Crunching Numbers: Compare Existing Customers to Potential Ones

Andy Black//May 7, 2018//

Crunching Numbers: Compare Existing Customers to Potential Ones

Andy Black //May 7, 2018//

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Have you built and maintained a customer database of existing customers who have purchased from you in the past? If not, you should immediately consider doing so. Without existing customer information, you are throwing away good income potential. A customer’s contact information is worth its weight in gold, and if used properly, direct mail and e-marketing will boost sales and retain existing customers. Without a customer database, you’re flying blind and giving away business to a competitor.

According to a recent survey by Invesp, an e-commerce consulting company, these three truths are glaringly evident: 1) Acquiring a new customer is five times as expensive as retaining an existing one; 2) The success rate of selling to a customer you already have is 60-70 percent, while the success rate of selling to a new customer is 5-20 percent; and 3) Increasing customer retention rates by 5 percent increases profits by 25-95 percent.

Your big advantage when selling to existing customers is your past engagement with them. If you take the time to note what they like and what they have purchased from you in the past, you will have an idea what might interest them in the future. This kind of information will allow you to build your customer outreach to a grouping of existing customers with the same interests and give you the potential for the most productive sale possible. Dividing up your customer database into groupings according to your inventory categories and services is an easy way to make sure you don’t lose customers. With Excel (or your POS software), it should be easy enough to sort your customers by preference, contacting only those who might be interested in what you are promoting.

I can’t stress too forcefully that knowing an existing customer’s preferences should be a top priority. The best way to keep up with customer trends is to build a customer database, one that is easily updateable. When you sell anything of significant value, whether it’s an aquarium setup or a puppy training system, you should take the time to note that in your database. Also, at the time of the sale, you should make it a point to encourage your new and existing customers to share their contact information with you.

It’s true—building a meaningful customer database requires a bit of finesse. Customers won’t share home and email addresses without a compelling reason. In a sense, you will in most cases need to bribe them with a preferred customer program, offering a discount or by running monthly giveaways that they would be eligible to win by signing up.

A cautionary note: Always keep in mind that just because you have a database full of names doesn’t mean you should sell to all of them all the time. There’s a fine line between offering sales-ready customers the opportunity to make a purchase and annoying customers who aren’t interested in buying additional products and services from you on every outreach contact.

Even if you narrow your contact listing to just customers who might be interested in what you have on offer, if your message is too pushy or too complicated, making them jump through hoops to get the best deal, you’ll not only sabotage your chances for future sales, but you will also hurt your store’s customer satisfaction and retention rates.

When time allows, always follow up with a quick email, checking with your customer who has recently made a substantial purchase to see if everything is going smoothly. Even if they don’t respond, they will remember that you did reach out to see if they were satisfied with their purchase and will be more likely to read future emails from you.

To build your business, you have to focus not only on selling, but also on strengthening relationships and gaining a deeper understanding of your customers. Using customer transactions, online community platforms and emails to learn about their needs and wants is an integral step to increasing sales and profits in today’s uncertain marketplace.