Operation Migration

Are your customer relationship efforts focused primarily on your top-tier customers? If so, you may be short-changing your other customer segments and doing yourself a disservice. “Companies often segment their customers based on today’s behavior rather than tomorrow’s opportunity,” says Kathy Sherbrooke, president and co-founder of Boston-based Circles, a loyalty management company. “There are often folks on the second or third tier who might be perfect top-tier candidates, and the goal should be to migrate them up the value chain.”

So how do you identify those customers and how do you shift them to your top tier? Take the example of a private client bank that splits its customers into three tiers -$1-$5 million, $5-$10 million and customers with more than $10 million invested. Sure, some of the customers in the lower tier may have all their money invested with the bank, but some may have only $1 million of their $20-million portfolio invested. “You have to create a deeper relationship to find out who has more money to invest” and to find out how you can better create a program that will appeal to that investor, says Sherbrooke.

You do that by gathering information and using that information to benefit the customer. Say, for example, one of those $1 million customers calls you to ask about getting tickets to the Master’s. You do it. Then you ask if you can arrange transportation for him, but he says no, he’ll be taking his private jet. “Now you know two things,” says Sherbrooke. “You know he owns a private jet, which means he probably has a lot more than $1 million – and you know he has an interest in golf.” To migrate him up the value chain, you might tap into that golf interest. How? “When your bank arranges an event at the U.S. Open and you are deciding whom to invite, it would make sense to invite this person,” she explains.

The strategy works, but only if the offer feels of value to the customer, such as the golf invitation to a fan of the sport, says Sherbrooke. Managing loyalty, she adds, is all about finding those pieces of information that will allow you to deepen a relationship in ways that are relevant to the customer, ultimately shifting second- and third-tier customers to the top rung and increasing both profits and the value of your brand.