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The more you know about your customers and their needs, the easier it is to sell to them and target them with appropriate offers. You can use the information you know about them to improve your business' efficiency and customer service by providing personalised treatment.

The right information will let you build up a useful profile of your customers. This typically includes:

• who they are - the age and gender of individual consumers, or industry and business size for corporate customers
• what they think and believe, what interests them, and their opinion of you and your product
• their purchasing behaviour - which products they buy, where and when they buy them, and how they pay

Profiling your customers in this way helps you group them into different segments, each of which can be approached separately.

Gathering customer information

There are several ways that you can gather this information on your customers. For example, using customer surveys, or if you sell online, using your website to capture information automatically.

Social media can help you gather information from your customers such as what they engage in and what their interests are. Take time to find out who your followers are, who else they follow and where they鈥檙e based.

If you have just a few important customers, it's worth getting more detailed feedback from them. Keeping a central record of customer details and sales in a customer database reduces errors and speeds up transactions while making it easier to identify and resolve any problems.

You can use specific IT software to help you collect and analyse your data. For example, linking customer records to your accounting system makes it easier to see how profitable different customers are.

Linking customer management to buying can also improve profitability.

You must make sure that you meet data protection rules for any personal information on existing and potential customers that you collect, keep or use. There are also specific rules for e-commerce.

Encouraging existing customers to buy from you more often is a quicker, easier and cheaper way to increase sales than attracting new customers. A good customer retention strategy is based on how well you understand your customers, your competitors, and the market you are selling in.

Understand your customers

Your sales data will tell you a lot about your existing customers, for example:

• how often your customers buy from you
• the type of products or services they buy
• the cost of the average transaction
• the average value of their order

Understand your competitors

It is important to understand your competitors. If you know who your competitors are, and what they are offering, you can:

• set your prices competitively
• improve your products and services
• respond to rival marketing campaigns with your own initiatives

You can also use market research and market reports to help you understand the marketplace you are operating in.

Tailor your offering 

Technology can help automate some of these processes. For example, you can set up different mailshots or emails to go to different customer segments. E-commerce software can allow you to offer discounts to particular customer groups, or send selected customers 'e-coupons' to use in your online store.

Your customer database provides information that you can use to increase sales. For example, you could:

• offer rewards to current customers if they introduce new customers to your business
• ask customers for testimonials about your business, for use in sales and publicity material
• ask business customers about their plans and offer to work with them on their new projects
• find out who your most valuable groups of customers are so that you can target new customers in the same groups
• tell customers about new, upgraded or related products
• communicate regularly with customers through emails or newsletters

You can use your customer database to maximise Customer Lifetime Value (CLV). This is a measure of the profit you retain from selling to a customer or groups of customers, set against the cost of marketing to those customers.

You may, for example, be able to up-sell - explaining why a higher priced product would suit them better. You may also find opportunities to cross-sell other products that fit their profile. For example, customers buying paint from a builders' merchant may also be in the market for small tools, nails and screws.

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.

Looking after your customers helps build customer loyalty - if they enjoy buying from you, they are less likely to switch to a competitor. To enhance the buying process, you could:

• tailor your products and services to meet specific requirements - if a customer prefers delivery before noon, organise your delivery schedule to make sure that happens
• identify and resolve problems quickly - it is better to under-promise and over-deliver, but make sure you always live up to your promises
• keep in touch - let them know when service contracts need to be renewed or when better deals become available
• build personal relationships with key decision-makers
• consider offering preferential terms - eg a bulk discount

Technology can help you improve your service. You might be able to let customers track deliveries through your delivery company's website. You can use your own website to provide useful information too, including downloads of customer manuals. You might also find it helpful to have a customer-only area of your site where you provide advance information - eg about new products or services.

Detailed customer databases with information about purchasing history, feedback and enquiries can also be harvested efficiently with customer relationship management (CRM) software.

It's important that you don't spread your resources too thinly. Make sure you give enough time to managing each of your key accounts. Ensure that staff are given adequate customer service training - they can make or break your reputation with customers.

Understanding your most valuable customers is essential for targeted sales growth. However, relying too much on a narrow customer base can be risky. Diversifying your customer portfolio ensures stability if market conditions shift. For example, if your three largest customers are based in the US, a sudden drop in the exchange rate in the exchange rate could see them drastically reduce their orders.

There are many ways you can diversify and grow your customer base - for example:

• increase your market share by widening your customer base in your existing markets
• use information to understand your competitors and take advantage of any gaps in the market
• growth through product and service development
• growth through strategic partnering with other businesses
• grow through international trade