How to lose customers & make more profit

Put this proposition to any management team and the most likely response would be that you have completely lost sight of what business it all about.  Surely we are in business to gain more customers, sell more products and services and hit that all important sales target! Isn't it?

All may not be what it appears when growing a business in a ‘win at all costs and hit the weekly sales target’ approach. Successful business growth has to be built on a foundation of good information, most of which is available from your existing customer base. The best customer for any business is the one that returns time and time again and whose needs we know and understand.

The better we understand our customers the more likely we are to achieve profitable growth in a managed and dynamic way. It is a route which is better managed and financially less of a strain. It also enables sales and marketing teams to build their client base in a more realistic and robust approach.

One of the first steps when considering business growth is to assess and analyse what we know about our existing customers. Most of the information we probably already know but have not necessarily connected to make an informed decision.

If the old adage of 80% of the business comes from 20% of your customer’s remains a strong guiding business principle, what are we doing with 80% of our existing customers and why do we keep them?

When considering our customers there are two key areas to address:

1. Are they profitable?

2. How can we create a greater customer relationship?

Profitable Customers

Assessing your customers on a regular basis is critical to success. This should be a process of getting to fully understand the customer, their business and their future requirements. If these factors are taken into full consideration our expectations of the customer become better informed.

A strong sales and marketing team will start to build ongoing customer intelligence and use this information to forecast future sales and sales growth. The information we need to assess must be more than pure invoice and future sales value. Most businesses can name good and bad customers. Good customers are ones which pay on time, know what they want and expect from you, and understand your products and its uses.

Poor customers are the extreme opposite, delayed payments, cause greater problems in service & product delivery and consume significantly more staff time in rectifying a satisfactory result. These are the customers who are likely to be the ones, which despite their purchase value start to impact on being profitable.

Once a business starts to collate and assess this information the more informed view the company

has on which customers are the best ones for the business.  Take a look at your customer database and see how well you can answer some of the following questions;

• Why does that customer buy from you?

• How frequently do they buy?

• Do they pay on time?

• What volumes do they purchase?

• What is they’re future requirement from you?

• Is the customer aware of your full product / service range?

• What are your customers’ pressures and how are markets affecting them – what does this mean to you?

• Have there been any difficulties implementing the product / service?

• What could have been done to avoid these problems?

• Was the customer satisfied as a result?

• Do you add real value to the customer and how can that be increased?

These points can be developed, refined, added, removed and developed into a customer intelligence

system for your business. So long as the information is accurate and up to date – you can identify where and how your business is likely to grow with your existing customers and identify threats to your success.

Where customers start to become bad customers new options arise for your consideration. At a certain point it may be that a customer relationship needs to come to an end, which enables your business to focus on good customers. This is not an easy process to achieve but one which will benefit your business and its successful

growth.

Greater Customer Relationships

Having defined our good, profitable customers the next phase of our growth strategy is to ensure we can build and develop our customer relationships. This process can be developed in many ways and there are a wide range of tactics, products and means of doing this.

The starting point is ensuring the customer is consulted on a regular basis and their needs are clearly understood and concerns acted upon. Our ultimate goal with good customers is to make them loyal and supportive of our relationship.

Taken to the extreme end of the spectrum – these customers are our best sales people – word of mouth is the best form of business introduction and 60% more likely to result in a sale.

Customer relationship management (CRM) is the ability to win and retain customers by providing them with optimal value in whatever way they deem important. This includes the way businesses communicate with them, how they buy, and the service they receive - in addition, of course, to getting the best through the more traditional channels of product, price, promotion and place of distribution.

Through CRM the customer becomes the full focus of the business and a marketing orientation has started to emerge across all aspects of the business.

Developing CRM

CRM is a simple and easy to implement system. A central database of detailed customer intelligence

is at the heart of the foundation. There is no global standardised CRM strategy and there is no need to implement an expensive software tool, but the sort of activities a business fully engaged with CRM includes:

• Gathering data at every touch-point with customers (Sales, customer support)

• Segmenting the information to enable the full scope of customers’ relationships with a business to be fully understood.

• Communicate the knowledge & information gained with database and from customer touch-points, and cascading this throughout the business to provide insight, intelligence, profile and forecasts of customer behavior;

• Informing sales and service functions where such options provide optimal value to customers and maximum scope for active customer management.

CRM is opening up new opportunities for businesses who are seeking to meet customers’ needs through e-commerce and web-based support. The Internet and communication technologies are one of the greatest ways of interacting with customers.

Through better use of the Internet and other technologies, relationships can be managed and developed in completely new and informative ways. It is easier then ever to implement one to one customer communications through functions which include:

• Personalised log in accounts

• Personalised e-mail

• Review of personal purchasing histories

• Review order processes

• Track current orders

• Advanced product ordering

• Cross matching favored products

• Auto order processing against timelines (renew licenses)

• Real time in stock availability

The options continue to go on and the only restriction is how we ensure it adds real value to customers and enhances our overall relationship.

Whatever your approach, there is still a demand to ensure your contact with customers is informative and information acted upon. The better we can define our good, profitable customers the easier it is to grow the business on a solid foundation. The ultimate advantage is that it also informs us of new customers who are likely to yield greater results and profitability. If this can be achieved, the board will almost certainly know you have not completely lost your marbles!

Home