, what this means for
cost and, of course, the level of profit it is
gaining from individual customers. •
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