Client scorecard dynamics crm

Which clients should we focus more time on? Are there any clients that we should consider firing? How can we find new clients that look like our best current clients? Do we have clients that should be more profitable?

These are the questions that many B2B firms are asking themselves as they think through how they should prioritize their client list.  So read on for some of the how’s and why’s of establishing a client scoring system.



What is a Client Scorecard?

Client scoring is a way to develop a consistent client scorecard (or client report card) for every client that a business serves.  The scorecard serves a number of purposes, including:

  • Identifying best customers, and providing them with a higher level of service
  • Identifying worst customers and, in some cases, discontinuing service to them
  • Finding past customers who have a great score but are now inactive, and re-activating them
  • Identifying prospects that are similar to your top customers for acquisition efforts
  • Identifying lost high value customers, and determining why you lost them and how you can improve your performance

Every sales and marketing manager will tell you that it costs many times more to acquire a new customer than it does to retain or upsell an existing one.  Client scorecards are all about leveraging your hardest won and greatest asset – your current customer base!

“It is 5-10 times more expensive to gain a new customer than it is to retain an existing one.” 
-Gartner Group

But sometimes the best way to define something is to define what it is not... 

  • A client scorecard is not the same thing as lead scoring.  Lead scoring focuses on the likelihood of converting a non-customer into a customer, whereas client scoring focuses on the value of existing customers.  Maybe we’ll talk about lead scoring in a future post.
  • A client scorecard is not limited strictly to active customers.  Client scorecards can include both inactive customers (in fact, this can be one of the most important segments for evaluating client scorecards) and prospective customers.  In the case of prospective customers, your scorecard may be more focused on (dis)qualifying prospective customers that are showing the signs of becoming the kinds of customers you do not want in your portfolio.
  • A client scorecard is not the same thing as client profitability. Profitability is an important factor, but profitability may not tell the whole story about the value that a client contributes to your business.
  • A client scorecard is not limited to objective data.  There are many subjective drivers of business value that should influence your scorecard.
  • A client scorecard is not a “score.” Although one output of a scorecard may be a single score, keep in mind that there are many components of a scorecard that should be evaluated – a high score or a low score do not tell the whole story about a client relationship.  For example, many of the data points for new clients (or even prospective clients) may be unknown – resulting in a lower score until these items can be evaluated.

7 Steps to Successful Client Scorecards

Like all projects that are worth investing in, a successful client scorecard project requires far more than the CEO taking a Saturday morning to write down the attributes of a good client – and handing those off to IT to add to a CRM system.  Sadly, most businesses tend to take that approach – and end up wasting time, making their CRM systems unnecessarily complex and generating scorecards that no one uses.

1. Get Your Team Involved

The people who work with your clients every day already have a good idea of what makes and good client and what makes a  bad client.  The agenda for the session is pretty straight forward:

  • Put your clients into lists of good and bad – focusing on longer-term clients so you have a good understanding of how the relationship has evolved.
  • Discuss what the characteristics of the clients in each group are – the goal here is to define what makes one group different from the other (most businesses are surprised at some of the findings at this stage)
  • Determine at what stage of the relationship this information can be known and which role (or which system) will capture itHelixPLAN Facilitated session client scorecard planning

For this meeting, you should use an outside facilitator and a proven methodology.  The reality is that most meetings of this type are ineffective because as soon as one person shares an idea, the rest of the group begins to evaluate the idea and respond to it – creativity is stifled, politics come into play and the results from the session are weak. 

You will want to get beyond the basics (i.e. profitable customers are all good; unprofitable customers are all bad) and get to some of the leading indicators of profitability; you will also want to recognize that some “hidden variables” can make even your most profitable customers undesirable (i.e. requiring an extremely high level of service, a brand that may damage your own reputation, an approach to your team that is demoralizing).  Most businesses also need to recognize that profitability can be an elusive calculation, so subjective variables can play an important role.

2. Evaluate Public and Private Data

You should do some analysis of both internally available data (such as from your accounting or CRM systems) and external data (such as data available from D&B) to see if any of this plays a role in differentiating your top customers from your bottom customers.  For example, you may find that certain industries tend to outperform others; or you may find that you tend to do better with private or public companies.  This can be a very important source of scorecard data because it doesn’t require your team to do extra data entry to create the scorecard.  For larger enterprises, predictive modeling methods can be used as part of this evaluation.

3. Talk to Your Clients

Conduct interviews or surveys with your customer list.  They are likely to tell you things about themselves that your own internal team did not identify.  This can be an important source of information that helps you qualify prospects or new customers.  This early qualification can help you focus your resources on the prospects that are most likely to convert into long-term, mutually-beneficial relationships.

4. Define the Criteria

Now comes the hard part, you need to winnow the list of criteria down to a minimal amount of new data that your team will need to begin to track.  The more information that you can get from internal or external systems (see item #2, above), the better.  But you should expect to require your team to capture some additional information on their own.  Remember that a successful scorecard system incorporates both objective information (i.e. hard numbers that you are likely to be able to pull from other systems( and subjective information (i.e. opinions of team members that will need to be keyed into the system).  Ideally, you will limit the items that your team needs to key in to a list of 5-10 items.

5. Capture the Data

Now comes the hardest part – you have to actually start capturing the data. 

This is where most scorecard projects fall apart.  Either they require too much manual data entry that is time consuming for employees that already have enough to do.  Or they require a herculean effort to integrate data from disparate internal systems.  Or both.  There may be no way to completely go around these issues, but here are a few suggestions:

  • Keep it Simple: The temptation is to jump right in and develop a “dream scorecard” in the first stab at this type of project.  Keeping the scope of the project simple will save you a tremendous amount of time and frustration.
  • Understand the Scope: Even if you can’t keep the project simple, it is important to fully understand the scope of the project so you will know what you are getting into.  Most projects of this type fail simply because the organization loses interest in making it a priority long before it is ever completed.
  • Piggyback on Other Projects: In large enterprises, there are almost always multiple projects going on with a goal of unifying information across different systems.  Rather than starting a project dedicated to the scorecard, see if you can piggyback on an existing project that may already be gathering much of the same process automation for client scorecard calculations using workflows
  • Automate What you Can: The more effort you can keep off the backs of the individuals who will have to use the scorecard, the better.  Automation can come in two flavors: (1) automate capturing scorecard metrics that are already available elsewhere – so no one has to re-enter data; (2) provide process mapping and automation for data that needs to be gathered manually – this can include an annual process, updates made at the conclusion of each project, etc.   Modern BPA (business process automation) tools built into CRM and other tools can handle much of the heavy lifting in this area.
  • Provide Ongoing Training and Support: I cannot overemphasize this point.  It never ceases to amaze me how many businesses put a tremendous amount of time into the IT part of projects like this – and almost no time in getting their team up to speed on how they need to participate.

6. Collaborate

“If you build it, they will come,” may work in the movies, but not when it comes to rolling out client scorecards. 

You will need to ensure that the salient information from the scorecards is distributed to the individuals who will need it.  And you will need to ensure that referencing the scorecard becomes a part of your corporate culture.  This means that scorecard data needs to appear on your internal portals, dashboards and on many of your client related reports.  Discussing the scorecard needs to become part of the every day conversation in your sales, service, accounting and customer management conversations.

7. Train, Support, Improve, Repeat

Your scorecard project will require plenty of care and nurturing.  You will need to constantly monitor the business process you established for creating scorecards to ensure that the team is following it.  You will need to work with the team to ensure that the scorecard management process is not too time consuming (this is particularly true during the early days after the initial launch).  In addition, the criteria for your scorecards will need to be reviewed and updated periodically as the economy, your customers, your competitors and your understanding of the marketplace evolve.

Next Steps

Developing a client scorecard does not have to consume a tremendous amount of time.  With proper planning and session facilitation a mid-sized business can launch client scorecards in just a few months; larger enterprises may take longer.  If you’re using modern collaboration, dashboard and CRM tools, you can significantly simplify the process of maintaining scorecards for your team.  Take the first step of facilitating a session with your team to get started.