Grow Your Business: Keeping Score With Customer Information
Dan Arens is an Indiana-based business growth advisor.
Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowLou Holtz, the retired head football coach at the University of Notre Dame, tells the following story, "I’ve been on the top and I’ve been on the bottom. At Arkansas my first year, we won the Orange Bowl. Then everybody loved me. They put me into the Arkansas Hall of Fame and issued a commemorative stamp in my honor. The next year we lost to Texas and they had to take away the stamp because people kept spitting on the wrong side of it."
Were his fans keeping score? Absolutely. Without a doubt, Coach Holtz would agree that keeping score with the right kind of customer information is an essential component for winning.
Whether you are in the on-line world, the business to business direct model, or even retail, your company might benefit from developing better, more, or additional customer information. In finance there is a saying we have all heard, ‘historical returns are not an indicator of future performance.’ While that might apply in those circles, having good information about your existing customers will better inform you for future sales.
The approach can be very basic, quite simple in fact, but the results can be profound. Determine the average amount of a transaction for your company. Compare your individual customers to that average. Those metrics alone will allow you to see how your customers stack up to one another with an easy comparison.
Find out how many calls have to be made before an actual sale is made. Obviously, this measure can help you in determining what must be done in order to bring in more first time customers. Ascertain how you go about converting first time customers to regular customers. Is it an intentional process or more haphazard? Once you make that first sale, your immediate goal should be to turn that customer into a regular buyer of your goods or services. That ratio, converting from first time customers to regular customers is called a conversion ratio. Determine how many first time customers it takes for you to convert them to a regular customer. You will have to determine what is defined as a ‘regular’ customer for your company.
Considering the element of time as it relates to the customer information arena, here are a couple of additional thoughts: Figure out how often your regular customers buy. Determine if they buy on a weekly, monthly, or quarterly basis. If they buy irregularly, see what can be done to smooth or even out their purchasing habits.
Find out your average customer life cycle. Just like a product life cycle, customers will be around for a certain length of time. No one likes to calculate it or determine it, but it can be a good reminder for you. If monitored well enough, it might even help you prevent losing someone.
Finding out more about your existing set of customers can provide you with some key indicators to help point your business in the right direction for acquiring new customers. For example, when reviewing your current customers you might discover or confirm that most of your customers are in health related fields. Armed with that information, you can be more deliberate in deciding whether you want to continue developing that market segment or be more intentional by diversifying into other areas. Knowing the geographic location of your customers can be helpful. As ridiculous as it sounds, by analyzing their location you can determine whether you want to expand with a broader geographic footprint or strive to get deeper penetration within your current footprint.
Based on what you already know and by using the internet, you can obtain huge amounts of information about your customers; some of the data might cost you, some of it is free, but all of it can be helpful in learning more about your current customer database. For example, there is a research database called A to Z Databases which provides information on millions of businesses across the country. You can perform all kinds of regular or custom searches, mining significant pieces of information about your clients. Access to these research databases is usually as close as your local public library.
Regardless of what information you acquire or how you put it to use, the additional insights you will gain should improve your ability to keep score with your many customers and allow you enough success that you will easily take your company to the next level of growth.
Dan Arens is an Indiana-based Business Growth Advisor.