Using customer behaviours to grow your business

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Some businesses report that up to 80% of their sales growth came from their existing customers and therefore that investing in sales and marketing activities which focused on this cohort (often referred to as backend marketing) can be more profitable, less speculative and easier to predict than front-end marketing (acquiring new customers).

In most cases your customer base will have many similarities and/or they can be segmented into common groups with similar traits, depending on the products and services you provide.

In my experience, it is possible to establish simple, successful and cost effective sales strategies that can be attractive to individual and segmented customer groups, once you understand them. But the question of course is, what is it that you need to know about your existing customer base?

  1. The value of a customer and what a customer’s total sales potential might be.
  2. The way your customers buy your products and services.

This is about identifying the how, what, when and how much. Knowing this will allow you to understand whether your objective should be to sell them more each time or to sell to them more often.

We can delve a little deeper when addressing these important insights by breaking them down into four key categories and ten key questions, all of which you should ideally be able to answer:

Customer basics

  • How many customers do I have?
  • How many active customers do I have?
  • Why do customers buy from me?

Customer acquisition

  • How many new customers do I get each year?
  • How many referrals do I receive from existing customers and why?
  • How much does it cost to acquire new customers?

Customer loyalty

  • How often does a customer buy from me?
  • How many customers have I lost and why?
  • How do I attract and retain customers?
  • How do I get customers to buy more from me?

Customer profitability

  • How much revenue and profit does a customer generate for me?
  • How much does losing a customer cost me?
  • How do I set the right selling price?

So now that you know what the questions are, do you have the answers? If your answer is yes, that’s great. If your answer is no, don’t despair. You may be surprised to learn that you probably do in fact have the answers – they’re sitting in the data you’ve retained about your customers. Typically, you’ll find them in your detailed invoice files which are stored in accounting packages such as Xero and MYOB.

Information like products or services sold, dates and times, customer details (including address) and prices paid can be used to form a revealing and informative picture of customer activity over a period of time. The data extracted can be used to identify trends, patterns and behaviours which in turn can be used as the foundation for effective sales and marketing strategies.

Importantly, your sales data analysis can provide valuable insights to help grow and develop your business, providing you know what to look for and how to use and apply the information you’ve extracted. This requires data interpretation skills combined with commercial acumen. And so, if you’re a little unsure about how to proceed, using the services of an expert to extract and interpret the data can pay real long-term dividends.

As a final thought, once you have an understanding of your existing customer base and their current and potential value to your business, you’ll then be in a position to make an informed decision on whether and how much to invest in a customer and how to prioritise your existing customer base.

Related articles:
1. 6 steps to grow your business
2. Hosting events to grow your business
3. Business finance to grow your business


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Peter Boehm
Peter is a seasoned business leader with over 30 years local and international experience in the SME and large business sectors. He is a recognised finance expert with substantial expertise in business start-ups, turn-arounds, growth and development.

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