Identifying Your Primary Customer

May 24, 2009 Comments Off on Identifying Your Primary Customer

Definition of customers

Restoration contractors who work on preferred supplier programs always have a great interest in customer service. After all, without a robust customer service plan their business would quickly falter. As a result, customer service initiatives get a sizeable share of marketing resources.

However, determining who the primary customer is can be confusing. The standard definitions of a customer are

  • the party that purchases your goods or services

and/or

  • the ultimate beneficiary of your services

An embedded requirement within these two definitions is that the primary customer should provide repeat business as it is unrealistic to think you can effectively sustain a rate of 100% new business in this industry.

Current practice

Applying these definitions to the primary relationship in a preferred supplier program is an inconsistent practice in our industry. Here is a summary of the various views on who the primary customer is:

  1. the party that most influences the flow of incoming business”, otherwise known as The Adjuster. This strongly held view has directed many millions of dollars to pizza and doughnut vendors.
  2. the party that pays you”, i.e. the insurance company. This view holds that the ultimate buyer holds the key to success.
  3. the party you directly service” or the policyholder, because even though they do not pay you, they are the main beneficiary of your services.
  4. Some point to less obvious parties such as brokers and shareholders.
  5. Finally, a few make it far more personal and consider their immediate boss to be their ultimate customer.

Identifying the primary customer

The Adjuster: Many contractors focus intensely on adjusters but fail to ask themselves two qualifying questions: (a) Do adjusters pay you? (b) Are adjusters the ultimate beneficiary of your service?

Adjusters are definitely stakeholders in the overall scheme of things but cannot be your primary customer unless they actually control the flow and quality of incoming jobs. They used to do this but their influence is declining. Of course, they can affect the timing and amount of payment on every job you complete but it is generally in their interest to see files closed quickly.

The Insurance Company: There’s a strong case here. Insurers buy your services on behalf of their policyholders and pass on most of the benefit of your expertise to them. Insurers do derive some direct benefit from you. First, they obtain some financial benefit (that’s a big part of all preferred supplier programs) by way of streamlined processes and pre-agreed costs. Secondly, you help them attain certain customer service levels (if all goes well) with all the attendant benefits that this brings. Thirdly, they are the source of repeat business.

The Policyholder: Since your business runs on a steady inflow of job referrals, we can conclude that the individual claimant isn’t your most influential customer. After all, how many claims will you get from the same policyholder? Of course, how you serve them is important, as this will help establish the boundaries of your success with the insurance company.

Brokers and Shareholders: They can make things difficult if you don’t handle them properly. However, they are not your customers. They neither provide you with a sustainable source of revenue nor are they the beneficiaries of your service. They are, at best, stakeholders.

The Boss: This very narrow outlook will likely keep one’s employed status precarious and unpredictable.

Conclusion

Your primary customer is a mix of two parties: insurance companies and the adjusters who work for them. It is a common mistake to treat them as mutually exclusive. Your marketing plan has to cater to the micro (tactical) needs of adjusters and the macro (strategic) systems embodied by the insurance companies that employ the adjusters. Understand the relationship between these two and make sure you fully leverage the opportunities offered by them.

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