How Can You Find More Profitable Customers?
|Author: Brian McGaughey||Published: 13th April 2011 22:13|
(Finding Your Most Profitable Customers)
Your business already has some customers who could be much more profitable than others. Here's how to identify your most profitable customers and make the most out of them...
Who are your biggest spenders?
Pareto's Principle - which holds true for most businesses - states that 80% of profits will come from 20% of customers. Identifying those key customers, and concentrating additional marketing efforts on them, always makes good sense in terms of potential returns. Though you should pay careful attention to your entire customer base, it can pay dividends to:
Understand the particular needs of your most profitable customers in greater detail
Find more customers who are similar to those in your most profitable group
Identifying your most profitable customers will be easy if you deal with relatively few. If you are a mass-market business, your sales records will soon reveal which are the customers to concentrate on. Once you've gathered all the relevant data about your most profitable customers, start giving them more of what they want.
Design your advertising campaigns around their needs, with copy that pushes their particular buttons and pick advertising channels and mail order lists that will reach more of them. Chances are the rest of your customers will respond well to this approach too.
Asking the right questions
Don't always assume you know more than your customers about what it is they want from you. Ask a few of your most profitable customers if you can involve them in a focus group, or if you can talk to them informally from time-to-time about things. They'll probably be flattered by your interest and it's a great way for them to ensure that they really do get more of what they want from their relationship with you.
Aim to discover not only how customers are using your products or services to meet their current needs, but also how they see those needs changing in the future.
What are your key products?
The Pareto Principle will apply just as much to your products as it does to your customers. 20% of your products will generate 80% of your turnover. So how can you take advantage of this? By producing more of the same - perhaps by making minor variations to your best sellers, or bundling them in packages with other items or services that would also be attractive to customers.
Once you have identified your key customers and your most popular products don't neglect them. If they are valuable to you, they'll probably be equally prized by your competitors. So keep assessing and developing your products so they retain their popularity and try to lock-in your best customers through loyalty schemes.
Stay aware of general developments in the market too. What challenges do your customers face in the near future and how could your business help? What conditions will the wider economy face in one, two, three, five and ten years' time?
Although you won't have a crystal ball, tools like SWOT (strengths, weaknesses, opportunities and threats) and PEST (political, economic, social and technical) analysis can help you position your organisation effectively to deal with the future.