One key strategy to grow revenue and increase sales efficiency is maximizing existing high-profit customers.
Using revenue data, we help our clients identify their top-performing and least profitable customers and segment their customer base into two high-level buckets: “Stars” and “Stones.”
What Are “Stars and Stones?”
Known as a “top account strategy,” we map our clients’ customer bases on a grid to evaluate profit and revenue.
Top Account Strategy
- The upper right quadrant contains “Stars,” or your company’s best customers. They bring in the most revenue and have the highest profit margins.
- The upper left quadrant contains growth opportunities. These customers are highly profitable but do not spend much making them prime targets for sales teams to grow.
- The lower left quadrant contains “Stones,” or your company’s least performing customers, named for the way they can sink your profitability. They bring in the least revenue and have the lowest profit margins.
- The lower right quadrant contains customers to avoid. They spend a lot, but every dollar spent results in a loss for the company, such as through taking up too much time in the sales cycle.
Other characteristics to examine – in addition to revenue and profitability – include:
- Frequency: You might have a customer who spent a lot of money and was very profitable, but they haven’t been around in a year.
- Strength of the Relationship: You might have a customer in the middle of the grid – buying a fair amount at break-even or some profitability – but you also have intelligence around what’s going on internally at that company that indicates how you should approach them.
Layering in more qualitative data can help you make an even bigger impact with your strategy.
Recommended Strategies Across the Quad
Focusing sales efforts on “Stars” and growth opportunities while reducing or eliminating efforts on your “Stones” and least profitable customers can increase returns on investment and contribute to meaningful company growth.
Nurture Your “Stars.” Discuss cross-selling and upselling opportunities and deepen relationships with these high-value customers through ongoing campaigns and networking.
Grow Your Opportunities. Develop re-engagement campaigns and dedicated outreach tactics to encourage these customers to spend more often or on higher value products and services.
Sink Your “Stones.” Evaluate the impact of maintaining low-performing customers or eliminating your marketing and sales strategies around them.
Avoid Your Most Draining Customers. If high revenue, low profitability customers are taking up too much of your sales team’s time and energy, avoid investing in them entirely.
Activating revenue, profitability, and other qualitative data to segment your customer base into the four quadrants mentioned above helps optimize your efforts and can lead to sustainable revenue growth with highly profitable customers.
Does your sales team need support identifying “Stars” and “Stones?” infoFluency can help with its range of data preparation, visualization, and managed analytics services designed to help you make more strategic decisions.
