What are Shrinking Customers:
Shrinking customers refer to individuals or organizations that are decreasing their use of a product or service, or who have ceased using it altogether. On the other hand, growing customers refer to those who are increasing their use of a product or service, or who have started using it. Understanding and identifying both types of customers is important for businesses as it helps them to better allocate resources, prioritize efforts, and make data-driven decisions to drive growth.
There are several ways to measure shrinking customers:
1. Decrease in customer engagement: You can measure the decrease in customer engagement by analyzing the frequency and duration of customer interactions, such as phone calls, emails, and website visits.
2. Decrease in customer spending: If customers are spending less money with your business, it could indicate that they are shrinking. You can track this by analyzing sales data and comparing it to previous periods.
3. Increase in customer complaints: If customers are complaining more often, it could indicate dissatisfaction with your products or services, which could lead to shrinking customers. You can track customer complaints through customer service channels, such as phone, email, or social media.
4. Decrease in customer referrals: If customers are referring fewer new customers to your business, it could indicate that they are not as satisfied with your products or services as they once were. You can track customer referrals by asking new customers how they heard about your business.
5. Surveys and customer feedback: Surveys and customer feedback can provide valuable insights into why customers are shrinking. This information can be used to make improvements and prevent further shrinkage.
It’s important to note that a single metric may not fully reflect the situation, so it’s recommended to use a combination of methods to get a comprehensive picture of customer shrinkage.
What are growing customers?
Growing customers refer to individuals or businesses who have demonstrated an increase in their level of engagement, frequency of purchase, or overall spending with a company over time. These customers are seen as valuable assets, as they generate more revenue and profits for the company and are likely to continue to do so in the future. Companies typically target growing customers with marketing and sales efforts aimed at further increasing their loyalty and engagement with the brand.
There are several ways to measure growing customers:
1. Increase in customer engagement: You can measure the increase in customer engagement by analyzing the frequency and duration of customer interactions, such as phone calls, emails, and website visits.
2. Increase in customer spending: If customers are spending more money with your business, it could indicate that they are growing. You can track this by analyzing sales data and comparing it to previous periods.
3. Decrease in customer complaints: If customers are complaining less often, it could indicate increased satisfaction with your products or services, which could lead to growing customers. You can track customer complaints through customer service channels, such as phone, email, or social media.
4. Increase in customer referrals: If customers are referring more new customers to your business, it could indicate increased satisfaction with your products or services. You can track customer referrals by asking new customers how they heard about your business.
5. Surveys and customer feedback: Surveys and customer feedback can provide valuable insights into why customers are growing. This information can be used to maintain and improve customer satisfaction.
It’s important to note that a single metric may not fully reflect the situation, so it’s recommended to use a combination of methods to get a comprehensive picture of customer growth.
Measuring shrinking and growing customers provides several benefits:
1. Customer retention: By identifying shrinking customers, businesses can take action to retain them before they stop using the product or service altogether. On the other hand, by identifying growing customers, businesses can continue to meet their needs and keep them satisfied.
2. Resource allocation: By understanding which customers are growing and which are shrinking, businesses can allocate resources more effectively, focusing efforts on areas that are most likely to drive growth.
3. Improved customer experience: By measuring customer engagement and feedback, businesses can identify areas for improvement and make changes to enhance the customer experience, resulting in increased customer satisfaction and loyalty.
4. Increased revenue: By retaining and satisfying customers, businesses can drive growth and increase revenue. In addition, by focusing efforts on areas with the greatest potential for growth, businesses can maximize the return on their investment.
5. Better data-driven decision-making: Measuring shrinking and growing customers provides businesses with data and insights that can be used to make informed, data-driven decisions.
Overall, measuring shrinking and growing customers can help businesses to better understand their customers, allocate resources effectively, improve the customer experience, and drive growth and revenue.
To improve customer growth, businesses can take the following actions:
1. Improve customer experience: Identifying areas for improvement through customer feedback and surveys and making changes to enhance the customer experience can help to increase customer satisfaction and drive growth.
2. Offer promotions and discounts: Offering promotions and discounts can attract new customers and encourage existing customers to increase their use of your products or services.
3. Develop new products and services: Developing new products and services can attract new customers and encourage existing customers to increase their use of your business.
4. Expand your customer base: Identifying new customer segments and targeting them with marketing campaigns can help to expand your customer base and drive growth.
5. Foster customer loyalty: Implementing loyalty programs and providing excellent customer service can help to foster customer loyalty and drive repeat business.
6. Enhance your online presence: Improving your online presence through website optimization, social media marketing, and search engine optimization (SEO) can help to attract new customers and increase visibility.
7. Invest in customer relationship management (CRM): Implementing a CRM system can help to manage customer interactions, track customer behaviour, and identify areas for improvement.
These are just a few examples of actions that businesses can take to improve customer growth. The specific actions will vary depending on the business and its customers, so it’s important to understand your customers’ needs and behaviours to determine the best approach.
To track and measure the performance of actions taken to improve customer growth, businesses can use the following methods:
1. Sales data analysis: Track the sales data before and after the actions were taken to see if there has been an increase in customer growth.
2. Customer feedback and surveys: Gather customer feedback and opinions through surveys and focus groups to see if customers have noticed any improvements.
3. Website analytics: Use website analytics tools to track website traffic, conversion rates, and time spent on site to see if the actions have had an impact on online engagement.
4. Social media analytics: Use social media analytics tools to track engagement, reach, and conversions on social media platforms to see if social media marketing efforts have been effective.
5. Customer behaviour tracking: Track customer behaviour, such as purchasing patterns and frequency of engagement, to see if the actions have had an impact on customer loyalty and repeat business.
6. Return on investment (ROI) analysis: Calculate the return on investment for the actions taken to improve customer growth to see if they have been successful and to determine if further investments are necessary.
It’s important to track and measure the performance of the actions regularly and to adjust as needed based on the results. This will help to ensure that the actions are having the desired impact and to identify areas for further improvement.
The value of your customer base is crucial to the future of your company. But how do you prevent that value from being compromised? EZlytix offers various KPIs and reports to track and measure the shrinking customer impact. Below are a few KPIs that help business identify and adjust many disastrous future scenarios at an early stage. This helps you to prevent your company from ending up in turbulent waters.
1. Top Shrinking Sales by Customer – Year-over-Year comparison of customers with shrinking sales by any dimension. Can pre-alert possible customer churn.
2. Top Shrinking Margin % by Customer – Year-over-Year comparison of customers with shrinking margin % by any dimension. Help identify product mix or possible contract issues.
Analyzing customer profitability and maximizing a customer’s lifetime value are highly important and essential to any business.
To increase your customer base, it is necessary to stay in constant contact with potential and existing customers and the more value your business can offer, the more likely they will remain loyal.
EZlytix KPIs help businesses to track the performance of customer growth efforts.
1. Top Growing Sales by Customer – Year-over-Year comparison of customers with growing sales by any dimension.
2. Top Growing Margin % by Customer – Year-over-Year comparison of customers with growing margin % by any dimension.
EZlytix is a reporting and analytics solution for Manufacturing and Distribution companies using SYSPRO. The solution offer 70+ pre-built KPI and reports that help you to analyze how sales and margin performance measures up to your forecasts and budget – and identify the biggest gaps.
In a span of one week, customers get access to meaningful reports, trends, dashboards, and key performance indicators (KPIs) – all from one single, consistent, and clean data source. Customers have the ability to analyze sales and margin performance at any level provided in the data: by market, product line, product, salesperson, geography, etc.
To know more, contact us.