Among the most valuable assets of any business is a well-developed (and up-to-date) database.

While many companies focus on growth through new customer acquisition, in reality it costs roughly ten times more to win business from new customers than it costs to convince previous customers to buy again. 

Establishing new customers means spending time and significant amounts of money on finding prospects, educating them about your product and/or service and company, and convincing them that you’re the business they should buy from. This is frequently a long and drawn-out process with low success rates.

By contrast, existing customers already know and trust you. If they’ve been professionally serviced in the past, they’ll be happy to buy from you again.

People prefer to deal with businesses they trust – businesses that they believe look after their interests and with whom they’ve developed a dependable relationship. It’s therefore imperative for you to learn as much as you can about your customers so that you can nurture these relationships. Your database is invaluable in this respect, and should be used not only to collect customer information but also to record sales details as well as the results of your marketing activities.

Database Style and Setup

Effective databases don’t necessarily require complicated or expensive computer systems. For smaller organisations a simple card system may be sufficient, or a basic off-the-shelf contact management software package. 

A well-managed database is really the starting point for both maintaining robust business levels and building profitable growth. Invest in an arrangement that’s flexible enough to accommodate you. Off-the-shelf database packages usually provide ample capability to meet the requirements of small businesses. If you have a system already, check that it’s flexible enough to tailor to your specific needs.

Most software packages come with straightforward setup instructions or, if you prefer, nem can recommend several consultants able to assist for a cost effective fee – simply explain what you’d like and they’ll deliver a complete solution for you.

The most important considerations when building a database are: what information will be gathered; ensuring information is readily updatable by staff; and storing the information in a usable format that can interface with email distribution services. 

Before setting up your database, know exactly what information is vital to you. This will define the type and layout of your database. At an absolute minimum, your database should record:

• Customer name, address, phone and email details

• Key decision-maker details, including role

• Customer source (i.e. where the customer originated, who referred them)

• How long the customer relationship has existed

• Customer rating (i.e. an A, B or C class client)

• Credit terms, if applicable.

Your database should additionally record information about YTD and PY sales, as well as contacts made with each customer. This may require interfacing with your accounting system, which can also be set up at minimal cost. But whether linked to your accounting system or not, the following information should be stored for each customer in your database: 

• Products or services bought

• How often they buy

• Value of each purchase

• Days or times of year they purchase

• Seasons, holidays or events that influence their purchasing decisions

• Their responses to your business’ special events, promotions or other marketing activities.

Also consider including categories that enable tracking of the more personal dimensions of customer relationships, such as:

• Birthday

• Interests or hobbies

• Family status

• Children’s birthdays

• Entertainment provided in the past.

Adding existing customers

The best way to gather detailed information about your customers is to ask them directly, to engage them in conversation, and to take note of the personal details gleaned through your interactions.

In retail businesses, competitions are an effective way to obtain names and email addresses. Leave forms on the counter in your shop or showroom, or send them out with product notices, order forms, marketing materials and invoices. If you’ve designed them well, you’ll find that a high proportion of customers and enquiries fill them in.

If you have account customers, you’ve already got a list of names and addresses to populate your database with. Ensure you also include the details of potential customers who enquire over the phone. Never let an enquirer hang up without leaving their name and email address. You can do this is by offering to email information to them – at the very least a catalogue or brochure about your product or service. It’s even more powerful to prepare a tailored proposal or letter that showcases your business offerings.

If a warranty or guarantee is offered with your product or service, ask for a name and address so that you can write out the guarantee.

Try asking customers if they’d like to go on your preferred customer emailing list so you can keep them advised of future specials and offers. If they respond with a yes, make sure you add their preferences onto your database.

You can also obtain information about your customers through business surveys. Ask customers to help you serve them better by sharing their preferences, likes, dislikes and shopping habits with you. Ask them such questions as:

• How did you hear about us? (to gauge how effective your promotions are)

• What newspapers, magazines or websites do you read? / Which associations do you belong to? / Etc. (to identify areas you should be advertising or marketing in)

• How do you rate our service (on a 1-5 scale)?

• How do you rate our range (on a 1-5 scale)?

• How do you rate our prices (on a 1-5 scale)?

• How do you rate our quality (on a 1-5 scale)?

• What attracted you to our business?

• What factors are important to you when making a purchase?

• Discount structures if applicable

• How do you select between possible suppliers?

• How could we improve what we do/offer?

Don’t forget to ask about interests or lifestyle issues either, if they’ll help you get to know your customers better or build closer relationships.

Bear in mind, however, that people are busy. If you prepare a customer survey, make it quick and easy to complete. There are many online survey options and nem can assist you in delivery of these.

For example, use tick boxes rather than asking people to write out answers. The easier you make things, the better your response rates will be. 

Obtaining information around purchasing habits can be challenging, especially if your accounting system doesn’t handle it for you. A good accounting system should be able to generate lists of products or services, matched with the customers who’ve bought them during a certain period. If your system doesn’t do this, talk to your accountant about getting one that does. 

Your accountant can advise around obtaining the most from your current package and will likely be aware of other packages to consider. Remember that this information is essential for your business’ continued success and growth.

If you’re in a business where customers buy predominantly with cash, look at options that allow you to store purchase records. Barcoding is a great example of this. Give customers a coded loyalty card and, when the customer makes a purchase, simply scan their card and then their products into your system. Not only will the purchase be automatically calculated for you but you’ll also have an electronic record of each customer’s purchasing history.