Finding Tomorrow’s Valuable Customers Today

The oft-neglected customer who represents little value today could be an important asset for your company tomorrow – the trick lies in identifying them.

You can download PDF version of this whitepaper here.

Companies in the telecommunications and banking sectors that have begun managing customers based on their value have taken that first important step in effectively dedicating their resources proportionately, providing a higher level of service to more valuable customers. This is often reflected through the offering of dedicated customer service representatives, tiered loyalty cards, and personalized products and services, among other practices.

The reason why this is considered only the first step, however, is because one segment of customers is often neglected by companies and not treated in a differentiated manner – this segment, for this article’s purpose, will be called the “future cash cow” segment.

Customers in the future cash cow segment can be identified as follows:

  • The monthly or annual value they generate through the products or services they currently purchase does not warrant their being identified as high-value customers.
  • They have the potential to:
    • Spend more in the current assessment period and thus could become high-value customers (current share of wallet – short-term potential cash cow).
      • An example of this is a prepaid mobile phone subscriber that splits his or her spending with different telecoms – if he or she chose one provider, their spend would be significant enough to be deemed a high-value customer.
    • May spend more in future assessment periods to become high value customers (future share-of-wallet – longer-term potential cash cow).
      • An example of this is a banking customer that currently generates little value for the bank, but in the future, as his or her wealth and needs change, will generate enough income for the bank to be deemed a high-value customer.

This article will address the identification of short-term potential cash cows, customers which can be targeted through various campaigns and outbound sales efforts to rapidly acquire substantial assets for your company.

Identification of Short-Term Potential Cash Cows

Among your customers are a significant number of them who don’t give you all their business, for one reason or another. These customers split their category spend in one of two ways. The first, splitting spend vertically inside one product line – an example is the above mentioned case where a customer splits his or her spending with different prepaid mobile phone service providers. The second, splitting spend horizontally across a range of products – an example of this is where a customer holds his or her current account with one bank and his or her mortgage with another.

While there are numerous ways to identify these customers, we will highlight some of the main methods that can be used…


  • The customer generates significant value in one product or service line but does not own other products or services, and, has similar demographic characteristics to those of high value customers. An example of this would be a fixed line subscriber who generates relatively significant value and lives in an apartment building or neighborhood where a majority of his or her peer residents (those of a similar age, gender, household size, etc.) have ADSL packages and mobile phone lines with the company. There is a strong likelihood this customer is splitting his or her spend horizontally among several telecom companies and is a good candidate to pursue as a short-term future cash cow.
  • The customer has a disproportionate inbound – outbound rate, receiving a significant level of calls (a level those who are high value customers exhibit) but making few. This may be an indication of the customer using another provider for a majority of outbound calls. Analysis among high value customers to determine a relative corresponding outbound rate to a given inbound rate can help identify such customers.
  • The customer has exhibited behavior at any time in the past that corresponded with an annualized behavior which would qualify the customer to be a high-net worth customer. An example of this would be a customer who met the threshold requirements of the telecom operator to be considered a high net worth customer for a short-term period (a month or quarter), but, did not exhibit this behavior over the course of the required period (usually a year). Odds are, this customer has churned some of his or her business to another operator, and, if won back, could join the high value customer segment.


  • The customer is receiving a relatively significant salary payment (similar to those deemed as high net worth and only holding a current account with the bank) to his or her current account but transferring it out soon after it arrives every month. These customers are ripe for the picking as their potential value is self-evident.
  • The customer is making monthly mortgage payments out of his or her account in installments that can then be used to estimate the value of the mortgage he or she is paying off. Based on the value of the customer’s current account and mortgage, his or her likelihood of being considered a high-net worth customer can be easily calculated. A similar observation can be made about credit card product ownership – electronic fund transfers to accounts in the customer’s name at another bank are a tell-tale sign.
  • The customer has characteristics which deem that he or she must be holding other products with the bank, but has chosen not to do so and opted to work with another bank. Customers with similar salary payments, living in a similar neighborhood, of a similar age and household size stand to own a similar set of banking products. Those characteristics common in the various high value customer sub-segments should be identified through analysis. This information can then be used to identify potential high value customers.

To effectively be able to do the above, extensive analysis will need to be conducted by a data mining expert. Based on the data on hand regarding the customer, the query criteria will need to be fine-tuned on a case-by-case basis to ensure the most optimal leads are produced, leads which yield the highest possible return.

Generating leads is the first part of the effort in obtaining short-term cash cows – effective sales pitches, product / service bundles, discounted pricing, customized campaigns, etc., will likely need to be utilized to convince the customer to give full share-of-wallet to the company. As it stands, he or she already has a reason for not switching their alliance over to just company.

Understanding the reasons why any given sub-segment of customers has chosen not to give their full share-of-wallet is needed here to ensure the right offer is made to the right customer. Testing offers will be an effective method to determine the right mix of product & service, price, and pitch. Looking at competitor’s offerings is another, particularly around those products or services least held by these short-term potential cash cows.

Utilization of the above listed methods for identifying potential high value customers should become a standard marketing practice in telecoms and banks. Such methods to acquire business and increase the high value customer segment base are extremely cost efficient, and, if tried and tested, very effective.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s