For a customer focused business, being able to delve deeply in the behaviour of customers can bring big rewards. Over the next few weeks we’ll publish a ‘getting to know your customers’ series of blog posts for small businesses. The series will look into how you can use accounting software to can gain valuable insights into your customers.
The more you understand who your customers are, what drives their choices and what they expect from you the better. Importantly, because customer behaviour is fluid it needs to be monitored regularly so that your products and/or services remain relevant to them.
As your accounting software program is tracking everything that occurs in your business, such as every transaction and every quote or invoice, the key is being able to know what you want to find out from that data and how to make the most of the results.
Part 1: Using accounting software reports to get to know your customers better
It’s likely your business plan already includes details of your target customers, such as their gender, locality, age and status. It probably also covers how your products and/or services fulfil the needs of this group and how you communicate with this audience. But how often does your business re-visit this plan and assess its effectiveness today?
While most businesses are well versed in the importance of knowing their financial position at any point in time by utilising key financial reports such as cash flow and profit and loss, reports that focus on customers aren’t given the same prominence.
Accounts receivable shows all the money owed to the business including details of customers who owe money, but what else could you learn about your customers?
Some key information about your customers you can draw from your accounting software , including products in the Reckon Accounts business range, are:
- individual customer sales history – analysis of what a customer has purchased and how frequently that customer makes purchases. This will help give you an indication of how loyal a customer is and their purchasing habits;
- time taken for an individual customer to pay – analysis of an individual customer’s payment habits. This can help you see if your cash flow is being impacted by how long an individual takes to pay you;
- top products by customer – an analysis of the products an individual customer buys. This can help you see what drives them back to your business.
If you’re running a business that doesn’t retain customer information at the time of sale, these reports may not provide the level of detail you’re searching for.
One common way many businesses of all types capture customer data is by running a loyalty program – but be aware of the costs before starting such a program. Customers are more likely to provide information to you if there’s something in it for them, so what will you offer and what will be the cost to your business?
It’s been estimated that over 200,000 loyalty programs are run in Australia and they range in type from 2-for-1 offers, discounts, vouchers and a whole lot more.
Do you use your accounting software to analyse customer trends?
As part of our ‘getting to know your customers’ blog series, our next post will look at the value of knowing your top customers.