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Why, and how, you should collect customer data

A customer database and purchase history is a must-have for every small business. If you don't have one, you need to get started right away because you have put off building an enormous asset for long enough.

It's well-known that it is a lot more effective to sell to the customers you already have than to find new ones. But if you don't know who they are, how to reach them or what they have already bought and like, you will just have to wait. – and hope. And that's no way to grow a business.

When I started a service business in 1993, I used handwritten repair tags and receipts. It was low-tech, for sure, but, I kept that data and entered it into a cheap version of Simply Accounting at night.

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Soon we progressed to a low-cost and basic point-of sale-system on my Tandy computer with monochrome monitor and kept collecting and entering the data. The business later expanded into retail which outgrew the service business, but we were already in the habit of collecting addresses and phone numbers, so we kept going. We added a new data field called e-mail, and kept going.

Before we knew it, we had an opt-in database of thousands of customers, and a history of what they had bought and when.

Do you?

My plumber needs to visit me twice a year to service our water-treatment system, but because he doesn't collect customer data, it is up to me to remind and book him. If he did, I could be on a long-term service contract, with calls booked months in advance. The next time we talked, all he'd need to do is up-sell me on some extras. My regular business would already be in the can.

I like shopping close to home and my favourite two indie retailers use a cash register. They don't have a database. So they don't have any way to tell me about the latest offering relating to my last purchase or about an upcoming sale. Instead, they have to hope I drop in on my own or see an expensive ad.

Imagine the customer-service benefits when you can reprint a receipt on behalf of customers who have misplaced theirs and needs one for warranty purposes.

You don't need to be Amazon to know what your customers bought and what to recommend. You just have to start small and simple and keep it going.

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Not only will leveraging customer info support sales every day of the year, but your customer database will be a valuable asset when you sell your business.

Maybe it's time to trade in your cash register for a laptop and cash drawer. I bet the majority of your customers will want to be in the loop on interesting developments in your business, as long as you communicate effectively and responsibly.

Special to The Globe and Mail

Chris Griffiths is the Toronto-based director of fine tune consulting, a boutique management consulting practice. Over the past 20 years, he has started or acquired and exited seven businesses.

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