So now what?
Remember Mrs. Anderson from first grade that said you need to “live up to your potential”? And then you asked her, “Mrs. Anderson, how do I know my potential?” Chocolate milk has been replaced with a latte, but not much has changed since first grade. You’re still stuck with that burning question.
How Do I Measure Potential?
For example, take Joe’s Pizza and John’s Pizza (if you’re from Manhattan, you know exactly what I’m talking about and which one is better). For Mr. Cheese Supplier, both seem like great customers. They each buy $10,000 per month consistently, but guess what, Mr. Cheese Supplier? Did you know that you’re supplying 85% of John’s cheese and only 15% of Joe’s cheese? You have a lot of room to grow with John’s Pizza and you didn’t even know it.
Mrs. Anderson is still staring at you (with her one good eye) back from first grade. Time to figure out your potential.
At Behalf, we work with small businesses and their suppliers to help finance transactions. One of our daily challenges is helping suppliers use their data to understand customer potential. This allows us to create joint, customized financing offers for those customers. As our holiday gift for the data lover, we’re letting you in on some of our tricks to use data to measure customer potential.
Look for the Initial Pattern of Your Best Customers
The pattern of your best customers’ potential growth is sitting buried in your data waiting to be discovered. As you look across your best customers today, many of them have probably been with you for five or ten years. They didn’t become great customers overnight, but in those first few critical months there was probably a purchase pattern that showed they were on the way to success.
If you can identify the pattern early on, you’ll be able to easily identify the next new customers with great potential and focus marketing efforts on them before your competitors.
Here are two examples of how to find counterintuitive patterns:
- Beauty Supply Seller – Across the county, thousands of people try to build home-based businesses selling beauty supplies every year. Approximately 85% of these will fail within the first two years. The pattern here is very interesting. The best sellers actually buy much less in their first few months. They’re cautious and don’t want to take on inventory they can’t sell. The clear indicator of strong potential in this industry is order velocity. Sellers that are on a path to success double and triple their order velocity within the first six months. You might overlook sellers like this because total order sizes will generally be very small. Big mistake. These customers have great potential!
- Toy Sellers – If you’re a toy wholesaler, your best customers probably buy numerous toy lines across multiple brands from you. Guess what? They didn’t look like that when they started. The best toy sellers actually start off focused on a specific line. When selling to hobbyists, this focus enables the toy seller to understand the hobbyist dynamics and identify the best marketing channels. You might think that toy seller loading up exclusively every month on Star Wars figurines is a little wacky, but he is probably on his way to big things in multiple of your toy lines (and he’s only a little wacky).
Supplement Your Internal Data
Your internal data is nicely organized and great for monthly metrics, but it is not so good at telling you too much about customer potential. For that you may need to import some external data.
Here are three great tricks to assess potential with supplemental data:
- Look at Customer Web Traffic – If your customers are online sellers, then web site traffic is the obvious way to assess potential. Even if your customers are offline sellers, they still probably have some web footprint that you can measure. Don’t have your customer website in your database? No problem. Use the customer domain in the email address. Accessing web traffic data is easily accessible over an API, fully up-to-date, and dirt cheap.
- Inquire About Revenue Data – Numerous services like Hoovers, D&B, etc. can provide you with revenue data to better measure customer potential. Here’s a great bonus: A lot of this data can be integrated directly into Salesforce out-of-the-box.
- Search Business Principal Data – Imagine you’re a wireless phone wholesaler. You have two new customers, Mike Yale and Mike Stripes. Both are sole proprietors and both sell from mall kiosks. With an easy social media search, you find that Mike Yale just graduated from (you guessed it) Yale, and has over 500 connections on LinkedIn. Mike Stripes has been wearing stripes for the past ten years in the San Antonio prison and has one connection (his mom). You don’t need to be a data scientist to figure out which of these customers has more potential. Most social media sites offer cheap or free data available over an API that can be easily integrated into your database.
Time to Start Using Your Data
So enough sitting around and staring at the same old data. Time to make Mrs. Anderson proud. Try some of these techniques and you’ll start seeing your customers in a whole new way. It has the potential to do big things for you business in 2015.
Learn more about making the most of your data with the free ebook below.