Do you know which of your customers are profitable?
By Karen A. Casey
Do you know the 80/20 rule? Research has shown that in many cases 80 percent of your income comes from 20 percent of your customers. If you can duplicate that 20 percent, your income potentially increases 80 percent. Sounds easy, but you need to do some research.
Do you know which customers generate most of your income? It may not be individual customers but a specific demographic or geographic area.
- If you are a retail store, do you know who is buying what merchandise – male, female, age group, where do they live?
- If you offer a service — landscaper, beautician, etc. — who calls you and where do they come from?
- If you are online only, who finds you and how?
You need to try to get this information at the point of contact with your customer. First get their email. You can offer them a discount or a freebie by filling out a form to get contact information – email, address or at least town, age group, how did they find you, etc. This will provide you invaluable information to focus future marketing to your customer base and avoid spending money where you are not getting sales. Once you get their email, develop a database that you can use to advise them of future sales, services or new items you have in stock. If a customer found you through a recommendation on Nextdoor or a Google Review, then ask all your customers to leave a review.
If you have their emails, you can send them the links to leave reviews, making it easier for them. These reviews will encourage others to find you.
Based on this feedback, take a look at your products and services and make sure they are focused on your profitable and repeat customers of your business. Consider asking for outside help to review your profitability. Studies have shown a small business owner who receives about three hours of mentoring reports higher revenue and increased business growth. There are many mentoring services available to you at no cost such as SCORE, Women’s Business Centers, Small Business Development Center and Veterans Business Outreach Centers. These services will help you stay focused and grow
Karen A. Casey, CPA, CFP, is a certified SCORE business mentor.