On-line sales performances’ evaluations can’t be restricted to global values. Of course they play a vital role in global appreciation, but today’s technology already allows us to make decisions regarding price changes, promotions, content organization and presentation in a more segmented way.
Gone are the days when decisions were made based on global values. “If it’s for one, it’s for everyone” – no. It stopped being that way a long time ago.
It became indispensable for companies to know the composition. Their activities and, above all, their (expected/) value. It’s crucial for companies to have reports about customer behavior, customer groups/segments, and products and cyclic events.
Having updated information upon which we can act in an unpredictable event is vital if we wish to keep our sales platform working and offer the best service possible. Knowing the market and the customer is, therefore, crucial. But how can we do it?
It’s all about discipline.
Discipline in data handling. We should be aware that the sales platform can’t guess everything. It can predict, but the closer to reality we can make decisions, the better. That is why it is of extreme importance that the company has at its disposal a set of reports, but also be available to supply data to build those reports as accurately as possible.
We can’t know a customer’s value if we don’t know the company costs associated with that customer’s sales. Cost of goods, marketing, shipping, operational, payments, human resources, among others, should be defined, so that reports can be generated for future analysis. We can’t just assume that, if we spend $300/month in ads, that cost should be distributed equally among all customers. We must allocate that cost to orders originated from ads.
Nowadays, most platforms give you some data regarding this, but no platform can know how much you are spending on advertising. Only you know.
But what to do with all this detailed information? Act.
Stop managing all your customers the same way and start focusing on smaller groups that have a higher value to your company. Please do not confuse customers with high order amounts with customers with value for your company. Creating an index for your customers is of high importance for a positive differentiated behavior.
Don’t fall into the trap of having first class and second-class customers. There is a bare minimum level of attention that should be given to every single customer. To high-value customers, there are a few ways we can improve loyalty. Price reduction, promotions, free shipping, easier returns, among others. It’s important to know that there is no magical formula that can be applied to all companies from all sectors. That’s why you need to know your market and your customers to design formulas to calculate their Equity and Lifetime Value. Only then will you be able to make the right decisions.
Keep your information up-to-date. One sale doesn’t always mean net profit.
Don’t do math like “my goods cost is $10,000 and I sold them for $20,000, therefore my profit is $10,000”. Nothing could be further away from the truth. If you don’t account for all costs, you could be losing money without knowing!Current Customer Equity tools already have the ability to not allow a new order if it’s not expected to generate a net profit for the company. It’s a good idea to implement something like this so we don’t get caught by surprise at the end of the year/quarter.