Classifying your customers may assist you to streamline your sales activities and help you focus on achieving the desired business goals. ABC is the most commonly used method.
A represents the ‘top grade’ or ideal client in your business.
B is a brilliant business customer.
C reflects the bulk of your clients eg steady, reliable, profitable, courteous and pays on time.
A number of years ago I worked for a Trans Tasman business with lots of customers and sales representatives. Here is the ABC classification system we used at the time to assist us to schedule our clients call cycles, communications and Christmas gift list.
ABC classification system:-
A grade clients had a total spend or invoiced sales of $100,000 + per annum
B business clients spent between $20,000 - $100,000 per annum with our company
C class customers placed orders ranging from $1,000 to $20,000 per annum.
Our Client Call Cycle was set as follows:-
A grade clients were visited every week
B business clients were visited every month with a phone call in between
C class customers would be visited every 6 months with a phone call in between as well.
At a minimum, a customer or prospective client should be contacted every 90 days, otherwise they forget you or you are not top of mind – your competitor is!
Other factors worth considering in your ABC Client Classification system include:-
Profitability of a client. Activity Based Costing may highlight the true profit.
Optimisation of a client's jobs. Work is optimised for our machines/processes eg
- Long run jobs, short setups, repeat work
- We actually enjoy doing their jobs.
Suitability. The client is a good FIT for our company - people, processes and profit eg
- Easy to deal with eg good order lead times, pays on time
- Customer helps us look good.
The Competitor's Client could be our future A, B or C grade customer.
Application of the ABC Client Classification system in your business may assist you to improve the productivity of your sales team. Software systems like Ostendo assist you with classifying customers, analysing sales, inventory, profitability, etc. You may have heard of data mining software which simply makes a science of this.