Solutions Spotlight: Opportunity Analysis

solutions spotlight opportunity analysis

Sales growth is critical for nearly all the organizations.  Most organizations develop an ongoing set of initiatives to address sales growth.  Research from a variety of sources concludes that only 25% of those initiatives succeed.  The LRC Opportunity Analysis can impact that success rate by a multiple.

The LRC Opportunity Analysis is based on the research findings:

  1. Nearly all organic growth comes from great customers.
  2. What characterizes those great customers? Common findings include giving you more share of spend, higher levels of retention, and average to above average margin.
  3. At a minimum Great customers have concluded that your execution is superior to that of their alternatives. Their conclusions may extend to believing that your organization provides some critical benefits that are unique in the industry.
  4. In our language, a Great customer is a Loyal customer. It’s just that not all Loyal customers are Great.

All organizations have a segment of Loyal customers.  These customers believe the organization delivers more value than their alternatives.  On average, these Loyal customers behave far more positively than the customers in the Neutral and Vulnerable segments.  A typical finding is shown in the table below:

solutions spotlight opportunity analysis2

However, not all Loyal customers exhibit these behavioral patterns.  Looking at a distribution of the share of wallet for just the Loyal segment, you can see that bottom two quartiles give a share of spend far lower than the top two quartiles.

solutions spotlight opportunity analysis3

Identifying the customers that have a stronger attitudinal relationship with your organization, but a weaker behavioral relationship will provide a strong opportunity for growth.  Why?

  • If you’re average, the Loyal segment is usually about 30% of your overall customer base.
  • This segment provides the lion’s share of your revenue and income.
  • Half of that segment, about 15% of your existing customer base, has a strong relationship with your organization, but is giving a significant share of their spend to someone else.
  • That 15% is a substantial opportunity for you.

The LRC Opportunity Analysis determines:

  • Who your Loyal customers are, along with a profile
  • Projects that profile onto your entire customer population to determine all of your Loyal customers.
  • The current behavioral patterns from a sample
  • Models the behavior from that sample onto the entire customer base

From that, your team will know the customers that report strong relationships with your organization, but provide below average behaviors.  They can serve as a target for a high impact sales initiative.

Other aspects that you may consider for your growth strategy:

  • Migrating weaker customers to strong – our typical loyalty profile
  • Identify prospects that could be potentially “Great” customers
Posted in Insights, LRC Blog.