Why knowledge of the size of the customer base is important.

[Etini]

One of the most important components for a business that buys and sells is the optimum management of inventory. Inventory management needs to be handled in a way that avoids overstocking or understocking. And one very vital input that would help an organisation manage it's inventory effectively is a clear understanding of the customer base available for the business. A sound of knowledge and estimate of the customer base of a business helps to achieve optimal inventory management in the following ways:

1) It helps a business to project the possible demands per time: A good understanding of the size of your customer base would allow the business to predict demand patterns per time. That ensures that customers don't run short of demanded products and the business is not tied down by dead stock.

2) A good knowledge of your customer base helps to improve cash flow: When you understand the size of your customer base, you wouldn't overstock and that would help you to have a better cash flow because excess supply that would have happened because of overstocking is eliminated.

3) A sound knowledge of the size of your customer base would make the business to eliminate understocking. That means that customers can always get their desired products when they want, thereby breeding trust amongst the customers towards the business.

 

[Leah Kelvin]

Businesses have a good reason to know how many clients they possess. The first one is having an idea of the market potential and growth opportunities. The second one is that it helps in targeting a certain group of customers effectively. Thirdly, revenue-generating units can be focused on by resource allocation. Moreover, competitive analysis and revenue forecasting can be enhanced by these statistics. Also, this way, it will result in business growth that comes as a result of guiding customer acquisition, retention strategies Lastly, investor confidence in terms of scalability and long-term viability increases significantly. As a result, market understanding; targeting; customer strategies; resource allocation; competition analysis; revenue forecasting; and investor attractiveness are the areas where strategic decisions should be made concerning knowledge about customer base size which ultimately leads to business success.