To build a successful business, you need as many ‘good’ clients as possible. Agreed? And when the economy is booming, and you’ve got clients beating at your door – it’s important to be able to service them all efficiently and effectively. Customer expectations of service have risen dramatically – and they will continue to rise. And in an arena such as accountancy, where the service offering is based on knowledge and expertise, and is therefore, intangible – service levels are the only means a client can truly evaluate a practice.
A vital point to understand:
that point is: even though you are providing a similar service to similar clients – and many of their needs may be similar, you can’t communicate with all of your clients in the same way. Building a relationship with each client is fundamental. And building those relationships involves a long-term commitment to nurturing your client base and dedicating the necessary resource to the cause. It’s an enormous yet necessary task. Hence the phenomenal increase in software packages and customer relationship management gurus.
See how you score on these questions:
- Do you know who your good clients are? How do you know? Through analysis, or gut feeling?
- Do you know who your bad clients are?
- What activities do you do to nurture your good clients?
- What are their needs?
- Are you asking them what they want from you?
- Are you expending too much energy servicing bad clients?
- How effective is your marketing activity?
- Where are new clients coming from?
- Why are good clients leaving?
- How do you categorize your clients?
If you know all of the answers to these questions on an ongoing basis – then you are pretty much on top of managing and understanding the needs of your clients – if not, then let’s take a look at how your client database could be providing you with these answers….
Firstly, how do you define a ‘good’ client? The Pareto Principle states that 80% of your sales come from 20% of your customers. And therefore, that 20% of your client base are the ‘good’ clients. Now it may not be exactly 80/20 – in some cases it could be 90/10 and in others 60/40 – but there’s definitely a case for doing some analysis and identifying which clients make up your ‘good’ client segment.
In fact, through customer analysis, if you make a list of all your existing and potential customers, broken down into categories representing turnover, chances are you’ll end up with a client base split into three sectors:
- A small number of high volume customers.
- A large number of medium volume customers.
- An even larger number of low volume customers.
On your database you can then categorize your clients accordingly. Keeping an eye on client profitability is necessary to the health of any business. Segmenting your clients this way will also help you to prioritize your marketing activity. Remember, a happy client will play a big role in encouraging peers, friends and family to use your services. And it’s likely your ‘good’ clients mix with other ‘good’ prospective clients. And to build up your business, you need as many ‘good’ clients as you can get.
And then there will be other sectors of the potential market that you are interested in:
Hot prospects – ready to buy
Warm prospects – may buy if timing is right
Leads – potential customers that you know about vaguely, but not enough to put them into a particular category.
Suspects – potential customers you would like to have, but as yet have no contact with – let’s call them ‘dream clients’.
Cold prospects – simply will never buy
Looking at these five sectors, it becomes apparent that each sector requires a different approach. One shoe certainly doesn’t fit all – and so mass marketing to these sectors, is unlikely to be effective.
Also, do you want to be wasting resource marketing to those ‘cold’ prospects that will never buy from you?
Your client database can help you prioritize, segment and target the specific clients you want to be communicating with – so that you are speaking to them as individuals.
In it’s simplest form – effective marketing means that you have to identify the needs of your market and then provide a service to fulfill that need. Therefore, to achieve this, your firm needs to become highly customer orientated – with a clear focus on servicing your clients needs.
Servicing your clients’ needs, is only possible if you really get to know what it is they really want from you. Really getting to grips with the needs of your client base.
And then you have to record all those needs, buying habits, and have the ability to build a solid base of information about your customers and prospects – that you can tap into to help you to communicate with them on an one to one basis.
Therefore, your database becomes the focal point for all your marketing activities, providing you with a means to apply tactics to nurture your clients and prospective clients.
Setting Up Your System
Most firms have some form of client ‘database’ be it manual or electronic. However, in the age of technology – and with so many ‘client management’ software packages around, there really isn’t any reason why every firm should not have their clients’ details recorded electronically.
Recording client information has become a simple exercise. And given the highly competitive computer industry, you can set up a computer database, capable of sorting and managing information of thousands of customers, for a relatively low cost.
Building Your Database
It’s important that you keep the information on your database as simple and basic as possible. Many people will have access to and have to understand clearly the information held on your database. Therefore, keep it simple. No need for complex codes. Ensure you have the basics:
Clients Details and Characteristics
· All names, addresses and telephone numbers
· Business: Type of business, number of employees, key personnel, turnover
· Client: Sex, date of birth, family members, hobbies
Service/product purchased /Special Requests/Interests
· Services purchased
· Complaints
· Enquiries, Instructions, Agreements
Recency /Frequency / Monetary Factors
· Recency = when client last bought your service
· Frequency = how often they buy
· Monetary = how much they spend
What influenced the Transaction
· Advertising, Direct Mail, Tele Sales, Publicity, Conference, Directories
Customer History
· The information stored should give you a complete history of your relationship with the client.
· You will be in a position to contact customers on a personal basis – as will other members of your team. The history log enables effective delegation.
Your Return on Investment
· By recording all transactions in your database, including what influenced the client to get in touch with you, you can break down the return you get from all advertising and marketing activity.
You Only Get Out What You Put In
Your database is only as good as the information you put in. Collecting the right information requires commitment from everyone within the organization.
Who spoke with who last. Make this a performance standard internally that each and every person has to log every conversation, contact with a client onto your database.
It may seem laborious but it’s incredible how effective this system is. Imagine, you’ve been on holiday for 2 weeks and three of your colleagues have recorded every conversation they’ve had with your client on the database. That way, you don’t need to have a meeting with either your client or your colleague to find out what’s happened in your absence – you can simply contact your client – and continue your relationship.
And you’re client will be impressed that you know exactly what’s been happening in your absence.
It’s so important that your database is up-dated regularly. It has to be up-to-date. Recent research undertaken by Royal Mail showed that 85% of the sample surveyed agreed that inaccuracies in the name and address reflected badly on the image of the company.
Think about how you feel when you receive a letter with the incorrect name or address – or you receive something that is totally irrelevant to you. It probably heads straight for the filing cabinet marked ‘bin’.
I know I personally feel ‘how are this organization going to offer me a fabulous service when they can’t even get my name correct’. And if the information they send to me is totally irrelevant, then I often think ‘what time have these people spent finding out about my needs’ – answer ‘zero’. Not a very customer focused approach. It’s an instant turn off. And a waste of resource for the sender….
A little bit of fun
Within your database, do record personal details of your customers. When you know it’s a birthday or special occasion, send a card, or flowers. It’s the little things like this that really show your clients that you are thinking of them and understand who they are. A simple field on your database can help you really WOW your clients.
Invest in Your Database
It’s fundamental to build a relationship with your clients. They grow to trust you and the likelihood of them switching to another supplier is heavily minimized. Also, your clients are more likely to buy more services from you – as they trust you and know that you understand their needs. A little time builds a lot of loyalty. Your database will help you manage many relationships effectively.
Research evidence states that it costs five to ten times more in resources to replace a client than it does to retain one. There is clear evidence that practices should be retaining important clients and enhancing their business relationships. Again, your database can help you to leverage your activity.
Do a client information audit. What do you know about them? Identify the gaps in your knowledge and then create a means of gaining that information – the simplest way to gain information – ask for it.
Are You Making the Most of Your Customer Database?
Michelle Davies – Accountancy Ireland, Vol.33, No. 4, August 2001
Michelle Davies
Client Consultant
RAN ONE (UK) Ltd
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