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How many customers are enough customers?

I was reading a blog post the other day about some new business trends. It got me thinking about the good-ole-days. The days when customers were loyal. The days when most of us lived and died by certain brands. The days when it was OK to be open, honest, helpful, and profitable, all at the same time. These were the days when most of our bosses were making enough money to warrant pay raises on a regular basis. I wondered what happened? What changed? Why does it feel like old-fashioned values and principles no longer work? The reality is, they do work.

Most of us know the value of referrals and the value of our existing customer base. Or do we? I'm going to suggest that you probably don't know. Yeah, you think your database of clients is valuable but do you really know just HOW valuable? It's nearly impossible to know how many customers is enough customers if you don't know what they are "worth." So, assuming you practice good old-fashioned customer-care principles, ask for referrals and understand the value of what once worked (because you believe it still does today), you may be able to use some of the thoughts below to attempt to answer the age-old question: "How many customers is enough customers."

We'll use my buddy Joe Salesman as an example. Joe needs to sell 15 units a month to keep food on the table. If your like Joe, you would rather help existing customers replace cars (the ones you sold them years ago) than a stranger that just walked up. Good thinking, the stranger will usually not let you earn a living like your existing customers and referrals will. I'm digressing, back to the point. Let's see how well Joe could do if he had 1,000 customers to rely on. Don't be overwhelmed by the big number, were only using it as an example.

The US Government prints a Distribution of Vehicles report each year. It's boring reading for most folks but nerds like me tend to like the numbers. Uncle Sam says that Vehicles per Household in 1969 was 1.6 and there were 3.16 people per household. Looks like 3/1 or so, 3 people for each car. In 2008 things looked a little different. About 2.5 people for every 1.9 cars. This is good if you sell cars. Bad if sell insurance. Car folks like Joe and I tend to think that "cars last longer so they get replaced less often." This is true, but the shear number of cars per household has out-paced the replacement trend. Blah, blah. What's it all mean. It means that we can begin to figure out the answer to "how may customers is enough customers" for Joe.

Back to Joe's 1,000. If a group of 1,000 people replaced their vehicles every 8.9 years (longer lasting then ever before according to the feds), 1000 vehicles would need replacing over the 8.9 year time span. If I'm boring you, go call somebody and ask for a referral or something. If not, keep reading. 8.9 years is about 106 months. 1000 vehicles in 106 months is about 9 cars per month. This isn't looking good for Joe.

To get to 15 units a month, Joe's gonna need to know about 1,800 people, yikes! Or is he? If Joe asked a few hundred folks for referrals on a regular basis, Joe may be able to take advantage of the "Six Degrees of Separation" principle. It says something about everyone on earth being connected by a maximum of six people. I'm not a math guy but I understand the logic. If this is the case, and Joe had faithful customers bragging about him all the time, he would only need about 300 customers. 300 seems almost doable.

The Point: How many people Joe has in his database is not nearly as important as how many people know Joe. Joe does not necessarily need to know everyone he is marketing to. The good news is, people still do want good old-fashioned help. People still do want to be loyal. It's Joe's job to give them a reason to be loyal to him. I could go on and on about prospecting, social media and all kinds of other modern ways of "building a list" but that is not the goal of this post. The goal was to answer the simple "how many customers is enough customers" question. And the answer is, it depends. It depends on how good Joe is at asking for referrals. It depends on how many compelling reasons Joe gives his followers to refer him. It depends on how much discipline Joe has to constantly ask for referrals. Constantly follow-up. Constantly ask for business.

The nitty gritty: I earn my living writing and maintaining software, customer service and lead management software. I spend hours and hours pouring over literally millions of customer records in an effort to provide our customers top-quality products. After doing this for many years, I have noticed a few trends. The most significant trend I see each and everyday is that the top-producers (that use our software) are not necessarily the ones that have tens of thousands of "customer records." The top producers are the people (and dealerships) that have absolutely mastered the art of follow-up.

Start building your list, start asking for referrals, start doing follow-up, start making money, it really is that simple.

David Book
Follow my on Twitter

Views: 29

Tags: CRM, ILM, follow-up, prospecting


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