Increase your Profit through Strategic Customer Engagement
I know it is stating the blatantly obvious but to grow your business revenue you need to get your current customers to buy more or get more customers. To increase profit, you need to find a more efficient way of serving your customers or to deliver greater value so they are happy to pay more. Achieving these objectives depends on effective and resourceful management of your customer relationships which requires engaging communication strategies with valuable communication. Here are some tips to help you do that.
- Know your customer profitability. In particular, who are your most profitable customers and your least profitable customers? Generally you will find that 20% of your customers will bring in 80% of your revenue. Analyse their characteristics to put them in groups; identify the common characteristics of each group. For highest revenue growth, target more prospects who are like your profitable customers and avoid the least-profitable types.
- Understand your customers. What do they value and what do they want? Where do they gather their information and how do they like to communicate? Knowing this will help you make decisions so you deliver the right message to the right customer at the right time via the right media channel. If you know what they want, you can provide it. If you don’t know, ask them!
- Define your relationship strategy. You want different relationships with each group of customers. The aim is to increase the loyalty and spending of your most profitable customers, therefore you want in-depth communication with them, individually if you can. As there is little business value in relationships with your least profitable customers beyond maintaining the connection, they should receive less communication that is more general in nature and lower cost to serve. This will help you get the best return on investment on your marketing and customer service spend.
- Plan your two-way communication. Create a plan for your communication with each group of customers; how often, which communication channel/medium, what message and what offers will you make so that you deliver just what your customer wants. Also be sure to plan how you will receive communication from your customers. A relationship requires two-way communication so you need to listen to your customers to understand them and know what they value. Be sure to save and analyse this feedback and information as it is very valuable to your business – especially if it is negative. It is best to know what you need to fix.
- Always focus on the value you deliver. In every communication, make sure you deliver value to your customer – in their terms and not just what you think is value. Ensure you have a message and offer that is valuable and important to them. Knowing your most profitable customers well means you can offer more of what they like and hence acquire more customers like them. Consequently you will increase you profitability and your revenue.
These are some of the tips for good customer relationship management. I know it is a lot easier said than done, but if you start with the right relationship and communication strategies for your customers, it will be a lot easier for you to grow your business. You can always call on coaches like me to help you execute these tips.