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Do you know who your most profitable customers are?

Over the summer, we're going to share with you our three-step strategy for making your business more profitable by making better use of the information you use to deliver to your clients. No matter what stage your business is at – whether you’re a new start-up, or beginning to get repeat orders from clients, or looking to grow more quickly, there’s a strategy you can adopt that’s within your budget which will help you manage the way you deal with your customers.

1. This month we’ll look at ways to record information without spending money on a complicated computer system.
2. Next month we’ll show you how you can start to analyse the information to make sure you know who you’re selling to, what they’re buying from you, and how much profit you’re making.
3. Then, in September, we’ll talk about the final stage: using the information you’ve recorded to save time and money by doing administrative tasks such as creating quotes, raising purchase orders and sending out invoices automatically.

Step 1: Data Capture. Record Information in a Standard Way

If you’re just starting out, you need to use your cash carefully. You may not want to spend money on a computerised system at this stage. You may just want to concentrate on winning orders, delivering to your clients, and getting paid.

The good news is, you can still get the benefits of a structured approach by using a simple, paper-based system.

Standardise the way you record customer information

We recently designed a job form for a client who provides property maintenance services. They wanted to be able to track all of the enquiries coming into the office, and their progress through the sales, delivery and invoicing process. They also wanted to find out which of their marketing approaches was working best for them.

What they didn't want was to spend a lot of money on a computerised system without first measuring the benefits of a structured approach.

Document your business processes

We created a double-sided A4 job sheet which fits into wall-mounted trays.  There are five of these trays, one for each stage in the process:

1. enquiries,
2. assessments,
3. quotes,
4. jobs, and
5. invoices.

The job sheet has spaces to record the name, address and other contact details of the person making the enquiry. They can make notes about the job – what needs fixing? How urgent is it?

They also record information about how the person found out about them: from their website, or from newspaper advertising, or by word-of-mouth. All of this information will be useful when they move to the next step in our three-step strategy: analysing the data to help understand more about their customers.

Once an enquiry has been made, the next stage is to for them to carry out an assessment of the problem. The job sheet allows them to record the date agreed for the visit, and any additional notes about the job once the visit has happened.

If they think they can help, they produce a quote for the work. This will usually involve charging for time spent on-site, together with the materials needed to carry out the job. The job sheet has spaces for them to record quantities and supplier costs for the materials, and estimates of the time needed.

Once the quote is accepted, the job will be scheduled in. The job sheet has spaces to record the date agreed for the job, the actual time spent (as opposed to the estimated time needed), and the actual prices charged by suppliers for materials used, in case these are different from the original quote.

Finally, an invoice is prepared and sent to the client. The invoice date and the expected payment date are recorded on the job sheet. If the payment is late, the job can be flagged as overdue, and steps taken to recover payments. Once the invoice is settled, the payment date is noted and the job sheet can be filed away.
 

Track Project Status

On any given day, our client can see exactly how many quotes, jobs and invoices they have on, simply by counting the job sheets in each of the process slots. They know which quotes need to be followed up with the prospect, and which invoices need to be chased with the client.

All without the use of a computer system.

Get Ready for the Next Stage

Our strategy is for this client to move to a simple spreadsheet-based system for analysing their operational data in a few months’ time. Because they’ve started capturing their data now, they’ll have months’ worth of real data ready to be analysed once they move to the next stage. And, because we designed the job form with this next step in mind, all of the data will slot into the correct parts of the spreadsheet with no problems.

They’ll be able to start answering the important questions about their business really quickly:

• Who are our best customers?
• What’s our most effective way of getting new customers?
• Are we getting our quotes right, or are we under-estimating the work needed?
• What's our conversion rate?
• How much money are we making?

Next month, we’ll discuss how sole traders and microbusinesses can start getting their own answers to these questions without spending a fortune on complex computer software.