Managing Inventory Using the Customer Buying Cycle
If you find your business is struggling with inventory control, there are several things you can do to resolve any pesky issues. The first is having an automated system versus a manual one that places orders days or weeks behind schedule. Another problem arises with poor vendor management. To get the best deals, you need to negotiate with your vendors and keep an open line of communication going, so you can get the most for your purchasing dollars.One of the best ways to stay on top of your inventory management is understanding your customer buying cycle.
Anticipate the Buying Cycle
Your customers follow a series of steps prior to purchasing products from your store—called a decision journey.
From the first time they see your brand to the moment of purchase, each step along the way is set up through your marketing efforts, customer reviews, and word of mouth. Their initial encounter may be subtle, such as driving past your store or seeing the name in search results. It can also be through recommendations from friends during a happy hour or social media. Customers make initial considerations about your brand and then compare it to other brands like yours.
Most consumers are savvy enough to research brands, customer reviews, and detailed product information, when actively comparing your brand with your competition. This is where your marketing efforts really pay off. Having detailed information on your website can drive traffic to your store, either physically or online. An informed customer is able to make quicker decisions.
To gain new customers, entice them with discounts on first purchase. Over time, the discount will be paid back in future purchases. Customer loyalty bypasses the second stage in the buying cycle, therefore reducing the time between purchases and costs of customer acquisition. Understanding your customer can help you anticipate trends and create better forecasting models.
Inventory Management and Replenishment
To ensure that you’re meeting customer demand for your products and services, you need to align your operations and accounting. Both work together to make sure that your storeroom is properly stocked and deliveries are made on time. Any inconsistencies between these systems or gaps in service can cause problems with the customer experience.
Once your systems are aligned, you can follow these tips on inventory management that will anticipate your customer’s buying cycle:
1. Set Reminders
For seasonal products and promotions, set a reminder on your calendar to start the purchasing process.
2. Automate Purchase Orders
A purchase order for popular items can be automatically sent to a vendor when stock levels hit a certain number. This avoids mistakes commonly made in manual systems.
3. Analyze Trends
Examine your sales data and you will see the highs and lows of your business cycle.
4. Get Rid of Dead Stock
Dead stock can be quickly taken care of through deeply discounted prices and BOGO offers.
5. Safety Stock
When you have more sales than expected on one item, you need to be able to have enough in stock to cover demand. Using your sales data, you can find the spikes in customer demand for certain products and calculate how much you need to cover a surge in sales.
Successful businesses forecast sales and maintain stock levels to meet customer demand. You can see the trends in your customer’s buying cycle, which allows you to anticipate demand.
One of the best ways to understand the buying cycle is to give your customers a survey. The information will be invaluable, even if only a small number of people fill it out. You can also ask them in person. Just make sure you can write down their comments in order to keep track of them. Discovering how your customer makes their decisions is a valuable way of controlling your inventory.