Marketing Series:
Understanding Customers
by Gene Muchanski, Editor
The Dive Industry Professional
When I ask business owners to tell me what their biggest needs are, many times they will tell me that they need more customers. Although that may be true to some degree, when I dig down a little deeper, I find out what they really want is more sales. And the reason they want more sales is because they equate more sales with more revenue. If you have ever thought that your business needs more customers or more sales, I know how you feel. Many people have felt like that before. What changed their minds was what they found out about the different types of customers.
Getting a little basic, there are three types of customers; current customers, former customers, and future customers. There are three things we do with customers; acquire them, maintain them, and recapture them. And by the way; The reason we want customers is because we love what we do so much that we want everyone in the world to share our passion.
Current Customers: When talking about the three types of customers, we usually talk about current customers first because most businesses already have some number of customers. Current customers are the people who have purchased programs, products, or services from us in the past twelve months. We make reference to consumers when we talk about people who purchase products. We call them customers when they buy from us.
Customer Journey: Every customer has a buyer’s journey. If your new customers are pleased with their purchase they may become a repeat customer, if that applies to your type of business. Enthusiastic repeat customers become evangelistic customers or what we call lifestylers. Business owners should recognize and facilitate the customer buyer’s journey from customer to repeat customer to lifestyler.
Maintaining Customers: Customer maintenance is critical to the success of every dive business and its sustainability. Creating satisfied customers is the key ingredient. A business must sell a sufficient number of profitable products to a sufficient number of profitable customers to stay in business. That gives entrepreneurs a great latitude in how they run their business. It also gives them plenty of options and strategies pertaining to the number of products they sell and the number of customers they can properly serve at any given time. Before any thought is given to looking for new customers, it is a good idea to take a hard look at the current customers you have. A bird in the hand is worth two in the bush.
Every business should have a customer contact database. You should know how many current customers you have. You should know who your customers are, what they have purchased from you and when, and have their contact information handy so you can stay in touch with them on a frequent basis. There are many ways to store customer contact information. Depending on the number of customers you have and the size of your business, you should choose a computerized program that allows you to collect, organize, sort, and extract specific data to use in some type of outgoing sales and marketing campaign. The important thing to remember is that you can’t organize and use data you haven’t collected and stored.
Point of sale programs with a customer relationship management application works well for retailers. For other types of companies, accounting programs with invoicing and CRM capabilities can help you stay in touch with your customers. Email management platforms like Google Workspace, Microsoft Outlook, and Constant Contact all do an excellent job at collecting, storing, organizing, and sorting customer contact information that can be sent to targeted customers, individually or in groups. Marketing Automation Software (MAS) like HubSpot is used by marketing professionals to keep the lines of communication open between a buyer and seller. At the bare minimum, a Dive Industry Professional should have their current customer’s contact information on a spreadsheet such as Microsoft Excel or Google Workspace Sheets. Spreadsheets are easy to set up and use. They are flexible to work with, and the data can be downloaded from and exported to other applications easily and reliably.
Customer maintenance includes learning more about your customers and their recreational needs. It’s all about forming a friendly business relationship with your customers and treating them as your recreational partners. They are using the diving skills you taught them and are hopefully diving with the equipment you sold them. Are they traveling with you on your sponsored dive trips? And have you invited them to attend your regional dive show with you? What have you done this year to keep your current customers engaged with diving and specifically, with your business? Do you sponsor a dive club and keep your customers active and engaged in diving?
Advantages of Current Customers: The first thing to remember is that your current customers are only yours on a temporary basis. They are only your customers while you are meeting their recreational needs. If you want to keep them as customers, you have to treat them right and make addressing their needs a top priority. This builds loyalty and keeps them from becoming your former customers. Or worse, your competitor’s current customer.
Current customers are easy to maintain. You’ve already paid the acquisition cost. You have their contact information and their purchasing history. You know what they’ve bought, and you should know what they need. You’ve already created the market for diving equipment, additional dive training, and new dive travel. Don’t lose the market you built.
Former Customers: Former customers are people who bought from you once but haven’t bought from you in the past 12 months. There could be a number of reasons why. Maybe they moved, got married, had kids, or just stopped diving. You would know that if you had kept in touch with them. If life is the same with them, maybe all it takes is for you to reconnect with them again. It could also mean that something is wrong with your products or your after-sale service. It could be that your former customers no longer have a need for your product or have found a competitor who fills their needs better. Looking in the mirror and honestly analyzing your company and your products can be a very painful experience to undertake. But if you do find something that needs to be addressed, and can be corrected, the benefits will outweigh the effort.
Recapture Your Former Customer: Unlike the Prodigal Son, your former customers may not just return home on their own and show up at your door. It’s most likely that you will have to write, call, email, or visit them. But all is not lost if you had recorded their contact information in your database in the first place. (I know. That was a dig). I have always made it a point to connect with former customers on a limited and periodic basis, and I can testify that the process works well. Not always, but often enough to make it worth the effort. Many times, our former clients say, “Thanks for getting in touch with me. I’ve been meaning to call you.” With that, a recapture takes place and a Prodigal Son or Daughter returns. And yes, we celebrate that.
Advantages of Former Customers: The are numerous advantages to working with your former customers. They have already done business with you before and know who you are. There is no acquisition cost. They already have some type of professional relationship with you. You have their contact information, and you know how to reach them. You should have their sales history in your POS system. You should have a general idea as to where they currently are in their recreational customer journey. You know what they have and you know what they need.
Make Recaptures Possible: There are many reasons why former customers become current customers again. Staying in touch with your former customers is one reason. Improving your business, carrying better products, diversifying your product line, offering products and services that are more in line with your customers’ lifestyle are just a few things that will get an old customer back in the door. To increase your customer traffic, I would make it a point to give your customers a reason to do business with you again. And then communicate that with them.
A good way to target former customers for conversion from former customer to current customer is to make that conversion a priority at your business. As soon as a customer goes 12 months without making a purchase, transfer them from current customer status to former customer status, in your Customer Relationship Management (CRM) software and your Marketing Automation Software (MAS). Conduct a quick survey to inquire why they have not purchased from you in 12 months. Maybe some of the answers you get will help you do things that will improve your business. As you make improvements in your operation, be sure to update all of your former customers on the improvements you’ve made. Recapturing former customers is not about telling them you want them back. It’s all about improving your business and offering them the products and services that will make them want to come back and do business with you again. If you have truly improved meaningful aspects of your business, you’ll be back in the ball game of meeting your former customers’ needs again.
Future Customers: It should now be clear why I left future customers for last. If you have done an outstanding job of maintaining your current customer base and recapturing your former customer base, you may not need or have a capacity for new customers.
To be perfectly honest, most businesses do have an ongoing need for new customers. I make a distinction between new customers and more customers. Dive businesses that have a professional customer management strategy in place will prioritize acquiring new customers and have a list of preferred personas and prequalifications. We’ll get into that in more detail later. Dive businesses who are interested in churning out as many customers as they can get in the door will prioritize only in acquiring more customers.
Advantages of New Customers: All businesses have a certain customer turnover. You should know what yours is. In the diving business, as in other businesses, people die, move, lose their jobs, get married, have children, change locations, change their recreational priorities, or lose interest in diving all together. We can simplify customer turnover by understanding that customer needs change.
As a rule of thumb, businesses lose about 25% of their customer base every year. That is the main reason we must always be looking for new customers to fill our customer pipeline. The first thing you need to measure is your customer turn rate. What is yours? If you have a customer satisfaction program that tracks and measures customer sales performance, your company can significantly decrease your customer turn rate. There are new ways to deal with customer turn rates, but let’s first talk about the traditional disadvantages of looking for new customers.
Disadvantages of Finding New Customers: Acquiring new customers is the most expensive and time-consuming process of increasing your customer database. The funny thing about that, is that most of the dive businesses in the recreational diving industry spend more time, money, and manpower looking for new customers than they do servicing the current customers they already have. The disadvantages or challenges, as I call them, are numerous. Finding new customers takes research, promotion, advertising, marketing, exhibiting, and asking for referrals. Many times we don’t know who our future customers are and it is most likely that they don’t know who we are.
Depending on the stakeholder group in the diving industry you identify with, your customer acquisition process may differ. When you break down the components it really is easy to put together a strategy for finding the right kind of customers for the programs, products and services you sell. Like any hunter will tell you, the most important thing is that you know what kind of customer you are looking for. An old saying in marketing is, “If you try to sell to everyone, you’ll end up selling to no one.”
Acquiring New Customers: You can learn a lot about the type of future customers you want by knowing more about the current customers you have. Your current customers are doing business with you because of something. What is it about them that made them want to be divers in the first place? What was it about you that they liked? It is a good idea to build an ideal customer persona and use that as your average standard for customer selection. As in any average, it’s a good thing to move to the left and right of your average standard. Your customer persona common denominators may be geographical, demographic, psychographic, or gender related. You should also consider social, economic, and professional similarities in your current customer base.
In the final analysis, it is always a good thing to plan your acquisition strategy on your acquisition cost, return on investment, and projected customer lifetime value. Your customer acquisition campaigns should include detailed planned outcomes, achievable actionable items, and measurable key objectives that give you a sufficient return on outcome (ROO).
In future articles about customer strategy, we can discuss the buyer’s journey and purchasing funnels. Consumer Science covers more than just getting more customers in the door. It covers issues like getting the right customers to begin their buyer’s journey with your company and going through a well-thought-out purchasing path. A purchasing path that identifies their needs and satisfies their recreational growth in a systematic manner. It’s about tying in Product Management issues that develop the right product for the right customer in an attempt to match products with people. It’s about how to understand and execute 21st Century Dive Industry Marketing. Are you ready?
# # #
