Focus on your best customers for best results
One simple truth that is often overlooked is the importance of your best customers.
Different organizations have different ways of defining what constitutes a “best” customer, but broadly speaking these are the individuals who, through a combination of frequency, basket size and tenure, are much more valuable than the average consumer.
Metrics and key performance indicators used by retailers often fail to look specifically at the behaviour and preferences of these key customers. This can be a serious oversight, particularly when best customers have different behaviour than their less valuable peers.
Securing the loyalty of best customers can take a number of forms. One of the most important is to ensure that assortment reflects the preferences of best customers. While traditional metrics do a fine job of measuring the efficacy of items in an assortment, care should be taken to isolate best customers purchases and determine which products are over indexed. In any assortment there could be SKUs that do not perform particularly well in the aggregate, but have high sales rates and basket penetration among best customers.
Ensuring that these items are available and not delisted is an important factor in enticing best customers to continue spending at your stores.
Beyond assortment care should be taken to rewarding best customers. Increasingly retailers are utilizing their loyalty programs reward best customers with points and special promotions. Beyond that, marketers are utilizing these channels to try and engage best customers. This can help create a connection between the retailer and customer outside of the traditional spend-reward dynamic, and when done effectively can help deliver increased engagement and loyalty without subsidizing purchases.
Retailers are faced with an increasingly bewildering array of metrics and measures used to gauge business. Within this morass of data it is important to take time out periodically to review the effectiveness of assortments, marketing campaigns and other programs with an eye towards their effect on best customers.