Customers and markets

No customers - No business!

Customers are your income. The better you are at dealing with customers, the more successful your business will be.

Added value

You will only sell a product or service because customers feel they need it. Answer the question 'Why did the customer buy from me and not one of my competitors?' and you will know how to market your product or service. Customers buy from you because you provide more than just a basic product or service. This is the definition of'added value', and only your customers can decide what added value is.

The key is to get close to your customers and to build relationships. Customers will tell you when their needs change, they will give you indications about how your market is changing, and they may give you vital information on your competitors. They will tell you what makes your business stand out from the crowd as far as they are concerned. To get this information you can either do a formal survey of your customers or ask them in conversation. An example of a formal survey is shown below:

Customer attitude survey

Here is a step-by-step method to help you carry out a Customer Attitude Survey by phone.
The procedure uses a tried and tested method.

Step 1
Identify some customers, including:



Aim for 10-30 contacts in total (or more if you have a large customer base).

Step 2
Write the following letter to your customers:

Dear X,
To help us assess and improve the overall standard of our service (products), we are carrying out a brief customer survey. To do this, we are asking our customers for their opinions and advice on our service (products). We will phone you soon. It won't take up much of your time, and we will be very grateful for your views. Thank you for your help.



Step 3
Decide what information you need and design your questions. For example, here are some that we have prepared:

You can design your own questions or change them into your own words. Each question can be followed up with questions asking for greater detail.

For example:

Step 4
Decide whether someone in your business will carry out the telephone survey or whether to employ someone from outside. Make sure the person is 'comfortable' speaking to customers over the phone, and is a good listener. Set out your questions on a sheet of paper, leaving spaces for answers. Write the customer's name on each form. Tell the person doing the research to stick to the questions and to write answers word for word - not to interpret the answers. Ask open questions - those that can't be answered just 'yes' or 'no'. If the survey is done professionally and properly, it will improve your image with your customers.

Step 5
Phone the chosen customers about 3 days after sending them your letter. Ask them to identify which is the most important of the issues in Step 3. Then take each in turn and ask them to rate your business on a scale of 1-5, with 1 = awful and 5 = excellent.

Example

'Mr Customer, you said delivery was your number 2 priority.
On a scale of 1-5 (5 being excellent), where would you rate us?
Do you mind if I ask whether our major competitors are above or below that rating?'


Step 6
Assess the information collected. Which issue was mentioned most frequently? What are your customers' most important needs? How do they see your business? You should end up with a list of customer needs and a rating of your performance compared to your competitors. Clearly the next step is to take action to build on your strengths and deal with important weaknesses. You may also have identified some new opportunities in your research which you now want to take up. Businesses are sometimes worried that customers will not talk enough or will not be honest. You will probably find that the problem is not getting people to talk but stopping them talking. Remember, they are far more used to salespersons trying to sell to them than people genuinely interested in their views.

Step 7
Consider following up your survey by thanking the customers that took part by phone or letter. You may even wish to tell them some of the results and how you will be changing or improving what you offer.

Note
If you are selling to the general public, it is harder to do this survey by phone and you will probably have to concentrate on a smaller number of regular or recent customers. The alternative is to produce a written questionnaire which you can post to customers. If you do this, be aware of the following:

Other methods of carrying out a customer attitude survey include:

Remember the golden rules with any customer attitude survey method are:

How to Add Value

Some of the things businesses offer to add value are:

Caution! The only alternative to added value is to sell at a cheaper price than your competitor. However, if you reduce the price:

If you do not keep in close contact with your customers, the first sign that you are out of step with your markets will be an unplanned drop in sales. By then it may be too late to do anything about it.

Market segments

No business has the resources to sell to the entire world, so it is best to divide your potential customers into groups or segments to make the most of your promotional activities.

If your customer segments are not similar, you may need to think up a different selling message for each, or focus all your activity on the strongest segment for your business. Don't be surprised if most of your business is from one type of customer. Many businesses find that up to 80% of their business comes from just 20%of their customers, or 20% of their products generate 80% of their sales. The successful owner knows which products and customer segments are the most profitable.

Sales platform

As well as knowing which products and customer groups are the most profitable, you need to generate enquiries. This is one of the most difficult areas for business-owners as they have to decide how much time and effort to put into selling.

You always need to contact more potential customers than you will sell to. Keep a close watch on your promotional activities and find out what has attracted your customers. You will then know exactly what your 'conversion rate' is for turning casual enquiries into money spending customers. If you know how much business you want to do in a given time, you will then know how many potential customers to promote your business to.

Being able to do this is not as hard as you might think. The method, 'sales platform', is one of business's best-kept secrets. Each business needs to develop its own sales platform. Here is an example:

This is how one kitchen fitting company applied the sales platform technique.

 Source of information
Step 1 Annual sales target �,000 Business plan target
Step 2 Average order size �000 Previous experience
Step 3 Orders needed each year 36 Step 1 � Step 2
Step 4 Orders needed each month 3 Step 3 � 12
Step 5 'Conversion rate' - how many quotes given become orders 1 in 3 Previous experience or market intelligence
Step 6 Number of quotes that must be given each month 9 Step 4 x Step 5
Step 7 'Conversion rate' - how many casual enquiries become quotes given 1 in 6 (1/6) Previous experience or market intelligence
Step 8 Casual enquiries needed each month 54 Step 6 Divided by Step 7



This gives the kitchen business a monthly target for its sales activity. Each month, the business needs to complete 3 orders, give 9 quotations for new business and attract 54 casual enquiries from potential customers to meet its financial targets.

The following may be used to work out your own sales platform:

 Source of information
Step 1 Annual sales target   Business plan target
Step 2 Average order size   Previous experience
Step 3 Orders needed each year   Step 1 � Step 2
Step 3a Orders which should come from repeat business   Previous experience
Step 3b New orders needed in the year   Step 3 - Step 3a
Step 4 Orders needed each month   Step 3b � 12
Step 5 'Conversion rate' - how many quotes given or research become orders   Previous experience
Step 6 Number of quotes that must be given each month   Step 4 x Step 5
Step 7 'Conversion rate' - How many potential customers or research you contact result in giving a quote   Previous experience
Step 8 Potential customers you need to contact each month   Step 6 x Step 7



This gives you a monthly guide for planning your sales activity.

Be aware!
The success of your business depends on 'keeping your ear to the ground' in all sorts of ways. Here is a list of a few things that have had a major impact on businesses in recent years:

The businesses most likely to survive or prosper are those that identify these trends early. For example, if you decide that the cost involved in meeting new law is more than your business can afford, recognising this early will allow you to change direction.

Selling

There is a common belief that selling is about putting pressure on a potential customer or manipulating them. This is wrong. People tend not to buy from suppliers they do not trust. Selling is about trading your human qualities. Research has shown that in 83% of cases, customers actually like the sales person they have been dealing with. This is another aspect of added value.

How do you get potential customers to trust you?

What makes a good salesperson?

Complaints

If you think you are doing all right because you don't hear any customer complaints, think again! In general, people do not complain - they just go somewhere else. Worse, they usually tell about 10 other people of their bad experience with you. (Normally, a good experience will be passed on to an average of 5 other people.)

Keep in touch and encourage your customers to talk to you, even if you just get complaints. Often, by reacting to their complaint, you actually increase their loyalty towards you. Customers do understand that mistakes happen. Take responsibility rather than blaming others - solving customers' problems is a vital part of business.

To summarise

A 'Marketing Effectiveness Questionnaire' can be used to help you decide how 'customer-orientated' your business is. A sample questionnaire can be seen in the appendix section of this guide.

'Customer-orientation' is an attitude of mind, and the wise business person is always trying to improve. Each of us is subjected to over 500,000 advertising and selling messages every year, so the competition to get your name in front of your customers is tough.

Repeat business and 'referred' business (from people who have heard about you) are the most important selling areas. Work hard at generating ideas to create more repeat and referred business.

Never criticise your competitors in front of present or potential clients. You will reduce the credibility of your own products and services by doing so. Your competitors do a good job, but you can do it better.