So you want to grow sales in your business?

You have two main choices, sell more to the customers you already have, or find new customers to whom you can sell, or both.

Let's have a look at the second option. For the sake of this discussion we will assume for the moment that you have exhausted the possibilities for selling more to existing customers.

If you want more customers, where do you start? Let's start by looking at the customers you already have and ask the question, "how can I find more customers who are like my best customers?"

If your sales or accounting systems are able to provide you with the information, sort your list of "sales by customer" for the last year (say) in decending order from greatest to least sales.  You need to be careful here that the results are not skewed by a few large sales which are outside the norm of how you do business. 

Now look at the list and segment it into five equal groups by number of customers. This divides the number of customers into 20% segments. Total the value of sales for each 20% segment and analyse the results.  You may be surprised to learn that a sizeable proportion of you sales, maybe 70%-80% are delivered to your business by customers in the top 20% segment.

What about the next 20% segment? How are these customers different from the top 20%?  And the segment after that?

If you are able to segment your customers by trade or business type and sort sales by this type of segment, what can you discover here?  What about by type of product or service purchased? For people who are smart with spreadsheet software, sorting customer data with pivot tables can reveal some very interesting results, especially in a customer type/product type matrix. But let's not get too complicated.

Now it's time to ask some probing questions. Who are your best customers? What do you know about them? Where can they be found?  What similarities do they have? What do you know about their buying preferences?  How do I treat them that is different from how other customers are treated? What is it that makes them "best" customers for my business? Who else sells to customers like these?

There are many questions you can ask, and you need to ask them if you wish to discover the best approach to attracting them to your business. Some of those questions relate to demographic characteristics and other to psychographic charcteristics. Demographic characteristics are those that you can generally count, measure or observe such as genda, age, income, lifestyle choices etc. Psychographic characteristics are generally about behavoural observations such as emotions, likes and dislikes, choices and preferences, comfort and discomfort, and so on.

Using your new found knowledge about who your best customers are, you can now develop strategies to target other similar prospective customers in your trading area knowing more about what and how they buy, and what is important to them and the business relationship they want with you.

Its time to do some analysis and thinking now!

If you don't have the knowledge or resources to do this yourself, seek help from someone who does. "Cloning your Best Customers" is a foundational marketing topic in Full Spectrum Business Development coaching.

This posting by Carmine Coyote of the Slow Leadership Blog caught my attention. It neatly sums up attitudes to risk, which is very topical in light of the current credit squeeze resulting from the US sub-prime mortgage problems.

In her opening paragraphs Carmine says:

"Risk is one of the most misunderstood ideas in the world today—especially the business world. Despite all the time and effort devoted to risk evaluation and risk management, corporations constantly find themselves subject to far greater risks than they imagined.

The reason for this is rather simple: they confuse risk with probability and try to deal with it primarily by statistical or mathematical means.

Probability is, indeed, numerical. It’s the study of the likelihood that some event or outcome will happen—an attempt to understand the inner workings of chance.

Risk is something quite different. The easiest way to describe it is to say that risk is simply a substitute for knowledge."

Carmine argues that while risk can be assessed mathematically, the best way to minimise risk is to make business decisions based on knowledge - the more knowledge, the better the decision.

Risk can be assessed and amelierated as follows:

• knowledge - the more the better - that gives you as full a picture of facts, events, personalities, economics, politics, etc relating to the business decisions you make; supported by;
• mathematical risk probability calculations that attempt to rationalise the facts (knowlege) into numbers.

Relying on the numbers alone is not a safe option.

You can read the full article at http://slowleadership.org/blog/?p=186.

Quantification is a key process in Full Spectrum Business Development. Quantification includes both observation and calculation of key strategic and operational indicators.