Business owners understand why good customer service is a necessity: happy customers mean repeat customers. Repeat customers save you money and often bring you more business through referrals. How so? Well, referrals happen because repeat customers are happy with your service and products enough to keep coming back, which often means they’re also happy enough to refer people to your business. As for saving money, marketing/advertising is expensive, and the more repeat customers you have, the less marketing/advertising you have to do.
And beyond that, loyal customers also make it possible to save money through reduced inventory.
We’ve discussed that one of the most difficult aspects of parts inventory control is coping with the demand for your stock items and determining how much inventory to keep in stock. Forecasting, or predicting future sales, is hardly an exact science, and when you predict too low of a demand, you may run out of product and have unhappy customers. If you predict more of a demand than there is, you will have excess inventory sitting on your shelves and tying up cash flow – eventually causing you to take a loss when the market value of your inventory declines.
The less confident you feel about your forecasting, the more likely it is that you will keep your inventory levels high to protect yourselves from having out of stock items. Repeat customers make this less of an issue because their sales are relatively predictable, especially when their purchases are cyclical, as when they make purchases to replace items after a newer model has been released. This kind of regularity means that you can keep lower inventory levels during the times that are less busy and more inventory when you know that many customers will be making replacement purchases.
If, however, you have very few repeat customers, you are relying on new sales to keep your business afloat. Sales from new customers are far more difficult to predict. If your business launches a successful new marketing campaign, for example, it’s likely that you’ll see an increase in sales – but how much of an increase? You don’t know, so you’ll need to beef up your inventory for the possibility that the new marketing campaign will cause a large influx of orders.
Don’t take this advice the wrong way – keeping old customers AND getting new customers should always be your goal. Just keep in mind that repeat customers are easier to keep, more likely to bring you new business, and an easy way to keep control of your inventory levels.
To get loyal customers and keep them coming back, it’s important to have to good customer service, which includes inventory control. If you’re having trouble keeping your parts inventory under control or have questions about getting software to help you with that task, please contact
Acumen Information Systems today – we can help.
FAQ
How does customer service affect inventory control?
Loyal repeat customers make demand more predictable, which lets you hold lower inventory.
Why do repeat customers save money?
They reduce marketing and advertising needs, bring referrals, and their predictable, often cyclical purchases allow leaner inventory.
What happens when demand is forecast too low or too high?
Too low leads to stockouts and unhappy customers; too high leaves excess inventory tying up cash and eventually losing value.
Why is relying on new customers harder for inventory?
Sales from new customers are much harder to predict, so you have to carry more inventory to cover uncertain demand from campaigns.
