One of the most valuable assets of any business is a well-developed database. The majority of companies focus on expanding their business by acquiring new customers. However, the reality is that it costs up to ten times more to generate new business from new customers than it does to encourage previous customers to purchase from you again. Securing new customers entails expending time and a significant amount of money identifying prospects, educating them about your product and/or service and company, and persuading them that you are the ideal person or business from which to buy. This can be a laborious and protracted process with a low success rate.

Existing customers and clients already trust you, and if they have been well-treated in the past, they will gladly buy from you again. Most individuals prefer to conduct business with those they trust, who they believe will prioritise their best interests, and with whom they have forged a strong relationship. Consequently, it is crucial to gather as much information about your customers as possible to facilitate this. This is where your database becomes invaluable.

Your customer database should be utilised to document all pertinent information about your customers and record the sales made and the outcomes of all your marketing activities. An effective database does not necessarily require complex or costly computer systems. For instance, a rudimentary card system may suffice for smaller organisations, or one of the numerous electronic contact management software packages may be suitable.

An effective database serves as the foundation for maintaining your current business and fostering profitable growth. Invest in one that is adaptable enough for you to customise it to your specific needs. Most off-the-shelf database packages are well-developed and offer the necessary flexibility to provide you with more than you require in terms of their capabilities. If you already possess one, ensure that it is adaptable enough for you to tailor it to the particular needs of your business.

The most critical consideration is determining the relevant information to collect, guaranteeing that this information is easily accessible for updating by all staff, and ensuring that it is usable. Before establishing your database, it is essential to discern precisely what information you will depend on. Identifying this information will define the type and layout of your database.

At the very least, your database should document:

• Customer name, address, and contact details (phone, fax, and email)
• Key decision-maker details
• Customer source (origin of the customer’s initial contact)
• Duration of the customer’s association with you
• Customer rating (classification as an A, B, or C Class Client)
• Credit terms

Your database should also register sales and contacts made with each customer, although this may necessitate interfaces with the accounting system, which can be implemented at a reasonable cost. Regardless of whether it is linked or not, the following information should be documented for each customer:

• Products they purchase
• Purchase frequency
• The value of each transaction
• Days or times of the year when they make purchases
• Seasons, holidays, or events influencing their purchasing decisions
• Their responses to your special occasions or promotions

You should also contemplate incorporating categories that facilitate the development of relationships with your customers, such as:

• Their birthday
• Personal Interests or hobbies
• Family Status
• Children’s birthdays
• The best way to gather information is to ask your customer and take note of all personal details gleaned through your conversations.

Competitions are an effective method for obtaining customer names and addresses in retail businesses. Forms can be left on the counter in the shop or showroom, or sent out with product notices, order forms, marketing materials, or invoices. When designed well, a high proportion of customers and inquiries will be eager to complete these forms.

For account customers, a list of names and addresses can be used to initiate the database. Details of all potential customers who inquire over the telephone should also be included in the database. It is essential to never allow an enquirer to hang up without providing their name and address. Offering to send information by mail, such as a catalog or brochure about the product or service, is one approach to obtaining this information. Preparing a specific proposal or letter that sells the product or service is even more powerful.

If a warranty or guarantee is offered with the product or service, it is recommended to ask for a name and address to write out the guarantee.

Customers can be asked if they wish to be added to the preferred customer mailing list to receive updates on future specials and offers. If they agree, their preferences for these should be included in the database.

Conducting a business survey is another way to acquire additional information about customers. Customers can be requested to provide their preferences, likes, dislikes, and shopping habits to assist the business in serving them better.

When conducting a business survey, a number of questions can be asked to obtain additional information about customers. Some of the questions that can be included in the survey are:

• How did you hear about us? (To assess the effectiveness of promotions)
• What publications do you read/watch, or which associations do you belong to? (To determine where the business should advertise or market)
• How would you rate our service?
• How would you rate our product range?
• What initially attracted you to our business?
• How would you rate our prices?
• How would you rate the quality of our products/services?

When seeking to develop closer relationships with customers, it is important to ask about their interests or lifestyle issues. It is crucial to bear in mind that customers are often busy, and as such, customer surveys should be quick and easy to complete, with tick boxes rather than written answers to achieve a higher response rate.

Obtaining information about purchasing habits can be challenging, especially if the current accounting system does not handle it. An effective accounting system should provide a list of products or services purchased by customers during a specific period. If the current computer system does not do this, consulting with an accountant may be necessary to obtain an appropriate accounting package that is compatible with the business.

For businesses with predominantly cash-based transactions, systems that allow for the storage of purchase records should be considered. Barcoding is an excellent example of such a system, where customers are provided with a coded buying card, and their products are scanned into the system. This not only automatically calculates the purchase amount but also records each customer’s purchasing history.

Once a database of current and past customers is updated, potential customers can be added by gathering as many details about them as possible. The more information known about potential customers, the better equipped the business is to sell to them by targeting their factors and issues that influence their buying decisions the most.

Several sources are available for obtaining a list of potential customers, such as:

• Mailing house lists
• Membership directories
• Advertiser lists
• Local papers
• Exhibitors lists from trade show
• Subscribers lists
• Councils
• The Australian Bureau of Statistics

The database should be able to capture relevant information about the customer and provide reporting facilities that can generate a range of reports with a mixture of criteria. Reports that can be useful include:

• Contact log by customer
• Purchase log by customer
• By product type and period
• Customers by source
• Average dollar sales by customer and overall
• Customers by purchase

These reports can provide an indication of purchasing habits, enable better planning of marketing, and can be used to target customers who have not purchased for a while or are likely to respond to specific campaigns and special offers, resulting in cost-effective and well-targeted marketing activities.

A well-organised database should be capable of being sorted according to various criteria such as customer, product or service purchased, activity, the volume of spending (in both time and dollar value when applicable), business source, and customer type (age, gender, marital status, lifestyle interest, business size, industry, etc.). Sorting the database using these criteria will aid in targeting marketing efforts and analysing the results.

For example, to determine the number of new customers obtained from the Yellow Pages telephone directory, the business source should be measured. Market purchasing habits should be analysed to determine if a new product line is necessary for a particular area, and if there is a niche for it or if the area is already oversaturated with the product.

To identify the growth areas that require concentration for the next marketing effort, the current happenings in each area should be analysed. Information such as the number of new customers obtained, frequency of purchases, and the average dollar sale can provide valuable insights. If any of these numbers begin to slip, it is time to focus marketing efforts on that area again.

The database is a valuable marketing tool, and sorting through it using the appropriate criteria can provide a list of customers and potential customers to target immediately when seeking to stimulate sales.