The term 'Customer Base' is included in the Economics edition of the Financial Dictionary. Get your copy on Amazon in Kindle, Paperback or Audio edition. Choose your edition here...
A customer base refers to a company’s prospective customers who the business might be serving. There are many individuals who believe this only pertains to the customers whom a business already counts. Still analysts tend to include in those customers who share common buying habits in the category. This is the case even when the customer has not come into the relevant store location or bought one of the company products yet.
In this group of all potential customers is a narrower set of the customers who are loyal followers of the company products. Business analysts call this group of consumers repeat customers. Business strategies focus on the critical need to turn every one-time customer into a repeat customer. Every company is interested in this, even when not all companies are focused on growing their entire customer base.
Theories on how to build up reliable and impressive customer bases abound. They run the gamut from offering periodic promotions to advertising the company products, brand, and services effectively to offering the highest possible customer service to clients. Any way a business manages to bring people into the store these are possible customers and could become a part of the reliable customer base. The hardest challenge is to bring them back to the store repeatedly.
It is well known that repeat customers are always the most crucial component of any businesses customer base and ultimately company success. These are the ones who will repeatedly and consistently spend money buying the business’ products or services. They are also the best possible word of mouth advertising regarding the finest qualities of the company.
It is interesting to realize that some customer bases do not preexist at all. This is because some businesses provide a unique service that establishes a new customer pool which was not around before they began offering the service to the community. It happens when a company comes up with an idea to provide a service to people that they did not even realize they needed.
The trick for many businesses is to find a way to balance the differences between a company’s end goals and the needs of the customer which will change periodically. Businesses have to be capable of adapting their strategies to the shifting requirements of a consumer base. At the same time, the business can not be spread in all directions simply chasing consumer fads.
The trick is to build up a loyal customer base which counts numerous repeat customers. When a business develops these types of customers, analysts call them an installed customer base. This refers to those clients of a company who are already utilizing the various products which the company produces.
It is helpful to look at a tangible example to better understand this idea. A company might sell laptop computers, printers, and software. The installed customer base would be only the customers who count at least one of the business’ products working in their house. If they were interested in buying a laptop, they would be merely a member of the potential customer base for the business.
It is always more costly to add new customers than it is to keep those which are already existing customers of a business. This is why so many companies today focus their primary efforts on customer service, retention, and relations with their current customers. It does not take much in the way of advertising to keep an existing customer base. The good news is they already know the products.
This is why some promotions and occasional special pricing offers to loyal customers is enough to keep them coming back for more of the core business products. Companies often do this by maintaining as complete an existing customer mailing or emailing list as they possibly can. It is easy to send them promotions in the mail and even easier via emails.