Karen Paiyo

An automated customer database, in and of itself, is simply a tool that uses the benefits offered by technology to collate details about each client, to assist in the development of strong customer relationships. These relationships are built in order to more effectively market small business's products and services to clients.

This, in turn, drives increased revenue, and hopefully, increased profits. But apart from the obvious ways of harvesting value from your customer database, there are many other ways to use your customer database to drive increased profits. Let's look at some of them.

1. Better Product Development

Improving the knowledge you have about your customers may assist in better product development or services to suit particular segments of your business. If, for example, you sell a high priced, high-end product but find a larger segment of your business is price sensitive, you may develop a similar, budget priced item, minus a few of the bells and whistles the high-end product offers to better satisfy your clrice sensitive client base. This can result in increasing your sales revenue.

2. Better Targetted Marketing

Knowing more about your clients, including their motivations and buying behaviours, enables you to more specifically target a particular segment of the business and increase sales conversion rates. This allows you to develop a marketing campaign specifically designed to appeal to this customer segment, rather than developing a mass marketing campaign that attempts to appeal (usually unsuccessfully) to every body. Segemented marketing is much cheaper because it markets to fewer clients and the sales conversion rates are typically much higher than a mass market campaign.

3. Reduce Marketing Costs

Technology opens opportunities to reduce marketing costs. This includes the ability to switch from traditional or "snail mail' to the use of email technology. Australia Post mail starts at a standard 55c per item and works up from there. This might not be a problem if your business markets to only a few key customers, but when you are marketing to thousands of clients, on a repeat basis, the costs quickly add up. Apart from the savings from the actual mailing costs, automation will also assist in reducing the amount of labour and the time taken to produce the marketing campaign.

4. Actively Pursue and Identify Sales Opportunities

An effective customer database allows you to actively identify potential sales opportunities and to automatically trigger standard marketing campaigns. For example, if a typical client purchases your product every month, it can automatically trigger pre-filled re-order froms every month to be issued to the client. Another possible option is a birthday special offer campaign or other event based opportunity. Other opportunities include cross-sell, up-sell and product bundling offers based on existing purchasing practices.

5. Improved Business Intelligence

The more you know about your customers and their buying behaviour, the better you will be able to understand your business and the more you know your business, the better your business decisions. Key customer metrics you should be able to measure from your customer databse include, Customer Acquisition (New and Repeat, active and inactive), Customer Satisfaction, Customer Profitiability and Customer Retention.

6. Enables Benchmarking

Collating information about your clients allows you to benchmark your performance compared to similar businesses within your industry. Knowing where you stand in your industry allows you to monitor your business progress in comparison with the industry in general.

7. Better Business Flexibility

By Collating your data in one central database, you have the added flexibility that any person in your business can quickly and easily pick up the customers details and continue the relationship with that client. This reduces the reliance on key personnel and allows new employees to get up to speed quickly.

8. Improve Customer Service and Customer Experience

By having a complete history about your client, you can work on improving your customer service processes which will result in a better customer experience and more loyal customers. This can include special services, bonuses or offers for your VIP customers or simply streamlining processes for particular clients based on their loyalty or other factors.

9. Value Customers Based on their Lifetime Value

If you know that your customers typically continue to buy your products and services based on a particular pattern over their lifetime, you are better able to determine the value of that customer over the long term and then treat them accordingly.

10. Negotiate Better Deals with Your Suppliers

Understanding your clients purchasing patterns gives you the ability to proactively manage your purchasing and inventory management practices. It also allows you to more effectively negotiate purchasing deals with your suppliers. Understanding your clients purchasing patterns may also assist in the management of cash flow and monitoring the sales pipeline will also add insight.

About the Author

Karen L. Paiyo is an Australian Small Business Counsellor, supporting and nurturing the spirit of entrepreneurship in the Asia Pacific Region. Karen empowers small business owners by transferring to them the skills and expertise needed to help them take their business ideas from creative concept to profitable reality, faster and with less risk.

For more small business articles, news, tips and business advice, check out her website at http://www.karenpaiyo.com