We all know our customers. We know their names and their businesses, and we often know something about their lives outside of work. Usually we have lists of who our customers are. However, what many small business owners usually don’t know is what’s happening in the mix of their customer base.

When you analyse your customer base, and you should, you need to identify the following indicators:

• What are the broad customer categories by dollar spend – eg: up to $1,000 per annum, $1001-$3,000 etc. You will obviously select categories which have more meaning to your business.
• What is the average customer dollar spend by category, and how do they compare
• Overall, which customers generate most of your revenue – eg: the top 20% may generate 80% of your turnover, or close to that, or your top 10 customers may generate 80% of your revenue. The objective here is to identify those customers which are vital to your business in terms of revenue.
• What products or services are your customers buying? All, some, a mix? Is it changing?
• Is the average dollar spend by category increasing or declining over previous periods?
• Which customers have been active (purchasing) over the longest period of time?
• Which customers have become inactive (not spending) and why?

When you’ve identified this information, you need to look at what you’ve discovered:

• Who are the most valuable customers?
• How many customers add little value, or cost money to service?
• What is the profile of the preferred high value customers?
• What products or services are not really selling? Which are selling well?
• What is the risk identified by your 80/20 analysis? Do you have all or most of your eggs in one or just a few customer baskets?
• If you were to lose any high value customers, you know what the impact to your business would be.

What actions can you take from there?

• Make sure your most valuable customers are well looked after and serviced.
• Revisit your product or service range and make changes where necessary (delete items from your range, look at developing new products, proactively promote some products or services more than others, etc.)
• Assess the structure of your sales team – you may have a direct sales team (or advisors, or consultants, or technicians, or whatever is appropriate to your business) manage the top customers on a one on one basis, you may have a set number of your team sharing the management of the next tier of customers, and you may consider a telesales or telemarketing person or team to manage all of the small customers. They may also be managed via a website interface, for example.
• Now that you know the profile of your preferred type of customer, you need to ensure that you focus on this profile when attracting new customers. This will spread the risk of having most of your revenue generated by just a few customers, and will build your business in the right direction.
• Finally, don’t forget about building the value of your customers: ask them what they think, what they want, what they may want to see changed, and what else you can do for them. Now you have them, and you know them well, build on that to build your business.

Stumble it!