Sales. It all adds up.

Where do your customers come from? Most business owners have a good idea of who their top customers are. But what about the customers who account for the rest of the sales? At the end of each quarter or year, gross sales are made up of every customer you have. Each customer type makes up a percentage of your total sales. Without an understanding of customer segments, businesses can’t adequately and profitably advertise. Here are three tips to help you better understand your sales.

1. Segment your customers.

Segmenting or categorizing your customers allows you to see the bigger picture of where your sales come from. Begin with a simple sales report. Organize your sales by product or service, price, industry, zip code, date, total sales, and the customer types become clearer. Some customers may buy one product type, others may be seasonal, while others may live nearby and buy based on convenience. Begin acquiring your customers’ gender, age, occupation, anniversary, or other information, and you can segment them even further. Segmenting your customers helps market to them more specifically. And because you are able to target specific groups, you can eliminate unnecessary advertising costs.

2. Customize your advertising to reach each customer segment.

A message that appeals to one customer category may miss the mark with another. Each customer type should be marketed to deliberately. Categorizing helps you understand why customers buy. Understanding why customers buy helps you market to them more effectively. For example, a business may determine that their customer types are architects, contractors, developers and property managers. Each of these customer types have different reasons for buying, and will require different advertising messages.

3. Be mindful of the ROI.

Whether it’s a customer or an entire market, a sale has to be worthwhile. After all, you didn’t start a business to lose money or break even. If you add two columns, “cost and time”, to your sales report, you can determine the ROI (return on investment) for each customer segment.

While many different customer types make up overall sales, not all customers are equal in terms of profitability. Some customers require more money in advertising and more customer service hours. Some take longer to pay or have larger cashflow requirements. Some accounts may have lower margins or higher shipping costs. Sometimes a smaller client can be more profitable than a larger one. Be aware of the costs in both time and money for each customer category.