Are You Making the Most of Your Customer Database?
Michelle Davies -
Accountancy Ireland, Vol.33, No. 4, August 2001
To build a
successful
business, you
need as many
'good' clients
as possible.
Agreed?
And when the
economy is
booming, and
you've got
clients beating
at your door -
it's important
to be able to
service them all
efficiently and
effectively.
Customer
expectations of
service have
risen
dramatically -
and they will
continue to
rise. And in an
arena such as
accountancy,
where the
service offering
is based on
knowledge and
expertise, and
is therefore,
intangible -
service levels
are the only
means a client
can truly
evaluate a
practice.
A
vital point to
understand:
that point is:
even though you
are providing a
similar service
to similar
clients - and
many of their
needs may be
similar, you
can't
communicate with
all of your
clients in the
same way.
Building a
relationship
with each client
is fundamental.
And building
those
relationships
involves a
long-term
commitment to
nurturing your
client base and
dedicating the
necessary
resource to the
cause. It's an
enormous yet
necessary task.
Hence the
phenomenal
increase in
software
packages and
customer
relationship
management
gurus.
See how you
score on these
questions:
If you know all
of the answers
to these
questions on an
ongoing basis -
then you are
pretty much on
top of managing
and
understanding
the needs of
your clients -
if not, then
let's take a
look at how your
client database
could be
providing you
with these
answers….
Firstly, how do
you define a
'good' client?
The Pareto
Principle states
that 80% of your
sales come from
20% of your
customers. And
therefore, that
20% of your
client base are
the 'good'
clients. Now it
may not be
exactly 80/20 -
in some cases it
could be 90/10
and in others
60/40 - but
there's
definitely a
case for doing
some analysis
and identifying
which clients
make up your
'good' client
segment.
In fact, through
customer
analysis, if you
make a list of
all your
existing and
potential
customers,
broken down into
categories
representing
turnover,
chances are
you'll end up
with a client
base split into
three sectors:
-
A small
number of
high volume
customers.
-
A large
number of
medium
volume
customers.
-
An even
larger
number of
low volume
customers.
On your database
you can then
categorize your
clients
accordingly.
Keeping an eye
on client
profitability is
necessary to the
health of any
business.
Segmenting your
clients this way
will also help
you to
prioritize your
marketing
activity.
Remember, a
happy client
will play a big
role in
encouraging
peers, friends
and family to
use your
services. And
it's likely your
'good' clients
mix with other
'good'
prospective
clients. And to
build up your
business, you
need as many
'good' clients
as you can get.
And then there
will be other
sectors of the
potential market
that you are
interested in:
-
Hot
prospects -
ready to buy
-
Warm
prospects -
may buy if
timing is
right
-
Leads -
potential
customers
that you
know about
vaguely, but
not enough
to put them
into a
particular
category.
-
Suspects -
potential
customers
you would
like to
have, but as
yet have no
contact with
- let's call
them 'dream
clients'.
-
Cold
prospects -
simply will
never buy
Looking at these
five sectors, it
becomes apparent
that each sector
requires a
different
approach. One
shoe certainly
doesn't fit all
- and so mass
marketing to
these sectors,
is unlikely to
be effective.
Also, do you
want to be
wasting resource
marketing to
those 'cold'
prospects that
will never buy
from you?
Your client
database can
help you
prioritize,
segment and
target the
specific clients
you want to be
communicating
with - so that
you are speaking
to them as
individuals.
In it's simplest
form - effective
marketing means
that you have to
identify the
needs of your
market and then
provide a
service to
fulfill that
need. Therefore,
to achieve this,
your firm needs
to become highly
customer
orientated -
with a clear
focus on
servicing your
clients needs.
Servicing your
clients' needs,
is only possible
if you really
get to know what
it is they
really want from
you. Really
getting to grips
with the needs
of your client
base.
And then you
have to record
all those needs,
buying habits,
and have the
ability to build
a solid base of
information
about your
customers and
prospects - that
you can tap into
to help you to
communicate with
them on an one
to one basis.
Therefore, your
database becomes
the focal point
for all your
marketing
activities,
providing you
with a means to
apply tactics to
nurture your
clients and
prospective
clients.
Setting Up Your
System
Most firms have
some form of
client
'database' be it
manual or
electronic.
However, in the
age of
technology - and
with so many
'client
management'
software
packages around,
there really
isn't any reason
why every firm
should not have
their clients'
details recorded
electronically.
Recording client
information has
become a simple
exercise. And
given the highly
competitive
computer
industry, you
can set up a
computer
database,
capable of
sorting and
managing
information of
thousands of
customers, for a
relatively low
cost.
Building Your
Database
It's important
that you keep
the information
on your database
as simple and
basic as
possible. Many
people will have
access to and
have to
understand
clearly the
information held
on your
database.
Therefore, keep
it simple. No
need for complex
codes. Ensure
you have the
basics:
-
Clients
Details and
Characteristics
· All names,
addresses
and
telephone
numbers
· Business:
Type of
business,
number of
employees,
key
personnel,
turnover
· Client:
Sex, date of
birth,
family
members,
hobbies
-
Service/product
purchased
/Special
Requests/Interests
· Services
purchased
· Complaints
· Enquiries,
Instructions,
Agreements
-
Recency
/Frequency /
Monetary
Factors
· Recency =
when client
last bought
your service
· Frequency
= how often
they buy
· Monetary =
how much
they spend
-
What
influenced
the
Transaction
·
Advertising,
Direct Mail,
Tele Sales,
Publicity,
Conference,
Directories
-
Customer
History
· The
information
stored
should give
you a
complete
history of
your
relationship
with the
client.
· You will
be in a
position to
contact
customers on
a personal
basis - as
will other
members of
your team.
The history
log enables
effective
delegation.
-
Your Return
on
Investment
· By
recording
all
transactions
in your
database,
including
what
influenced
the client
to get in
touch with
you, you can
break down
the return
you get from
all
advertising
and
marketing
activity.
You Only Get Out
What You Put In
Your database is
only as good as
the information
you put in.
Collecting the
right
information
requires
commitment from
everyone within
the
organization.
Who spoke with
who last. Make
this a
performance
standard
internally that
each and every
person has to
log every
conversation,
contact with a
client onto your
database.
It may seem
laborious but
it's incredible
how effective
this system is.
Imagine, you've
been on holiday
for 2 weeks and
three of your
colleagues have
recorded every
conversation
they've had with
your client on
the database.
That way, you
don't need to
have a meeting
with either your
client or your
colleague to
find out what's
happened in your
absence - you
can simply
contact your
client - and
continue your
relationship.
And you're
client will be
impressed that
you know exactly
what's been
happening in
your absence.
It's so
important that
your database is
up-dated
regularly. It
has to be
up-to-date.
Recent research
undertaken by
Royal Mail
showed that 85%
of the sample
surveyed agreed
that
inaccuracies in
the name and
address
reflected badly
on the image of
the company.
Think about how
you feel when
you receive a
letter with the
incorrect name
or address - or
you receive
something that
is totally
irrelevant to
you. It probably
heads straight
for the filing
cabinet marked
'bin'.
I
know I
personally feel
'how are this
organization
going to offer
me a fabulous
service when
they can't even
get my name
correct'. And if
the information
they send to me
is totally
irrelevant, then
I often think
'what time have
these people
spent finding
out about my
needs' - answer
'zero'. Not a
very customer
focused
approach. It's
an instant turn
off. And a waste
of resource for
the sender….
A
little bit of
fun
Within your
database, do
record personal
details of your
customers. When
you know it's a
birthday or
special
occasion, send a
card, or
flowers. It's
the little
things like this
that really show
your clients
that you are
thinking of them
and understand
who they are. A
simple field on
your database
can help you
really WOW your
clients.
Invest in your
database
It's fundamental
to build a
relationship
with your
clients. They
grow to trust
you and the
likelihood of
them switching
to another
supplier is
heavily
minimized. Also,
your clients are
more likely to
buy more
services from
you - as they
trust you and
know that you
understand their
needs. A little
time builds a
lot of loyalty.
Your database
will help you
manage many
relationships
effectively.
Research
evidence states
that it costs
five to ten
times more in
resources to
replace a client
than it does to
retain one.
There is clear
evidence that
practices should
be retaining
important
clients and
enhancing their
business
relationships.
Again, your
database can
help you to
leverage your
activity.
Do a client
information
audit. What do
you know about
them? Identify
the gaps in your
knowledge and
then create a
means of gaining
that information
- the simplest
way to gain
information -
ask for it .
Michelle Davies
Client
Consultant
RAN ONE (UK) Ltd
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