Don’t take me for granted

Do you ever feel unappreciated when you shop?  Every time you hear about a cell phone deal that you don’t qualify for, because you are already a customer, doesn’t it make you dissatisfied, and perhaps even a bit grumpy?  Definitely not tranquil!

What would happen if your best customers went away?  “You wouldn’t have a business,” says Michael Schiff, in a January 2010 article in CPGMatters, entitled “Analysis of Data Underscores Importance of Best Customers.”

This article applies learnings from other data-driven marketers to the grocery business:

• The top 10% of customers represent almost 40% of revenue
• It costs 5 times as much to win a new customers as to keep a current one
• Those high value customers tend to remain loyal within a year, with 95% remaining constant
• Best customers also tend to shop less on promotion — only 11% of the dollars spent by high value customers were on markdowns

At the same time, many grocery retailers are focused more on acquiring new customers rather than focusing their efforts on retaining best customers (and, I might add, finding customers who can be migrated to Best Customer status).  As Shiff comments, “They think, ‘What can I do to get somebody else?’”  As he notes, light customers are heavy customers elsewhere.

The cost of making infrequent customers into best customers is much more than the cost of increasing market basket among best customers, who still spend only 60% of their grocery dollars with their favorite store.

You know, we spend so much of our time trying to attract new customers that we often forget that most of our Best Customers are still spending a substantial portion of their dollars in our category in other stores.  A recent study by one of our clients (non grocery) indicated that their Bet Customers spent only 50% of their category dollars with their store.

So where would you prefer to spend your money?  On a customer who rarely comes in, and mostly for a hot sale, or on frequent customers, who appreciate the brand and are high value to start with?

Here are my No Excuses Marketing recommendations for marketing to customers who are already Best Customers:

1. Identify your share of wallet (percent of category spending in your business) through quick web surveys.
2. Determine where the rest of the spending goes, at what price point and on what products.
3. Send Best Customers web offers on their next purchase, structured increase their spending on the products that are typically purchased outside of your store.  Consider service benefits as well.
4. Measure, measure, measure (but you probably know that already).  Make sure to have control groups, please.

With Best Customers, the few have the power of many.  But like many constants in our lives, it is easy to take them for granted.  Take these quick, inexpensive steps and show these customers appreciation while increasing share of wallet.

What’s not to like?

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Tagged as: Best Customer, best customer experience, bestcustomer, Customer experience, Customer Management, Customer marketing, Database marketing, Grocery store, marketing measurement, Retail experience, retention