Retain and grow your customer base

Analysing your customers allows you to identify those who best fit your business priorities. For example, if you are launching a new product your aim might be to build sales as quickly as possible. But if you have cashflow problems you might value customers who pay quickly.

Most businesses want customers who are as profitable as possible. Customers tend to be more profitable if they:

• buy high-margin products
• pay full price without negotiating discounts
• place a small number of large orders rather than many small orders
• do not cancel or amend orders
• pay on time, without being chased for payment
• do not require extensive after-sales service

By analysing your records you can assess how profitable each customer is. In some businesses, just a few customers are responsible for almost all the profits. Some of your largest customers might actually be among your least profitable. You may even find that there are some customers you would be better off without.

You should also try to look ahead. For example, a business customer that is expanding might become more profitable for you in the future. It's important to anticipate changes and how they might affect different customers.