Marketing For Small Business - Who Are Your Most Valuable Customers?
It is a well known fact that it is essential for you to have an understanding of the value of different customers or customer groups contribute to your small business.
If your small business can determine who your most valuable customers are, your sales and small business marketing strategies and tactics can then be used more effectively to attract and retain these key customers more profitably.
The 8 key characteristics to look at when analysing your customers are: Average Transaction Value This is the average value of transactions over a year.
You first need to work out the average for your business eg.
on average your customers may spend $100 per transaction.
Then you look at each key customer and see if they are spending more or less than $100 per transaction with your business.
Overall your objective should be to increase your total average transaction value each year.
Discounts Look at how often you need to discount your product or service price with your customers to attain a sale.
Ideally you should not need to discount to gain sales from your key customers as this affects the profitability of your small business.
Service Costs This relates to the service costs involved in gaining a sale or after a sale to ensure customer satisfaction.
Ideally you would want minimal service costs for your small business whilst still maintaining a high level of customer satisfaction.
Debtors This relates to how reliable your customers are with regard to their payments eg.
do they pay on time? This is important as it affects your cashflow and also ties up money that you could be reinvesting in marketing your small business.
Increased Business Look at whether your customers are increasing their business with you each year, such as buying additional products or increasing the frequency of their purchases of your products or services.
Strategic Value This relates to how important this customer or customer group is to the future of your small business eg.
do they provide a number of referrals, but maybe not spend a lot of money with you? Are they opinion leaders in your market which can be very important.
Gross Margin This relates to the sales price of your product or service less the costs involved in producing the product or service for the customer.
For example, if you provide a service but it takes you twice as long to provide the service for a particular customer then this customer will be of lessor value to your business.
Loyalty How loyal is the customer or customer group to your business? Look at how long they have been a customer and also would it be easy for them to switch to a competitor.
By identifying your most valuable customers you can put in place a marketing plan to retain your most valuable customers and keep them loyal, attract customers who have the same or similar characteristics to your most valuable customers and identify which customer characteristics need to be increased to make your business more profitable and successful.
© Marketing for Business Success Pty Ltd 2008
If your small business can determine who your most valuable customers are, your sales and small business marketing strategies and tactics can then be used more effectively to attract and retain these key customers more profitably.
The 8 key characteristics to look at when analysing your customers are: Average Transaction Value This is the average value of transactions over a year.
You first need to work out the average for your business eg.
on average your customers may spend $100 per transaction.
Then you look at each key customer and see if they are spending more or less than $100 per transaction with your business.
Overall your objective should be to increase your total average transaction value each year.
Discounts Look at how often you need to discount your product or service price with your customers to attain a sale.
Ideally you should not need to discount to gain sales from your key customers as this affects the profitability of your small business.
Service Costs This relates to the service costs involved in gaining a sale or after a sale to ensure customer satisfaction.
Ideally you would want minimal service costs for your small business whilst still maintaining a high level of customer satisfaction.
Debtors This relates to how reliable your customers are with regard to their payments eg.
do they pay on time? This is important as it affects your cashflow and also ties up money that you could be reinvesting in marketing your small business.
Increased Business Look at whether your customers are increasing their business with you each year, such as buying additional products or increasing the frequency of their purchases of your products or services.
Strategic Value This relates to how important this customer or customer group is to the future of your small business eg.
do they provide a number of referrals, but maybe not spend a lot of money with you? Are they opinion leaders in your market which can be very important.
Gross Margin This relates to the sales price of your product or service less the costs involved in producing the product or service for the customer.
For example, if you provide a service but it takes you twice as long to provide the service for a particular customer then this customer will be of lessor value to your business.
Loyalty How loyal is the customer or customer group to your business? Look at how long they have been a customer and also would it be easy for them to switch to a competitor.
By identifying your most valuable customers you can put in place a marketing plan to retain your most valuable customers and keep them loyal, attract customers who have the same or similar characteristics to your most valuable customers and identify which customer characteristics need to be increased to make your business more profitable and successful.
© Marketing for Business Success Pty Ltd 2008