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Retaining existing customers to maximize your profits For an ongoing business, satisfying and retaining customers is the key to success. By selling your existing customers as many products and services as possible, you will increase their loyalty to your business, build long-term rewarding relationships, and close out the competition. As you begin to think about your current customers, try to categorize them in simple terms as follows: My best customers....
By describing your customers in these terms you have begun to segment the market. One of the most important ways you can segment your existing business is by analyzing the monthly purchases of your customers. Simply make a list that starts with the customer that spends the most with your business and end with the one that spends the least. In the table below Customer A would spend the most with your business, and Customer E would spend the least.
With this type of analysis you have segmented your customers by the amount they spend with your business. Take the segmentation one step further by including the total monthly purchases your customers make from both your business and the competition. For example, although Customer D only spends $500 on your products and services, it spends a total of $2,500 when you include purchases from the competition. Now you can begin to develop a marketing strategy based on the segmentation analysis. For instance you could:
Market segmentation means focusing on a particular niche of a market that will be profitable for your business. This depends on choosing the right segment, with the right product and image to satisfy your prospects' needs. Finally, segmentation has to be constantly renewed because the characteristics of the market constantly change as new customers enter and old ones leave.
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