A few months ago, I was at a conference where I sat down for lunch with the head of sales from a mid-sized company.
He was going on about how he had to get more leads, and his boss kept telling him to increase the number of leads per month so that he could close more deals and bring in more revenue.
And as we ate our salads, we went through all the tactics you’ve probably discussed with your leadership or founder in terms of how to grow your business: Content marketing? Check. Adwords? Check. PR campaigns? Yep! Nothing seemed to be working!
Finally, my friend had an epiphany: “Wait for a second,” he said. “What are we doing all this for?” We were so focused on getting new customers that we weren’t thinking about our current ones!
Or, as he put it: “We’re trying to find new customers when we should be growing bigger with the ones who already know us!” And that’s when it hit me:
The tools you use to grow your business depend on what type of business you have and whether or not your company is growing primarily by acquiring new customers or growing its existing customer base to increase revenue from them over time.
| Takeaways |
|---|
| 1. Understanding your customer base is essential for targeted marketing. |
| 2. Tracking customer behavior helps tailor your strategies effectively. |
| 3. Utilize data analytics to gain insights into customer preferences. |
| 4. Regular tracking enables you to adapt to changing customer needs. |
| 5. Continuous monitoring aids in making informed business decisions. |
1. The Importance Of Tracking Customers’ Business And Identifying The Potential To Increase Their Revenue Per Customer
To improve customer loyalty and increase revenue per customer, it is important to know how customers are currently spending their money.
Tracking your customers’ business helps you identify ways in which you can increase your revenue per customer by providing them with products and services that align with their needs and interests.
There are many metrics you can track when it comes to tracking your customer base. Some of these metrics include:
- Average order frequency
- Average order value (AOV)
- Lifetime value (LTV)
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2. Don’t Track The Number Of Sales, But Instead Track The Number Of Customers You Have
The number of customers you have is more important than the number of sales.
That’s because the number of sales is a vanity metric, which means it’s only valuable to you if it makes you feel good about yourself and your business.
(I’m not saying vanity metrics aren’t useful in general they can be a great way to track progress toward certain goals it’s just that they’re not always useful for measuring success or failure.)
The number of customers, on the other hand, will help predict future sales and growth over time. You might have a one really big sale at first but then never sell another product again because there aren’t any new people coming into your store or website!
So instead of tracking just how many products have sold since the last time you checked (which I’ll call “sales”), try tracking how many people have purchased something from your store since then (“customers”).
This will tell you whether or not there are still people out there who want what it is that you’re offering; if there aren’t any new customers coming through, then maybe no one else needs what it is that does exist on offer either!
3. Track The Number Of Customers Who Are Repeat Buyers
You’re likely familiar with the term “repeat buyers.” In short, these are customers who have purchased from you multiple times.
If a customer has purchased from you three times, that’s not exactly a repeat buyer that person is probably just really into your service or product and is going to keep coming back (at least until they find something better).
The key takeaway here is that repeat buyers are more likely to be your best customers in general. They’re more loyal and profitable than first-time buyers.
They’re also more likely to refer other people to use your service/product and brand yourself as well in other words.
They’re the kind of people who will support your business through thick and thin because they trust that what they get out of buying from you will be worthwhile over time (and hey, sometimes those purchases can even save them money!).
Crafting questions that encourage meaningful responses is essential for accurate insights. Learn how to incorporate open-ended questions effectively in your surveys and interviews to gather valuable information directly from your audience.
4. Track The Number Of Customers Who Are New Buyers
This metric is a good starting point for understanding the shape of your customer base because it allows you to track how many customers are new buyers.
You can then use this data to understand what percentage of your customers are new buyers, which will help you get a sense of how much growth potential there is in terms of attracting more new customers.
By looking at this metric over time, you’ll be able to see whether or not the number of new buyers tends to increase or decrease over time. If it’s increasing (or decreasing), that tells us something about our marketing efforts and whether or not they’re working well.
5. Track The Number Of Referrals You’ve Received From Your Current Customers
It should go without saying, referrals are the best source of new customers. They’re free, they’re warm leads and they come with a built-in stamp of approval.
To make sure you’re getting the most out of your current customer base, track the number of referrals you receive from each customer.
With this information in hand, you’ll be able to know if certain types of customers naturally refer more (and/or have better relationships with their clients) than others.
You can then attempt to replicate these results by identifying which marketing channels are driving those kinds of outcomes and focusing on those instead.
6. Track How Much Revenue Each Customer Brings In On Average
Tracking how much revenue each customer brings in on average can help you figure out what your best customers are worth, and how to keep them around.
For example, let’s say you have a small business where you sell customized t-shirts online. You know that most of your purchases come from customers who buy multiple items at once, but it’s unclear if some of these orders are larger than others.
To get a clearer picture of this information, look at the total amount spent by each customer over time and compare it to their average order size (the number of shirts bought).
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7. Track How Much Revenue Your Average Customer Brings In Per Year
You can also track the average revenue per customer, which will help you understand how much each new customer brings in (and therefore how much to charge them). To calculate this number, divide the total revenue by the number of customers.
For example, if your total sales were $100,000 and you had 10 customers, then each customer brought in an average of $10K.
If you sell multiple products or services but want to keep things simple and not go crazy with spreadsheets (understandable!) then we recommend tracking one product or service for now until you have more time and resources on hand.
8. Track How Many Products/Services Each Customer Is Using On Average
Every company has a unique set of products and services, but there’s one thing they all have in common: A customer. Whether you’re selling to businesses or consumers, you need to understand what each of your customers is buying from you.
You can do this by tracking the average number of products/services each customer is using on average.
This will help you identify which products/services are most valuable to your customers, which ones are less popular (and maybe not worth the investment), and which ones have potential for growth in the future.
Next time you’re tracking how many products/services each customer is using on average at any given time, keep these three things in mind:
- The total value of each product/service that each customer is using on average
- The total value – or lifetime revenue – generated by all of their purchases over time
- The value – or revenue per purchase – generated by individual purchases
9. Track The Value Of Each Product/Service That Each Customer Is Using On Average
Tracking the value of each product/service that each customer is using on average will help you understand how much value your customer base is getting from your company.
You can also track the value of each product/service that each customer has used over time, which can give you an idea about what products are most important for customers and if there are any changes in preferences over time.
Finally, tracking the value of each product/service that each customer has used in the last month gives a good picture of how much a typical customer spends with your company on average.
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10. Track The Total Value Of Each Product/Service That Each Customer Has Used Over Time
It’s tempting to think of your customers as a single, large group that all have the same needs and preferences. But there’s a lot more going on than you might realize.
Some of your customers are going to be more loyal than others; some will need more help or assistance than others; some will have larger purchases over time and others will have smaller ones.
You’ll want to figure out what kind of customer each person is so that you can provide them with the best experience possible. To do this, track the total value of each product/service that each customer has used over time.
11. Track What Percentage Of Your Sales Come From Which Products/Services
You can also track the percentage of sales coming from each product/service. This will help you understand whether a particular product is driving more sales than others, which could suggest that it should be promoted more heavily or even given its dedicated website page.
Another useful metric to track is the percentage of revenue coming from each product/service.
If you see that one product’s revenue share is growing at an accelerated rate compared to other products, this may indicate that there’s a stronger demand for it and you should consider increasing production or offering additional features related to that item.
Finally, keep an eye on how many referrals come from each item on your site so that if someone mentions having bought something but not being satisfied with it (or maybe even because they love it), you’ll know what needs improvement so as not to lose future customers!
This data can also be used in conjunction with other types of information about your customers’ preferences:
For example, if someone purchased both A and B but didn’t use either one after receiving them and did use C you’d probably want to find out why! For example, did they forget about A&B? Did something happen after purchase? Did C replace both A&B?
12. Track What Percentage Of Your Sales Come From Which Marketing Channels
If you don’t know how large your customer base is, it’s impossible to know what percentage of sales come from which marketing channels.
You may think that you do a great job of reaching new customers through social media and email campaigns, but if those channels only make up 5% of total sales, then they aren’t worth much.
It’s important to track what percentage of your sales are coming from each marketing channel so that you can make sure it’s an efficient allocation of resources.
If one channel keeps bringing in more revenue than others, then it may be wise to invest more heavily in that channel or try different ones altogether!
13. Understanding Where You Stand Now Will Help You Figure Out Where You Want To Go Next
Understanding your customer base is a vital part of being able to define, and then achieve your goals. But it’s also very hard to do.
While many companies tend to focus on the business side of their work and how they can get more customers and sell more products it is equally important that they have a clear understanding of who they are selling to.
By knowing exactly what makes up your customer base and how those people interact with you regularly, you can make sure that the needs of your whole organization are being met by focusing on improving those areas where you need improvement.
Effective market research sometimes reveals inconvenient truths that can reshape your strategies. Explore the challenges and insights discussed in The Inconvenient Truth of Marketing Research, and learn how addressing these truths can lead to more successful campaigns.
Conclusion
In essence, the most important thing is to know who you are speaking to. This can help define your brand identity and motivate your target market.
It’s also good practice to keep track of your customer base so you can measure the success of any changes you make whether that be in messaging or content creation strategy.
The shape will guide how your message is received, which means that it needs close attention if you want a healthy business relationship with clients who trust what they’re hearing from us.”
Further Reading
How to Find Customers: A Comprehensive Guide: Explore effective strategies for finding and attracting customers to your business.
Managing a Customer Service Team: Learn essential techniques and insights to successfully manage a customer service team.
Building and Growing Your Customer Base: Discover actionable tips and tactics to expand and nurture your customer base.
And here’s the “FAQs” section based on semantic of the TITLE:
FAQs
How can I improve my customer base effectively?
Enhancing your customer base involves a combination of targeted marketing efforts, understanding customer needs, and providing excellent service. Focus on engaging content, personalized interactions, and delivering value consistently.
What are the key aspects of managing a customer service team?
Managing a customer service team requires effective communication, training, and performance monitoring. Ensuring that team members have the necessary skills and resources is essential for delivering exceptional customer support.
How can I attract and retain customers for my business?
Attracting and retaining customers involves a customer-centric approach. Understand your customers’ preferences, address their pain points, and offer exceptional experiences to encourage loyalty and advocacy.
What strategies can I use to find potential customers for my business?
To find potential customers, leverage various strategies such as targeted advertising, networking events, social media engagement, and partnerships. Tailor your approach to reach your specific target audience effectively.
How do I develop a customer-centric strategy for my business?
Developing a customer-centric strategy involves placing customer needs and satisfaction at the core of your decision-making. Listen to feedback, personalize interactions, and continuously improve your products and services based on customer insights.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.
