Last updated on May 13th, 2019 at 02:36 pm
Hidden in your company’s files, you have a wealth of information that can grow your business without adding a single new customer.
Inside of these files are customers who have loyally supported and built your business over the years. Have you used this information to grow your business? Have you mined your customer base?
Mining your customer base is using this core of information to expand the products or services you offer these customers. In order to mine this base, you first need to organize it in such a manner that you can identify the key account characteristics. The following characteristics should be considered when organizing your customer base:
- Annual volume
- Products or services purchased
- Payment history & terms
- Customer service experience
- Sales territory
Let’s look at each of these characteristics in detail.
A number of questions need to be answered before we can assign a value to this customer. What are your annual sales with this customer? What is the trend, up or down in the last six months, in the last year? Are they growing each year or is the growth inconsistent? Are the sales profitable with this customer, or are you granting credits or adjustments on a regular basis?
Products or Services Purchased
Again, we need to ask some specific questions about the customer. What products or services are we selling to this customer at this time? Based on our knowledge of their business, what additional products or services can we offer them? What services do they need that we don’t offer that we should consider offering in the future? Are there other divisions we should be doing business with?
Obtaining a referral or letter of introduction from your current contact to the other division permits you to continue to grow your business by constantly meeting the evolving needs of your customer base.
Payment History and Terms
In order to properly classify your customer, you need to determine their creditworthiness. If we are going to grow the account profitably, we need to know if they can stay current with their accounts payable. Expanding business with a marginal account can negatively impact your accounts receivable and your own credit rating with your suppliers.
A question you might pose is, will an increase in volume necessitate a change in terms? Will your client request better dating or discounts in order to get the additional business? Always look for trends in payment and financial news articles about the health of your clients. A possible source of independent credit-monitoring services, could be Dun & Bradstreet.
Customer Service Experience
Prior to expanding sales with an account, you should touch base with your customer service and review the accounts interactions with this department. If this customer is a difficult one to manage, do you really want to expand the business and increase the potential for complaints and possible returns, discounts and credits?
Explore the causes before you write off the relationship. Determine if it is a personality problem with a sales representative. If so, change the representative or handle it yourself. This problem could actually be an opportunity to increase sales.
A final strategy would be to conduct a customer satisfaction survey and follow up with a personal phone call. These surveys help identify relationships that are in trouble and need to be addressed.
By organizing the customers by sales territory, you can focus your efforts by salesman or sales agent. This type of breakout permits you to compare sales by category by territory and identify missed opportunities.
You could also align your territories by relationships that work. If similar accounts in other territories are buying a product or service, why isn’t this product or service being offered to the customers in this territory? This question permits you to ascertain the reason why the gap exists.
If it is not a training issue, it could be a product-specific or competitive issue. By competitive issue, I am referring to the possibility that a local competitor offers a similar product or service at a more competitive price, or that their product outperforms your product. Another option would be to arrange salesman responsibilities by product or service application.
By organizing your customers using these characteristics and using a customer satisfaction survey, you will identify those customers that require the immediate attention of your sales force. Appointments can be scheduled by a customer service or sales representative to gather additional information from the customers. Your sales force can expose them to your additional products and services. This strategy will build stronger ties with your existing base and tougher entry barriers for your competition.
Too many companies tend to ignore their existing base when chasing after new customers. This makes their base vulnerable to the competition.