January Conference Highlight (Book summaries)

During our Q&A time with Sunil Gupta and Donald Lehmann at our January audio conference, a question was asked about how to get more value from customers.

Q.How can you know what products or benefits or services you can add, you can bring to the customer to get more customer value?

A. Sunil Gupta: In marketing we all know segmentation. We do segmentation by demographics, we do segmentation by lifestyles. What if we can do segmentation by a customer lifetime value? Who is more profitable, who is less profitable. Guess what, I am convinced that providing value to the customer is more profitable. If nothing else, my resource allocation will differ, in terms of where I spend more money. Best Buy recently decided some of the customers that were coming back and returning the stuff are actually not worth spending their time on. And a company like that spends a lot of resources on those five or ten percent of the customers and they ignore the other 90 or 95% of the good customers. So just by reallocating their resources they increase the value of the 90% of good customers.

A. Don Lehmann: It also allows them to experiment. Best Buy is a great example of a company that will do stuff because somebody wants to do it. But then they re-measure the results and quickly kill what doesn’t return value.

Watch for more conference highlights in upcoming editions of our Beyond the Books e-newsletter.