Keep your customers happy and coming back for more

Joanna L. Krotz writes about small-business marketing and management issues. She is the co-author of the "Microsoft Small Business Kit" and runs Muse2Muse Productions, a New York City-based custom publisher.

By Joanna L. Krotz

No doubt you've heard something about the 80/20 rule. Originally devised by a nineteenth-century Italian economist named Vilfredo Pareto, the law grew out of his keen observations about the trivial many and the critical few. Pareto noticed that 80% of the possible value of business activities tends to come from only 20% of the effort put into it.

Why should you care?

The 80/20 rule means that if you can define your critical few customers and target marketing directly to their needs, it's likely to pay off big time. The cost of acquiring new customers, according to many surveys, runs 8 to 10 times more than the cost of keeping existing ones. So you get a stronger return on your marketing dollars and better sales by focusing on 20% or so of your top-tier prospects. Usually, that requires three steps:

Here's how to stay connected to customers who count.

1. Identify Your Best Customers

First, find out more about your customer. You need to learn details about their habits, profiles, and preferences before you can characterize them. In technical terms, that translates into creating a customer database that can be conveniently accessed and manipulated by the staff, including sales, marketing, customer service, and billing.

Information most helpful to collect (with the customer's permission, of course) includes:

Business Contact Manager (BCM) can both capture customer intelligence and provide the easy access you need to effectively mine customer information. BCM is part of the Outlook e-mail program in Microsoft Office Small Business 2007. It has pre-formatted Account reports that give you immediate information about who buys what, how well they pay, and more.

Within the Activity History, you can go beyond simple contact information to consolidate all interactions for a given customer or account, including e-mails, tasks, appointments or sales calls, notes and other documents. Further, you can easily create customized reports with criteria of your own choosing or, if needed, export those reports to Excel 2007 (included in Microsoft Office Small Business 2007) for further analysis.

2. Monitor That Data

Using those tools, get into the habit of consistently updating customer information. At every customer touch point, try to learn a little more or verify your existing information. For instance, ask why the customer is buying the larger size rather than the small one. Why choose blue rather than gray? Has he or she been promoted, with a new title and responsibilities? Note any responses to marketing efforts. Keep adding details and making sure the customer profile is up-to-date.

After a half-dozen interactions, you'll not only have an individual account's purchasing history and proprietary profile, you'll have it captured in a centralized location for every customer—no more outdated sticky notes or multiple folders with conflicting information. Plus, all the actionable information will be easily accessible.

Armed with this information, you can categorize customers into four target groups—from highest to lowest spenders. Then, analyze which products or services grab the most attention or sales.

Next, start reviewing your list and segmenting customers. Pruning your client base of low-margin, high-demand and time-consuming customers lets the sales and service staff focus on key customers: loyal, repeat buyers and worthy new prospects.

3. Target Your Messages

When you're clear about the target customer and you can rely on smart, centralized customer information, you can send specialized offerings to selected customer segments. Use Publisher 2007, part of Office Small Business 2007, to create flyers, postcards or other mailings that send news of customized offers.

Follow these steps to build the solid foundation that will launch ongoing effective marketing events and offers. Just don't forget the payoff. Once you've focused on the right targets, make it worth your customer's time to listen to your message.