Getting to Know Your Best Customers
If you know what types of companies or people buy your product or service, you can predict who your best potential customers are based on how they stack up against that same ideal criteria. It can even shed light on new market opportunities. But you must take steps to augment it with business demographics to create an actionable best-customer profile.
First, admit you have a problem. Mailing the same materials to everyone instead of focusing on the best prospects, mailing to outdated lists and wasting sales efforts on bad leads are all return-on-investment killers. The biggest marketing challenge to overcome is spending time and money on prospects who will never buy from you, or even some who do buy from you but cost you money because they do not buy enough to offset the amount of service they require.
The key is analyzing your customer database and customer buying behavior to identify the common attributes of customers who have the best lifetime value. Order history is a central piece of this puzzle. In addition to identifying the customers who spend the most money and the prospects who do not, it shows how well you have retained specific types of customers and how successful you have been in upselling.
Tap the data. The best way to create a credible model of your best customers is to enhance your customer data with more detailed business demographics. Creating a system for salespeople to capture information on company size and business type is helpful, but one of the best sources of this information is third-party providers. Service bureaus provide data cleansing and matching services and will create a best-customer profile or model for you using your customer data combined with their database of business demographics such as SIC codes, number of employees, annual revenues and number of years in business.
The technology also exists for organizations to do much of this inhouse. Data now can be bought over the Internet, and software tools do the matching and help you create a customer model on your own desktop. This is often much more cost-efficient and time-efficient, as service bureaus can take weeks to conduct matching. And, when you begin purchasing prospect names and addresses, software and online data purchasing solutions allow you to set parameters based on your best-customer profiles.
Once you have detailed information on your customers, you can evaluate demographically what kinds of organizations buy the most products and services from you. Against that, you can compare sales leads and prioritize them based on how well they match the best-customer profile. Be prepared, because learning more about your customers and prospects can lead to radical changes in marketing practices. One common outcome of best-customer profiling is marketing to fewer people, something with which many marketers have trouble coming to grips.
Take action. Conduct extensive marketing seminars nationwide for your product line. Even if you end up with a high target market, the customer response and conversion rate may prove to be a high turnaround.
Overlaying customer information with business demographics will weed out the types of companies that are not good prospects. Examine your vertical markets to determine which ones deserve more attention. With this information, a marketing department can slash its budget by cutting the number of seminars while creating a highly targeted prospect list.
Cross the sales and marketing divide. Another great outcome of customer profiling is the value the marketing department can deliver to the sales force. Suddenly your marketing programs will give your sales department leads and will create more opportunities for them within your own customer base. They also will be armed with more information about prospects so they can prioritize which ones deserve the most personal attention. Imagine, your sales and marketing departments engaged in a healthy relationship. That alone should sell you on the benefits of best-customer profiling.