HOW much time do you spend trying to entice new customers to your business? Do you realise that it is actually much cheaper to retain an existing customer than to attract a new one, and trying to regain a lost customer is even more expensive?

One of the best business practices is this: once you have a customer, initiate customer management systems to keep him for life.

The marketplace today is changing rapidly. It is important to be able to stand out from the crowd and create a lasting and genuine differentiation between you and your competitors.

Today, customer focus is high on most business owners’ agendas, supported by ample evidence that customer satisfaction equals high profits. If customer satisfaction equals high profits, should all customers be treated the same?

The 20/80 principle

This is where most business owners fall off the rails. A little customer differentiation at this point makes all the difference in building business profits. If you focus your resources on your high-value, high-potential customers, you will reap the greatest rewards.

This does not mean that you ignore your lower-value customers. Instead, treat them in a manner that is appropriate for the level of support they give you in your business. If you follow the Pareto Principle, you will find that roughly 20 per cent of your customers provide 80 per cent of your business. The key is to identify this 20 per cent.

There are ranking systems you can use to help you establish a customer hierarchy. Once you have identified your “A-list” customers, ensure that you delight them throughout the service experience to ensure a firm relationship.

Key elements to do this include:


Aim to have them repurchase bigger and better orders and recognise them by providing added value. This might be a formal loyalty scheme.

Case study: My local coffee shop has a frequent buyer programme. It rewards me with a free coffee after 10 purchases.


There has to be something in it for both of you. You will cement the relationship by learning more about the customer and creating a value exchange. This could take the form of “key account management”.

Case study: A client of mine owns and runs a stationery supply business. He has fostered relationships with schools and now handles the ordering, packaging and delivery of “back to school” supplies for the students. This service saves heartache for schools and has created a lucrative business opportunity for the business owner.


Moving from a sales focus to a long-term relationship focus has exciting implications for you and your whole business. Everyone involved in your business must embrace the relationship development strategy. Put the development of long-term relationships ahead of short-term revenue or profits.

Case study: A small consulting firm set out to build a long-term relationship with a large government-sector agency. Their approach was to target the agency with a tailored product at a very competitive price in return for a long-term contract to implement their product. Their strategy to build a relationship paid off in terms of consistent demand and cash flow.

Know customers well

Most business owners already acknowledge the importance of their customers through investments in marketing, customer service and loyalty programmes.

Their pace of change in implementing these programmes though is sometimes too slow or their knowledge of their customers is not deep enough. The key elements to customer understanding are:

* Understand the priorities and preferences of customers: Identify your customers’ preferred service level for current and potential future experiences. Be clear about what is most important and what is least important to the customer.

* Compare customer’s perceptions to reality: Understand why customer perceptions may fall short and others go beyond actual performance. Identify your business’s perceived and actual performance, especially in priority areas for your customer.

* Compare perceptions of you and your competitors: Undertake a “gap analysis” to understand your weaknesses and your advantage and get clear on what action you will have to take to gain the advantage.

Customer-focused business owners know that the loyalty of their best customers is only achieved by delivering outstanding value to them and by delighting them at every interaction.

Creating loyal and profitable customers is the foundation for value creation. This simple formula offers a sustainable opportunity to increase profits in your business.