This is part C of the A to Z of Business & Website Tips
- Know your customers,
- Focus on the right customers &
- Give them that special treatment
How to Find Your Best Customers
The 80/20 Rule of Sales is an old business adage:
About 20 percent of your customers produce 80 percent of your sales.
The funny thing is that business owners often ignore the 80/20 rule.
We’re all tempted to waste our time trying to please all of our customers instead of the most lucrative ones.
We are all conditioned to always respond to the stimulus around us. So if you obey the 80/20 rule, you are going always to feel as though you are ignoring something — because you are.
It will be an irritating feeling at first. And it particularly gnaws at people that want to give 100% customer satisfaction, because they are prone to trying to treat people equally.
But all customers are not equal. Far from it. Some earn you an amazingly disproportionate amount of money, many make you a little bit of money, and some even waste your time. With the last group, you lose money selling anything to them at all.
Your goal should be to zero in on those 20 percent of customers who are essential for your business’ prosperity.
Here are some tips on how to find the 20% best customers:
Mine your customer lists.
Maybe it’s your email distribution list or your company’s Facebook following. But I still find it amazing how many businesses don’t bother to look up sales data on the customers. Apply the R-F-M rule: Check which customers on your list bought most Recently, bought more Frequently, and spent the most Money. Bingo. You’ve found a chunk of your 20 percent. Focus on them. Send them nicer Christmas gifts. Send them a postcard when you’re on vacation.
Study your geography.
Delve into your point of sale systems and find out where your money-making customers actually live. Then focus advertising etc in that area.
Find your customer niches.
The customers who buy the most expensive products or services almost always fit a peculiar demographic. They are noticeably different than everyone else. Stay open-minded as you figure this out, too.
Fire your problem customers.
Inevitably, there is another 10-20 percent of customers who rack up support tickets and chew up phone time, and take away from you servicing your most lucrative 20 percent. If you’ve tried to fit a square peg into a round hole too many times with them, just stop. I’ve done that. I’ve said to customers, ‘I should not be consulting for you anymore.’ I’ve occasionally even blacklisted customers — or at least made a point to ignore them until they go away. Be polite and gracious about it, because you don’t want a bad online review. But still do it.
Pinpoint your ‘Silent High-Volume Buyers.’
Almost all businesses have a few of them — especially in B-to-B companies. They send in a purchase order every two months, and it’s usually a nice fat one. They truly are your highest-return customers. They require so little maintenance that you don’t even notice they’re there most of the time.
Great customer service can be your very own secret weapon!
The key to good customer service is building good relationships with your customers. Thanking the customer and promoting a positive, helpful and friendly environment will ensure they leave with a great impression. A happy customer will return often and is likely to spend more.
To ensure you provide the best customer service:
- know what your customers consider to be good customer service
- take the time to find out customers’ expectations
- follow up on both positive and negative feedback you receive
- ensure that you consider customer service in all aspects of your business
- continuously look for ways to improve the level of customer service you deliver.
The following are some of the main elements of good customer service.
To build good customer relationships you need to:
- greet customers and approach them in a way that is natural and fits the individual situation
- show customers that you understand what their needs are
- accept that some people won’t want your products and concentrate on building relationships with those who do
- help people – even just letting a customer know about an event that you know they’re personally interested in is helpful
- continue to keep customers aware of what’s in it for them to do business with you.
Improving customer service
Customer service is about giving customers what they want, when they want it, in the best possible way. If your business provides good customer service, you have a greater chance of keeping and increasing your customer base.
Research indicates that it costs up to 10 times as much to attract a new customer as it does to keep an existing customer.
Good customer service can help your business grow by increasing:
- customer numbers through favourable word-of-mouth advertising
- the dollar amount spent per customer per transaction
- the frequency of customer visits.
You can establish a culture of excellent customer service in your business by planning, developing and sustaining a customer service program. Train your staff to give your customers the highest level of service.
Listen to customer complaints; you may learn something about your product or service. Let customers know that you appreciate feedback.
Overcome any objections. Listen to what the customer is objecting about (often price, merchandise or time). Confirm the validity of each concern and offer a solution.
Well-managed complaints can benefit your business. Good business owners learn to see complaints as an opportunity to build strong, lasting relationships with customers and improve their customer service. Customer complaints give businesses valuable information about how they need to improve.
The impact a complaint has on your business is largely determined by you.
If complaints are handled poorly, customers may withdraw their business and encourage others to do the same.
Complaints that are handled well may help you retain existing customers and could result in new customers being referred to your business.
Knowing your customer
Customer satisfaction surveys help companies measure satisfaction, identify unhappy customers and find potential advocates.
For most companies, customer satisfaction ratings can have powerful effects. Firstly, they help focus employees on the importance of fulfilling and exceeding customer expectations. Secondly, when satisfaction ratings dip, they warn of potential problems that can affect future revenue.
Customer satisfaction metrics assist with understanding exactly how happy (or unhappy) your customers are.
An effective customer satisfaction survey has 5-10 questions that relate to the service delivery, customer experience and overall satisfaction. Survey Monkey is a good tool to use to carry out all types of surveys.