There’s a tendency to see sales analysis as a somewhat dry affair. Hard-charging sales directors would sooner be out there selling, than poring over statistics and lists of customers. That’s a huge mistake, because sales analysis can unlock considerable increases in profitability—as well as generate more sales.
How come? Because sales analysis makes it easy for a business to identify its most loyal customers. And loyal customers offer any business a number of compelling benefits. Benefits significant enough to make even the most hard-charging sales director sit up and take notice of what sales analysis can offer.
So what are these benefits? Let’s take a look.
Sales analysis: the key to finding ‘stickier’ customers
Winning new customers costs money. Advertising, marketing, promotions, initial discounts—it all quickly adds up.
But the longer you can keep a customer, the longer the period over which those initial costs can be amortised, or depreciated. So loyal, ‘stickier’ customers are more profitable.
Moreover, loyal customers tend to be less expensive to serve because they are familiar with your business processes, and require less support. And this lower ‘cost to serve’ makes them even more profitable.
What’s more, loyal customers are generally far less price-sensitive, and more likely to view their relationship with your business ‘in the round’, valuing the quality of service, customer care, and reliability that they see in your business and its products.
Finally, loyal customers tend to be more consistent in their order placement—making their ordering easier to forecast, and so requiring lower inventory holdings to service the products they order.
Sales analysis: loyal customers spread the word
As we’ve said, it costs money to win new customers. But some new customers cost you nothing to win. Which are these customers? The customers recommended by existing loyal customers, in short.
Simply put, word-of-mouth endorsement has a huge impact on the likelihood of a new customer buying from you. Particularly when the loyal customers who are doing the recommending can point to a satisfactory trading relationship stretching back years.
There’s another take on this, too. Because sales analysis identifies the buying behaviour of loyal customers, it’s easier to persuade other loyal customers to try additional products and ancillary services—by pointing out that other loyal customers with similar trading histories also buy those same additional products and ancillary services.
Sales analysis: keeping loyal customers ‘sweet’
Who are a business’s most important customers? You might think that it’s those customers that make up the greatest share of revenues. Well, yes: they are important.
But just as important are a business’s most loyal customers—who may or may not be the present day ‘heavy hitters’.
So it’s worth going the extra mile to keep loyal customers happy. Meaning that it’s important to deal with loyal customers’ complaints promptly and fairly.
In fact, research shows that customers who complain and receive satisfaction are 80% more likely to stay with a business than those who don’t receive such satisfaction—and that customers who don’t like the way that they’ve been treated are also likely to go off and tell up to 11 other people of their experience.
Which bearing in mind that it can cost up to ten times as much to win a new customer as it does to avoid losing an existing one, makes poor customer satisfaction a costly business.
Sales analysis: loyal customers are profitable customers
The bottom line in all this? Quite simply this: loyal customers are profitable customers.
Indeed, American management consultant and author Fred Reichheld reckons that every 5% increase in customer loyalty raises overall profitability by anywhere from 25% to 100%.
And sales analysis is your tool for identifying and hanging onto those loyal customers.
To find out how Sales Analysis can help your business identify it’s most loyal customers, download our free bumper guide today