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Excellent customer service is key to the success of a small and
home-based business. In fact, a superior customer service is your primary
weapon against giant retailers and big businesses like Wal-Mart.
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To be able to offer excellent customer service, however, you first need
to know and anticipate what your customers want. You should know how to
reach, satisfy and track your best customers. And the best way to predict
what your customers want is if you have an accurate history of their
purchase history.
Information about your customers can significantly help shape your
business and marketing decisions. Specifically, the benefits of gathering
and analyzing customer information to your business are:
1. Maximizes revenue and profits.
Getting new customers can be
expensive. Marketers have found that it is five times easier and profitable
to retain current customers than generate business from new customers.
Analyzing information from your existing pool of customers allows you to
identify your best current and potential customers and allocate resources
strategically to maximize returns to the company. You can shift your
resources from expensive new customer acquisition strategies to the less
expensive customer retention strategies.
In addition, knowing key information about customers can make help you
develop marketing strategies more attuned to your current and potential
customers' need. As a result, you can increase the frequency (number of
times a customer buys), range (cross-selling of additional products), and
value of customer purchase (pushing more expensive product lines to
customer). You make better-informed decisions about your customers; hence
you market and operate smarter, faster and more cost effective than your
competition. This in turn improves customer loyalty and contributes to a
better bottom line.
2. Improves customer relationship.
Businesses who are able to meet the
needs and interests of their customers are more likely to develop lasting
relationships with them. Understanding your customers is the first step to
ensuring a loyal base of customers. If you know the who, when, where and how
of your customer, you are will be able to personalize communications, offer
a more individualized customer service, or direct specific promotions
targeted to exceed customer expectations which in turn could further
cement the customer/business relationship.
3. Maximizes the value of customers.
Your goal is to ensure that your
customers keep coming back to you again and again. You can achieve this by
identifying continuity and cross-selling opportunities to keep them reigned
in to your business.
If you are running a subscription-based web site, for example, you want
your members to continue their subscription year-after-year and purchase
your other products (e.g. books, downloadable e-books, etc.). If you are
selling men's clothing, you want the buyer to purchase a tie in addition
to the shirt already purchased. If you are a web designer, you want your
client, who originally asked you to create their web site, to also purchase
your search engine optimization services, create their advertising creatives,
or other ancillary services that you offer.
Keeping track of your dealings with your customers will allow you to
identify the "one time only" triers, the repeat purchasers, and the
loyal customers. Your goal is to be able to convert your single transaction
customers into a regular, and hopefully, loyal customers in the long run.
4. Lowers your costs.
A better understanding of your customers allows
you to craft the right marketing and customer communication programs.
Customer data can give you information about your customer's habits and
needs allowing you to better tailor your marketing campaigns, including
timing and frequency of promotions. You will be spared with the expense of
trial-and-error campaigns and ineffective marketing efforts resulting from
inadequate customer information.
For more information on researching your market, visit our
Market Research for Small & Home Businesses section
January
6, 2004
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