Assigning value to customer relationships
Many B2B companies already use lead scoring: a method of assigning values to prospects according to the likelihood they will convert. You should apply the same attitude to your customer base: is it easy to get this customer to experience product value, or does it take a lot of time and effort to service them? How much revenue do they generate, and is the lifetime value (LTV) high enough to compensate for your cost of acquisition (CAC)?
All this information can help you make data-driven decisions about the types of customers you want — and don’t want. If a company properly aligns its strategy with the right typology of B2B customers it wants to acquire, it will ultimately be successful in building a sustainable business that delivers value to both the customer and the company itself.
It might seem like a hassle at first to score your current customer base, but the rewards for doing so will make the effort well worth it in the long run. If you take the time to understand your customers better, you’ll be able to win more of them.
Before customers start flooding in, they must first be attracted and that is often a lengthy process — especially in B2B. We dove into all the peculiarities of the B2B sales cycle and have outlined them for you in this article.
Scoring leads and scoring customers
At its core, lead scoring is a system that helps your business identify which leads are most likely to become customers. Lead scoring can be used to understand the relative value of a prospect before they speak with sales. It can also be used to prioritise which inbound leads get followed up with first based on their engagement, behaviour, and how their profile fits with your ideal customer profile (ICP).
Lead scores can be manually assigned by BDRs or SDRs or automatically calculated by your CRM or marketing automation tool based on engagement of a contact with your online assets; for example your blog, downloadable content, and marketing emails. The purpose of lead scoring is to help identify and connect with your best prospects at scale without having humans spend time researching each one individually, calling them, and hoping for the best. B2B companies should treat their customer base with the same mindset as they do these leads.
Scoring customers based on the value of your relationship with them is essential in any growing business. As your business grows and develops, you will inevitably acquire some customers that are not really a good fit for your product.
Scoring customers based on the value of your relationship with them is essential in any growing business. As your business grows and develops, you will inevitably acquire some customers that are not really a good fit for your product. For example, you may find that customers in your current customer base are not getting enough value out of your product because you acquired them at a stage when your messaging was not quite clear, or when the focus of your product was different than it is currently. These customers are therefore difficult to keep happy, will churn faster, and will likely demand more resources from your company in the service you provide to them and the effort you have to put into retaining them.
It should be clear that you don’t want to acquire more of these types of customers, so you have to take this into account when analysing your CPI and working out your go-to-market strategy. Scoring your customer base can help you gain a better understanding of the types of customers you have, and how well they fit your product and the value your company provides to them.
Why it’s important to score your customers
We see that many companies do work with customer scores, but that these are based on the customer’s evaluation of the company. For example, net promoter score (NPS) measures customer loyalty and satisfaction by asking customers how likely they are to recommend your product to others. These metrics are useful and important, but we believe they provide a one-sided view of reality, namely customers’ assessment of their provider. We therefore suggest that companies also conduct customer value scoring as part of an ongoing segmentation and analysis of their customer base. The customer value score allows you to segment customers based on the value that the relationship with them brings to your business. The ultimate goal of this score is to identify what typologies of customers fit your business and product best.
The customer value score allows you to segment customers based on the value that the relationship with them brings to your business. The ultimate goal of this score is to identify what typologies of customers fit your business and product best.
Many companies already use lead scoring and should apply the same attitude to the customer base. Because we often see the following happen: companies look at who converts to customers and then start scoring other leads based on their acquisition path. That is fine in itself but only tells half the story, because what happens once that company becomes a customer? Is this company really valuable as a customer and does the relationship with them contribute enough for the effort and investment made? It is vital to keep applying customer value scoring on the right side of the bow-tie as well so you can understand how well that customer fits with your business; whether they are gaining value, and whether they are actually helping or hindering your business’ further growth.
How to apply customer value scoring
Performing customer value scoring on your customer base can be done with varying levels of complexity, depending on how much data you already collect about your customers and how much of that data is available in usable condition. We often see that B2B companies have little data – because B2B companies often have relatively few customers by definition – but also because they do not capture a lot of data about their process and about their customers. This can make the analysis of relevant and reliable data more difficult, but this does not have to be the case. If you look at the right data in the right way, you can benefit from relevant insights fairly quickly.
The simplest form of customer value scoring can already be done with a few qualitative data points that you can provide yourself, so you are not dependent on potentially unreliable and incomplete historical data.
Below, we will explain the data on which you could base a customer value score. The simplest form of customer value scoring can already be done with a few qualitative data points that you can provide yourself, so you are not dependent on potentially unreliable and incomplete historical data.
Customer value score: the added value that the relationship with a company brings to yours. You can see this as an importance score for this account and you score it on 4 items:
- Does this company fit the general profile you are looking for?
- Is their current need a good fit for your product/solution?
- Is it a low-effort customer to maintain and service?
- Are they bringing in high (enough) revenue (-potential)?
These simple items already answer a very important question: how hard should you fight for this customer or otherwise how okay are you with this client churning? The beauty of this way of scoring is that as a business, even if you’re not actively capturing a lot of marketing and sales data, you can provide the answers to these qualitative items yourself – or together with your team. Customer value scoring is an easy-to-perform analysis of your customer base, in which you create a segmentation of your customers based on your own insight and mainly qualitative and available information.
Customer value scoring is an easy-to-perform analysis of your customer base, in which you create a segmentation of your customers based on your own insight and mainly qualitative and available information.
Especially if you don’t have too many customers yet (say, less than 150), you can do this manually and gain a lot of insights. It is important that you weigh up which factors you want to include in your analysis and that you criticise them consistently for each of your accounts. It is therefore very important to be well informed about your customers and to build a strong relationship with them. This way, you can properly assess whether a customer, in addition to its own upsell opportunities, also offers potential for referral business and other collaborative marketing initiatives that can generate new business.
Customer value score in four simple steps:
- It starts with your own analysis of the type of company the customer is and the pain they are trying to solve with your product: does this use fit well with what it is intended for?
- Then, based on the relationship with your customer, you must be able to assess how well they are able to turn the use of your product into value for their business.
- From this, it is often easy to score the effort it takes to service and retain this customer.
- Finally, you will have to make a good assessment of the growth potential of this account, and the potential this customer offers for future income – both from this particular account and the importance of having this logo in your customer base.
In the easiest variant, you give each account a score of 1 for every time you can answer an item with ‘yes’ and add them up. A score of 4 is a company whose value to keep as a customer is the highest, the lower the score the less the relationship with this company contributes to your business.
If you wish, you can also score all items from 1 to 10 to perform a more nuanced analysis, and also assign different weights to the various items and thus adapt the scoring model to your own business. However, you do run the risk of applying less consistent scoring when you have to make more precise decisions about what exact value you assign, rather than just whether or not a company meets each of the four items.
Improve your strategy with customer value scoring
Customer value scoring can be used in different ways, but we particularly prefer to use it to fine-tune your ideal customer profile. As a B2B SaaS company with a subscription business model, you generate revenue over the entire lifetime of a customer, and you will need to optimise this to be as long as possible. Therefore, it is extremely important to include the customer value score in your go-to-market strategy and the ideal customer profile on which you focus your marketing and sales. This ensures that you not only focus on companies that convert the fastest and with the highest possible ratios into customers, but that you also target companies of which it is truly worthwhile having them as customers for a long period of time.
Including the customer value score in your ICP ensures that you not only focus on companies that convert the fastest and with the highest possible ratios into customers, but that you also target companies of which it is truly worthwhile having them as customers for a long period of time.
For example, looking at the conversion rates in your sales process gives you an idea of what type of prospects convert most often and most quickly to leads, opportunities, and finally to customers. If you then combine this information about the acquisition journey of your customers with the customer value score of those customers, you gain insight into the complete picture from acquisition to customer retention and growth. You create an even stronger demarcation in what your real ICP is, that goes beyond the quick win of rapid acquisition and also includes the long-term relational value that is so important for subscription-based business models.