Debbi Mayo-Smith: Database points the way to higher profits

Are you with one of the seven out of 10 businesses missing out on the cheapest, easiest way to generate sales?

I can quote this statistic as a fact because, over the past seven years, thousands of businesses have told me so. For many of my speaking engagements I email a pre-conference survey to attendees. The tallied responses all sing the same sad song: either no database or a database that contains minimal information and is seldom used.

For example, in late March, after collating 100 survey responses from a group of 300 membership-based businesses, I found 67 per cent were keeping only the simple name, address and phone contact details which were required to join.

It was such a crying shame - especially in this economy. Each business could have used the member information to bring them back in for more business and to improve profit. What's all the more depressing is that if you pooled the combined membership, there could have been a marketing and communication database in excess of 300,000 New Zealanders. This database could be used to benefit both the association members and their members; for example, by offering national discounts.

At the moment I have 52 survey responses from an international jewellery-buying group. Thirty-six of the businesses that have responded so far have a database; however, 25 per cent of them have a minimum purchase requirement before putting a customer into the database. Of the 36, 30 keep mobile numbers, yet only 11 are using text messaging. Just 16 are storing email addresses, and only 13 keep birthdates. Only seven have asked for and recorded family member details.

All advertise by radio and in the press, yet look how they neglect the diamonds they have in their own backyard: their existing customers.

On the other hand, having a database doesn't mean a thing unless you use it. Paul Watkins, a fellow speaker from Hamilton, was reviewing a law firm client's database. The firm had 5500 clients. Paul discovered that (in round figures):

* 3400 hadn't been seen in the past 5 years - in part because 800 of them were dead!

* 2000 of these hadn't been seen for 10 years.

* There were 400 they didn't want to see ever again.

* Of those seen inside five years, over 1000 were just for small conveyancing or wills.

* Only 600 had been seen in the past 12 months, of which fewer than 100 were considered active, high-value clients.

This 600 represent just 11 per cent of the total number of "clients". The top 100 represented only 1.8 per cent of the total. The firm has not undertaken a profitability analysis, but agreed that the top 600 clients (11 per cent of the total) would account for around 90 per cent of the firm's profit, and the top 100 for more than half of this.

This came as something of a revelation to the partners, and further discussion also led them to the following observations:

* That they treat all clients exactly the same - poorly! They never contact clients, but wait for the phone to ring.

* Interestingly, the more contact they have with a client, the more the client values the work done - and the less they question fees.

* They had no segmented database, so sorting for communication purposes was impossible.

Let's contrast this with Michael Shaw of Footprint Podiatry in Adelaide. I interviewed Michael to help understand general medical practices for an Australian seminar series I keynoted at last July.

"Debbie, I'm a jack-of-all-trades. My wife asked me to join her business as practice manager. The first thing I said to her was, 'Darling, you've got to put in a computer system and patient database'. 'Why? We're doing okay' was her response. I replied, 'Because you're leaving so much money on the table'.

"One of the first things I did was change our forms so we could track where new patients came from. I started a newsletter with special offers and we used the built-in modules for email and text messaging our software had. We were able to cut our no-show and late factor by 49 per cent.

"One day while looking through our appointment book I noticed a two-week quiet period coming up. I thought I would try to fill the gaps so I targeted non-compliant follow-ups. These were patients who didn't follow the suggestion to come in for their six-month assessment after treatment as suggested.

"I sent an email to 26 patients which generated three appointments, and a text message to 78 which generated an additional six. This might not sound like much, but it only took one hour of my time and cost $12.80 for the text messages, yet it brought in over $500 in revenue. In my first year we doubled practice income."

If your business is not taking advantage of the ease of getting new business from your customers, isn't now the time to start?

Debbie Mayo-Smith is a best-selling author and international speaker.

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