Angel Customers and Demon Customers: Discover Which is Which and Turbo-Charge Your Stock

I thought this book would be helpful in understanding how small businesses could use the idea of having angel and demon customers. Unfortunately, the book is written at the corporate level and had little usable information for me.

The central thesis of Selden and Colvin's book is that not all customers are desirable. Some are "angels" who deliver net profit while others are "demons" who cost more to serve than they generate in revenue. A well run company must understand who its customers are and then organize around serving them effectively, securing its relationship with angels while repairing (or ending) its interactions with demons.The authors write with a simple and bright style that keeps the book interesting. They touch on a number of case studies they've performed in their professional careers to help illustrate their points. I wish that they had included more data in the book, but what they do provide is about right for an introduction to the topic.Some reviewers deride the content of this book as obvious, but even more obvious is that a tremendous number of businesses don't get it. I see the problems the authors describe play out repeatedly, from perspectives as a professional within my own industry, as an investor, and as a consumer. This book is an exciting rebuttal against the mentality of "The customer is always right" (what if the customer wants to pay less than your cost?) and a wakeup call to move forward from smokestack-age business organization in the information-age economy.

We should all be aware of unprofitable Customers. Anyone in business should be already aware of the 80/20 rule - that 80% of your profits come from 20% of your customers.This book goes that one step further - by some excellent case studies it shows how 150% of your profits come from 20% of your customers - they are the Angels. The Demons are those 20% of your customers who actually lose you money equal to 150% of your profit.Its not another book about CRM (Customer Relationship Management), but it is about being Customer-focussed rather than Product-focussed.I have multiple relationships with Companies who could do with reading this book - including my own employer, with whom I have around 20 Contracts, and yet any one Business Unit only seems to know about 1 or 2 others at best. All those lost selling opportunities - for example they know the ages of my kids from my Travel Insurance Policies, but have never tried to sell me any College Savings Plans!Read the book and make your Angels happier - and get rid of the Demon ones!

This is a skillfully written, subtile and insightfull book.I believe that the reviewer who said that "this book stated the obvious and that outside of a novice business student, anyone who finds this book interesting or useful may want to consider another profession than business" has missed the point of this book...completely.The importance of this book is NOT in stating that "the customer is important .. some more than others". This we all know.The importance of this book is in outlining a practical methods for ascerting which customers are money making one and which are not money making one **by going at the junction of customer marketing and customer finance**. It is by offering a practical way to relate the two perspectives (the qualitative and the quantitative one) that this book was useful to me.The key thing I learned from this book is the introduction of detailed customer-finance reasonings to evaluate clients.I also was greatly inspired by their concept of CUSTOMER DEAVERAGING. I too often see company that thinks in terms of their "average customers" and thereby miss any valuable & actionable insight on how to relate to their customers in a way which is both more profitable and more meaningfull (from both the customers and the client perspective).Well for company who are like that, I think this is a GREAT book that uncovers what needs to be done in both a practical and theorically sound way.I can testify that having applied a big part of the framework of this book to solve one strategy problem of one of my european client, we did uncover some really devishly customers (50% of their client acquisition was focusing on customers from which their will be never enough money generated to cover the initial customer acquisition expense) and some really angel ones (25% of their customer acqusition was focused on clients that represents overall 65% of their actual profit). We were also able to do some detailed financial modelling to discover that, in their specific case, they should refocus their attention on the angel customers and probably completely change their business model and value proposition for dealing with their demon ones.If I had one critic it would be that the part relating customer oriented strategy and the stock valuation is treated without enough precision.Having said that, I can also state the customer business I was speaking about is a recurrent one and that as a result the benefit of acquiring an angel customer goes well beyond the financial revenue derived from them in the first year. So, beyond the immediate profit improvement that are likely to results from their refocusing on the right customers this year, I anticipate this company to achieve a surge of their financial results in the following years (This hopefully will ultimately also find a reflection in their stock price...)

I had high hopes of finding a kindred spirit with this book. While the author writes about angel customers and demon customers, I've talked about dream and nightmare customers to recognise that not all customers are good news.The authors make the point that the increase in value of a business comes from building a portfolio of profitable customers and the ability to renew that portfolio. I agree and think this is a good way of looking at the business. There has been too much pro customer / anti shareholder value talk when a well managed company knows that it has to do both.While business owners can benefit from thinking through policies that increase business value, this book is focused at companies that publicly trade their shares so there is an easy-to-find valuation. This is where the danger of finding the right balance between customers and shareholders is at its highest as these companies come under pressure for short term results. It also brings with it the problem that the valuation derived from share prices may not be sensible as popular share buying theories are based on identifying undervalued companies or riding increases in momentum, regardless of the underlying value.The authors argue that all costs must be attributed to customers rather than just variable product costs and direct customer costs that would generate an incremental profit but probably suggest that most, if not all, customers are profitable. The inevitable problem with allocation all costs is that the allocation methods are controversial and the analysis runs the risk of being precisely wrong (because accountants are great at generating costs to n decimal places) rather than approximately right. I think there's a more persuasive argument to say that you have to do both, depending on the decisions to be made. The authors then say that you should allocate the cost of capital to customers so that an economic profit can be generated.It's important to think through customer profitability issues because it has ramifications on marketing (best aimed at angel or dream customer types), pricing and customer service issues as well as actions taken by the sales force. Some customers generate great profit while others are more trouble than they are worth. Many are in the middle where profitability can be improved. If you're going to turn your back on many customers, you'd better be sure that the chosen customers are secure from competitive threats and sudden changes in customer needs.In the end I felt that the book was too biased towards the finance perspective and didn't take adequate notice of the strategic and marketing perspectives. I suspect admirers will be finance based but some times, it's good to step into the other camp. I found I was defending my views as I read the book rather than adding new ideas into my coaching approach.Paul Simister, a business coach who helps business owners who are stuck, get unstuck.

a timeless book and a must read for anyone in business

very good quality