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How knowing your customer can increase sales

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The top 10% of your customers spend up to 3x what the rest of your customers spend. The top 20% of your customers are responsible for up to 80% of your total sales.

These 2 numbers should convince you how important it is to make sure that the top 20% of your customers are satisfied. So, how can you find out which of your customers is part of that 20%?

Keep good customer records

They say information is power. When getting to know your customers, it is the best starting point you could ever have. All businesses should keep track of money coming in and going out. And all businesses should also know who is buying and using their products or services. The best way to do this is by creating a customer database. You can do this on paper, in Excel, or using specialised software. Whichever you use, the main questions for you to answer are:

  • Who is buying from you?
  • What products (or services) are they buying?
  • Who are they buying it for?
  • When are they buying? Daily, weekly, monthly, on special occasions?
  • Do they coming back regularly to buy the same product? Or additional products? Or are they are not coming back at all?

The more information you enter into your customer database, and the more you keep it up to date, the more you will learn about your customers. And that information will do powerful things for your business because it will show you how to market your products and when.

Value your customers

You customers are your biggest asset. That is why retaining customers should be your highest priority.

You should value all your customers, but each customer has a different kind of value that they bring to your business. The customers that bring more value to your business – meaning: the 20% that are responsible for 80% of your sales – are the ones that deserve additional attention from you, don’t you agree?

So, who are your most valuable customers?

These are the ones who return to buy from you, more than once. They are the customers who come back every week (or every month), always buying the same items and sometimes adding 1 or 2 additional products. This is your solid customer base. This is the group that is happy with what you are selling. They are most likely to spread the word and share their experiences with their friends and talk about your product or service in their network.

In other words: this is the group that brings you business on a regular basis, but it is also the group that makes your business grow by telling other people about you. And remember: word of mouth is the most powerful selling tool!

For example: you sell office stationery and every week one of the local businesses buys notebooks, pens, and some other office products from you. The more satisfied he is, the more products he will add to his list of purchases. Because you will be the “go to” business for him. So make sure to keep him satisfied!

Also, he will be more likely to share his experience with other businesses. Especially if they complain about not being happy with their current suppliers for whatever reason (poor quality, lack of services, too expensive, etc). When your customer hears these complaints, he will share about how he never experiences this kind of problem with you. In fact, with you it is the opposite! So, he will recommend that people check out your business!

Note: when you are focusing on the most valued customers, do not forget the other customers. All customers are valuable. But you should base the extent of your effort on the level of value that they bring to your business.

Interact with your customers

Okay, if you have done your customer research, you now know who your customers are. The next step is to get to know them even better! At any time you interact with your customer, take the opportunity to learn about their experience with your product.

Ask them: How do they use the product? Why do they like it? Are they missing something (that you could add)?

It is also important to understand who they are buying for. Be aware that your customers may not be buying the product for their own personal use. Your customer could be a grandmother spoiling her grandchild, or a husband treating his wife to something he thinks she likes.

When looking to interact with your customers, you can approach them directly with specific questions, especially if you know them well and you speak with them on a regular basis. Another way Facebook, you can post a question or poll, asking, “What is your favourite ice-cream flavour: lemon or strawberry?”

The key here is to be intentional about your interactions with customers. Make use of the opportunity your customer is giving you when they come to buy from you. For example: if that office stationery customer comes to pick up his weekly supply, ask him if there are any products he would like you to add. Or, if a customer buys ice-cream for the second time, ask them if they liked the flavour that they bought the first time.

Just to remind you: all that information you are collecting, don’t forget to enter it into your customer database!

Send the right message to increase sales

Now that you are starting to know your customers, you can use the information you have collected to start adjusting your marketing. If your regular customers come because of the high quality of your product, make sure that the quality is what you use when doing your marketing.

For example: your customers tell you they buy certain vegetables because they believe them to have high nutritional value. When you are marketing to them, focus on the vitamins and other nutritious values because this will keep them feeling good about their repeat purchases.

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