Winning a new customer is far more expensive than selling more to your existing clients. Knowing who your best customers are can help you improve customer satisfaction and also help you sell more to those existing customers.
Gaining new clientele is one of the most difficult aspects of running a business, so it is important to retain and look after the ones you already have, and sell more to them, but at the same time still looking for new customers.
This guide explains how to get to know your customers and understand your market so you can increase sales and develop your business. It gives you details on how to use sales data, customer care systems and your databases to develop a strategy for keeping customers.
It also shows how to identify your most valuable customers, and how to maximize this value.
How to build your customer base
Every business needs a solid customer base in order to be successful. It’s important because customers provide you with revenue. Not only that, but they give you the essential feedback which helps you continually improve your offers and services, and they spread the word to other people about your business and what you do.
None of this happens by accident. Building a dependable customer base takes time and effort. If you want to build your business up on a solid foundation, you need to pay close attention to who your customers are and try to understand what motivates them to buy from you.
Who and where are your customers?
The very first step in building a customer base is to know: Who your customers are, and where you can find them. Once you have this information you can manage your customer relationships by engaging with them more effectively. This will have the effect of increasing sales to these existing customers as well as attracting new ones.
Knowing your customer’s key characteristics will help you decide where, when and how to communicate with them.
If you have been in business for a number of years, or you sell to a specific niche audience, no doubt you will already have a good idea about your customer’s general age, location and gender, but there is a lot more information that could be helpful to you.
• Do you know the websites your customers visit and what kind of publications they read?
• What other products and services do they buy?
• Why do they buy from you and when?
• What type of customer spends most with you?
If your customer base is large and diverse you need to segment them into groups that share similar characteristics and think about the best way to target each group.
Profiling customers this way enables you to better communicate with existing customers and target new customers more accurately. Getting this kind of information could be a simple matter of picking up a telephone and speaking to them. Or it might require a more formal approach such as running a survey in your newsletter or online survey program (we can help you with both of these if you don’t publish an online newsletter or don’t know how to create an online survey.
Why you should concentrate on looking after your most profitable customers
There is good reason to concentrate on looking after your most profitable customers: In general 80% of sales come from just 20% of your customers. Figures also prove it costs around 5 times more to get new customers as it does to sell to existing ones.
So it makes absolute perfect business sense to identify your most profitable customers. By making sure you provide them with excellent customer service, you are ensuring they will remain loyal and to maximize your profits.
Not only that, but they will be far more likely to recommend you to others. Your most profitable customers are the ones who will provide the foundation for the growth of your company. You can increase your profits further. Knowing the characteristics of these clients makes it easier for you to identify and target prospective customers who share similar characteristics.
Derek Williams, chief executive of The WOW! Awards for Customer Service, highlighted how important it was for businesses to identify profitable customers. He said: “The secret to growth is to have more customers of the type you want to have, to increase your average sale value and to get them to buy more often.”
Building good relationships with existing customers
The golden rule of marketing is: Go where your customers are. You could have the greatest idea in the world, but you have to get people to see you. After all, you need to have customers before you start worrying about profits.
For the majority of small businesses, being visible today means having a presence on the internet.
It is well worth doing your homework to find out what channels you should be using to target your customers. A simple way is to ask your customers where they go online. It is also worth looking to see what your competitors are doing.
Continue to engage with your customers – even after the sale
A common trap many businesses fall into is they only communicating with customers to make a sale offer. Take time to engage and build a relationship with them first. That way, when your customers are ready to buy, they will think of you first.
There are so many ways that you can do this. For example, social media and email newsletters are excellent for maintaining regular contact. Many small business owners comment successfully to local media via a press release to build their profile. You can even use face-to-face networking as a very effective way of getting to know your customers.
Make it a rule to always offer something of value whenever you have contact with your customers. This could simply be answering questions about your products or services.
Use Social Media
70% of Internet users use social media
More than 1 in 3 social media users talk about brands online
1 in 3 small businesses sell online and made over 130bn sales in 2012
Acquiring new customers
When it comes to increasing the size of your customer base, the first people you should look to are your most loyal customers. They are your best salespeople because they are more likely to recommend your business to others.
However, if you take the time to learn about them through profiling and communication this will help to tell you who you should be targeting next. Ideally, you should aim to get more customers that are just like the best customers that you already have.
It’s always a great feeling to get a sale and though one-off sales are fine, the chances are you will want every customer to buy from you again and again. The most obvious way to achieve this is to provide a good product or service at a good price, along with excellent customer service. It has never been more important to treat your customers well, since almost half of all consumers now put more importance on customer service since the start of the recession.
Customers love being valued and treated like VIPs. Many shoppers today will not stand for a poor retail experience.
Take time to find out what customers really value about your business – and give it to them. Involve them in your business. You can even do this by letting them get involved in helping you develop new products and services.
There is always a market for anything that saves people time or money, makes their lives easier, or simpler or cheaper. When providing something like this, make sure your costs are very competitive and you are giving customers exactly what they want, rather than trying to tell them what you think they want. You have to be absolutely focused on delivering something of real value to them.
You will find that when you are marketing well to your existing customers, you will very quickly start to pick up new ones. To get to this stage, you will have had to learn not only who your customers are but where they are. You will also have discovered what they like about your product or services, when they buy and what communications channels they use.
How – and when – to run special offers and promotions
Potential customers are much more likely to take the plunge and buy from you if you offer good incentives for them to do so. The classic ‘Buy-one-get-one-free’ is great if you have unsold stock to shift.
However there are many other incentives you can use, and understanding customer preferences is crucial when making offers and promotions.
• Offering a product or service at a discounted rate when a customer buys a popular related product or service will increase your average sale value.
• Selecting popular products as prizes for competitions and challenges will increase engagement and referrals, particularly online.
Getting the timing right is equally important. When do your customers most likely want to hear what you are offering? Seasonal sales and external events such as national holidays can offer good hooks for promotions. So, too, can the release of a new and improved product or service.
Don’t just do it randomly: Have a reason to make the offer and stress the value and benefits your customer will gain by taking this offer up.
Nobody knows the other players in the marketplace better than your existing customers so find ways to get your customers to promote what you do, such as a financial incentive in order to find you new business. Companies like Amazon do this very well by creating an affiliate program; individuals promote your products and get paid a commission on every sale.
Referrals are always a really effective way of getting new customers. 76% of consumers cite word of mouth as their main influence when deciding on which product to buy.
The internet makes it particularly easy for businesses to find get referrals because more than a third of social media users have talked about brands online, and four out of five online retailers reported increased sales after adding comment features on their websites and product pages.
If you are selling or marketing online it makes sense to enable ‘social sharing’ on your website landing pages. You can even ask customers to leave a testimonial if you advertize in online directories.
Your aim is to be certain that wherever new customers are likely to encounter you – online or offline – they are able to read something positive about your business that’s been said by another customer.
To encourage feedback offer customers incentive schemes to refer you. For example you could offer a discount when someone introduces a new customer or an invitation to a product launch. Some businesses now use group buying as a way of encouraging people to share discounts with friends and family on social media sites.
Ten Steps to Growing Your Customer Base
1. Focus on the right customers. Just because you might have a small business don’t just think you can only sell to other small businesses.
2. Stay connected with your customers. Engage with them. Build a solid relationship with them. The internet and social media marketing makes this extremely easy to do.
3. Offer extra value. Always try to over-deliver so your customers will stay loyal to you and keep coming back for more.
4. Don’t be afraid to ask for referrals and testimonials.
5. Understand and address your customer’s key frustrations.
6. Keep communicating with your customers. Don’t let them forget about you. You can do this via online newsletters, social media platforms like Twitter and Facebook etc. Provide offers and information which may be of value to them.
7. Make it your aim to get to know your customers. Find out as much as you can about them. Get to know their interests, their partners names, how many children they have, what pets they have, what car they drive etc.
8. Improve your customer service skills. This includes how you communicate with them, how you answer the phone to them and how you present yourself and your business. Whatever contact your customers have with you, it should always be a positive experience.
9. Ask customers how you can do things better. No company is perfect but if you allow your customers to give you feedback you will keep them on side and loyal to your business.
10. Create forums or Facebook groups where customers can share information and ideas. Create a community for them to be a part of. It all helps with the engagement and keeping them loyal to you.
We have many more marketing ideas that will help to take your business to another level. To find out more about how we can help your company and give you a solid online marketing strategy please don’t hesitate to contact us.