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6 Steps to Finding Hidden Value in Your Client Base!
07 March 2011
Whether you have a retail business, a professional service business, you're a distributor of products, a producer of products, a medical practitioner, or owner of any other sort of business, you will appreciate that the fastest way to increase your revenue is to grow the value of your existing client or customer base.
I have been through this exercise with many clients and BOSSMENTOR® members, and the results often indicate considerable growth opportunity, and become a catalyst for renewed growth in the business.
So, what are the 6 steps?
Step 1: Collect your customer data. Use a spreadsheet, print out reports from your accounting package, or write it down manually if that's the easiest option. You need a list of all your customers/clients/patients over the last 3 years if possible, and next to each record the value of the business they did with you that year.
Step 2: Identify growth trends. Are your customers Inactive, Growing in value, Declining in value, Constant each year. You must be completely honest with this! Often we think customers are in growth mode and they're not, or we categorise them as generating a fairly constant stream of business with us, but they're bordering on decline. You have to be brutally honest if you want to produce results.
Step 3: Reactivate the inactive clients. Group the inactive clients together, put them into a new and separate list, and develop a strategy to reactivate them. This would start with communication - a call, a visit, an email, a letter, a special promotion or offer, etc.
Step 4: Flag declining customers. If you have some customers or clients that are declining in their value, and doing less business with you, you need to save them or let go.
First, you must understand why this is happening:
Is it because of your relationship (weak)?
Is it because of communication (lack of)?
Is it because you no longer have enough/the right/any new products and services for these customers?
Is it because the customer has changed in some way - they no longer need your product or service, they don't have the responsibility for buying from you any more, they have moved away, etc.?
If you don't have the answers to these questions you need to find them, otherwise you can't arrest the decline in business from this group. Step 4 requires similar action as Step 3 - you need to talk to your customers and find out where they are and what's happened.
Step 5: Identify growth clients. Highlight those customers or clients who represent growth, or who could grow significantly in the future. These are your strategic clients.
Step 6: Match products & customers. List all of your product or service offerings. Give them a name, a brief description, and a price. This is especially important for service firms, as they tend to have smaller offerings than companies which provide products. If you only have one generic service, you need to develop some new offerings which are suitable for your strategic customers and clients. In order to continue doing business together, you need to continue to be relevant to them - that is, you need to keep providing product and service offerings which will help your clients and customers and add value in some way.
If you currently have 5 different product offerings, for example, but most of your clients only have or use one or two, you need to focus on which clients could benefit from the other products, and work on that. You could double the value of a client in one year if you are able to do this. If most of your clients can't really benefit from the other product or service offerings, then you have the wrong products, or the wrong clients. Seriously!
I know of one retailer who was able to grow her business considerably, selling to exactly the same customers, when she offered a new type of product in her store. She did her research and knew what her clients would like, and where to source the right product, but the results were amazing. She just focused on what else she could provide to her existing customer base, to grow her business.
Good luck in finding the hidden value in your client base.
Jenny Stilwell is the Managing Director of BOSSMENTOR®, a consultancy providing advice on strategy and business growth for professional, lifestyle-oriented owners of service-based businesses who want to grow their businesses and ultimately spend less time in them. Bossmentor® provides mentoring programs, consulting services, and a range of resources for business owners wanting to grow. Visit http://www.bossmentor.com.au