High-Value Customers: How to Build a Great Product Strategy
Let’s discuss ways to build strategies for high-value customers and work towards establishing a great product experience
Who are high-value customers
High-value customers are users who have already subscribed, signed up to your product, or own some of your products if you have many products in your ecosystem. This cohort of users is called ‘High value’ because they bring more revenue to your company or these segment of users are your core users. For some companies, these customers can be B2-B customers, and for some companies, they are B2C.
What are the main pain points for these customers
There can be multiple pain points for this cohort of users to solve. For some users, it can be providing the best customer support, on-demand priority customer support, advanced product features, or personalized product features and experiences. For example, in the airline industry, we have upgrades for frequent travelers, or in the hospitality industry, we have upgraded hotel rooms or upgrade them to premium for car rentals. The main pain point in the above use case is how to provide the best value, best customer benefit, or the best customer experience for the high-value customers. How can we delight the customers through offerings or product experiences so they can stick with us and bring more revenue.
Why should we upgrade /upsell or provide Add-ons to the high-value customers:
Upgrades
There are two critical benefits of upgrading these customers. They bring more recurring revenues for the company. By upgrading these customers to a better experience, we can provide a better product experience for our core customers. We can offer better customer benefits with a more personalized experience with better customer value. The other advantage for the business is we get additional revenue from the existing customers, and their retention rates are usually high for this cohort. So losing these customers would be a huge business impact on the company.
Add-ons
For Add- ons we can combine multiple product offerings and build personalized product Add-ons for the customer at the best price so the customer can benefit from the overall bundled product offering, and even companies can expand their product SKU.
With Add ons, customers can add multiple products in the checkout flow, so it would be easy to manage and personalize their bundles in one place. For example, in the Airline industry, we can Add a hotel or rent a car at the checkout instead of booking them separately. For the hospitality industry, we can add an experience Add-on once they book a room to provide multiple offerings for the customers.
There are four main leavers to building an excellent strategy for high-value customers:
1. In product personalization
Build personalized product features catered to high-value customers. Make the product Add-free for high-value customers who are paying an upgraded price. Add Additional features which can make the complex task simple for upgraded users, so more users from the basic plan want to upgrade to the premium plan, for example:
a) Movie streaming companies have HD or more screen access for users who pay a premium price
b) E-commerce companies only give exclusive deals for customers in the premium plan so customers can save more on products.
c) Cloud platform companies give extra cloud storage if we upgrade to a premium plan vs. limited storage for free users
2. Marketing
For marketing, the fundamental goal would be how can we convey the product value proposition to customers so customers can upgrade themselves from basic plan to premium plan. How can we improve the awareness of the customers who may not know the benefits of upgrading from their current product to a premium product? If we could explain the key “customer benefits” of upgrading, then we can improve the overall conversion.
Here we have to personalize the messaging for each customer based on the customer persona so they can understand the product’s value or the key benefit of upgrading themselves to a premium plan. ( Time saved, helped customers save money, reduced wait times, easy access, etc.)
3. Personalization for High-value customers
We can build a personalized experience for high-value customers using ML/AI-based on customer product usage, NPS or PRS scores, and product purchase patterns based on similar customers or other attributes. Building a personalized experience is key to building a great strategy for this cohort of users. We can create customized product features or personalize the product experience by giving easy access to the top used product features for each customer would also help improve overall customer satisfaction.
4. Pricing strategy
By giving customers personalized pricing for upgrading from their current price to a higher price by providing a discount to the customer’s need will improve the overall conversion rates.
We can also personalize the pricing strategy for this cohort of customers using ML/AI to improve the upgrade rate for this cohort. By building customized pricing and combining that with the product value proposition messaging, we can improve the overall upgrade/Add-on conversion rates.
How can we measure the performance of high-value customers
If we improve the overall engagement for these users, we can say we have improved the overall performance or the overall sales of the high-value users, i.e., if we upgrade most of these users to the high paying plan or made them add additional product we can call that as success. We can improve this cohort’s overall performance if we could reduce the overall customer care calls by optimizing the product experience.
There can be two types of KPIs that we can track to measure performance.
- Customer benefit metrics
- Company benefit metrics
Customer benefit metrics
The customer benefit metrics is a KPI where we track the key performance improvements that are beneficial for the customer, for example, Time saved for the customer, reduction in customer care calls, helping the customer in their career improvement, Upleveling the customer skills, Improvement in their financial well being. All the above are key customer benefit metrics that vary based on the product.
Company benefit metrics
Company benefit metrics are those which will help the company, like Improvement in product engagement scores, Increase in long-term retention rates, Improvement in acquisition rates, increased revenue, reduction in customer care calls, and improvements in NPS scores or product recommendation scores, all of these metrics are key metrics to measure success for the product performance.
Finally, personalizing the product experience based on the user intent and persona with customer empathy and using the above techniques will help us improve overall upgrade rates.
All the above ideas are based on my experiences and research but feel free to add more in your comments.
Special thanks to Leneesh Pokala & Katie Cook for sharing their insights and learnings for this article.
Special thanks to Tremis Skeete, Executive Editor at Product Coalition for the valuable input which contributed to the editing of this article.
