There are many reasons why businesses should know their most profitable customers. Here are 8 of the most important reasons.
1. They are responsible for most of your profits
About 80% of your sales comes from about 20% of your customers. Read that again.
The biggest part of your revenues depends on just a few of your customers.
As a business owner, don’t you want to know who these people are?
Now imagine if you could increase that 20% to 50%. Meaning that you find a way to bring more of these best customers into your business.
How would that benefit your sales? And what would happen to your profits?
2. They do not make demands or complain
One of the key things that takes away from productive business is dealing with customer hassles.
- This could be customer complaints about a service or product.
- Or a customer coming in and wasting your time by asking many questions but without any intention to buy.
- Or a customer promising you that they will buy a huge amount from you in the future if only you will agree to give them a huge discount today.
Whether it is a customer getting angry with you, customers making demands on your time, or customers giving you a headache for whatever reason, your most profitable customers do not do this.
Your most profitable customers keep a low profile.
In fact, that is why many businesses do not even know who their most profitable customers are!
You don’t notice them and you hardly hear from them. They may not even be buying from you on a regular basis.
But when you look at the data, you realise that they are making a big contribution to your business.
3. Your most profitable customers are loyal customers
Your best customers are also loyal.
They don’t buy from you only once and never return. They keep coming back to your business.
This alone is a key reason why businesses should know their most profitable customers.
More importantly, they will buy multiple items.
Your best customers, the ones that are bringing you the most profits, will keep putting their money into your business. they may not buy in bulk and they may not even buy from you every month, but they will buy most of what you are selling.
Still, many businesses overlook this loyalty.
Often, this is because many of them lack insight into who their best customers are. As a result, they do not have anything in place to say thank you to the customers that are responsible for making their business survive.
Or, if they do have a customer loyalty system in place, very often, this system is generic, applying to every customer that they have. Like a business that gives out loyalty cards to every customer, regardless of what that customer is bringing to the business.
Businesses who take the time to find out who their most profitable customers are, and who then take steps to show that they truly appreciate these customers, will find that these customers will reward them by buying even more.
4. They can help you get new customers
Birds of a feather flock together, so it is likely that your most profitable customers have friends and family members who act in ways similar to them when it comes to buying.
Meaning: these friends and family members may become new most profitable customers for your business.
Encourage your existing best customers to bring new customers and help them to do so. For example, by giving discounts to both the new customer and the existing customer.
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5. They help you define (or refine) your USP
Your Unique Selling Proposition (USP) is what sets you apart from all other businesses. It is what makes your customers keep coming back to you.
Ask your most profitable customers why they buy from you.
What your best customers say they like about your business will be part of what makes your business stand out for them.
This means that other customers who value the same things will also be interested in coming to your business.
You can use this knowledge to finetune your marketing strategy.
6. They help you reduce marketing expenses
Your most profitable customers are already happy with your products and services.
Why not let them help you with marketing?
Ask them to tell you what they like about doing business with you. Or ask them what they like about a specific product.
This could be either through a photo or video testimonial that will serve as social proof for future buyers.
What you will get is:
- a highly effective marketing campaign
- that is focused specifically on attracting high quality customers
- that can be produced very cheaply and
- that can be reused in the future
7. They are willing to spend more money in your business
But only if you let them.
Your best customers are already spending a considerable amount of money in your business.
But I can guarantee you that they are not spending all their money in your business. Part of their money is going to other sellers.
Maybe you can help them reduce some of the stress of having to go elsewhere to buy products or services.
Since they are already happy with you, why not help them to become even happier? What other products or services might they have need of?
Your best customers can tell you what kind of new products and services to add to your business.
Asking them can show you opportunities to serve them even better by adding new products and services that you already know that they will buy.
And the best part?
By serving them well and making them happy, you get higher profits and more peace of mind.
8. They make it easy to run your business
Happy customers are loyal and easy to work with. Happy customers boost your profits.
Because they keep coming back and spending their money on your products.
This is fantastic information that you – the business owner – can use to grow your business.
Once you know who your most profitable customers are, you can start focusing your attention on how to get more of them. Instead of only having 20% of your customers as best customers, you can start taking action to get to 30 or 40%.
These 8 reasons are why businesses should know their most profitable customers. Following this strategy will bring you more money and also make you a happier business owner in the long run.