Business & Finance Small Business

Small Business Customers Who Are Ideal

One of the most valuable things a small business owner can do is to create a set of "golden handcuffs" for the business' best clients.
These ensure that these clients have added incentive to stay loyal, which is beneficial since the cost of retaining existing customers is generally much lower than the costs of acquiring completely new ones.
Clearly, the more valuable customer characteristics a single customer possesses, the more that should be spent to keep that particular customer (see the list below).
Here are some especially valuable customers whose retention is crucial to the success of the business:
  • Those who purchase frequently, in large volume, or who spend more when purchasing
  • Those who often make purchases outside of periods of high seasonal demand
  • Those who provide valuable information about trends, new competitors, or other developments
  • Those who are lower maintenance and generally require fewer resources
  • Those who have helped save you money, time, or effort in other ways
  • Those who have frequently referred new customers, or who have referred customers who are exceptionally profitable
  • Those who suggest new product and service ideas for your business
  • Those who point out potential problems, and provide suggestions for fixing them
This last item is particularly insidious, as many customers will not complain, but will instead simply leave dissatisfied, never to use your product or service again.
Dissatisfied customers can also tell others not to consider you, making it much harder to win over new customers.
Accordingly, when you find customers who are particularly valuable, it is crucial to have some strategy in place, so that you can 1) identify them, 2) identify what events might cause them to switch to a competitor, and 3) prevent them from defecting over to competitors who are targeting the same (or similar) market segments.
While rewarding customers who are not likely to switch is also good, these rewards should be done in a manner which is low-cost or non-cost, since otherwise rewards can reduce the amount of profit per customer.
Of course, knowing the difference between the costs of retaining an existing customer versus the costs of acquiring a completely new customer is also critically important, since these exact numbers will help to determine how much should be spent to retain a customer.
The list above, however, provides other variables to also consider before settling on a policy of customer retention.
Copyright 2010, by Marc Mays

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