There is a sea of data out there that retailers can use to understand their most loyal customers’ preferences and shopping habits. Use it! Without an action-oriented approach to data science, stores may identify “best customers” but may not customize product offerings or targeted marketing to appeal to them.

As far as customer priorities are concerned, part of the point of customization is to recognize that one shopper may be more focused on personalized service, another on new product offerings, and so on. One size doesn’t fit all — making it all the more critical to put data to good use.

Customer retention is the key to long-term success in any business, whether it is online or brick and mortar. Your best customers are the brands retained customers. These are the customers who are going to refer the brand to their friend and family and help acquire new customers. Over 80% of Zappos sales, for example, come from retained customers. Rather than spending the bulk of their marketing dollars on trying to get new customers, Zappos focused on building retention. This effort helped them grow from $1 million to $1 billion in sales in 7 years. Retailers need to take a page out of that book and focus on how to retain their customers and turn them into advocates by finding out what they love and hate about the retailers brand. Fix what they hate and build on what they love. Retailers think in a transactional paradigm. They do not think in a customer service paradigm and that is the root of all of their present problems. The brands that continue to thrive are customer focused… Read more »

Yes, yes, yes! This is the key to sustainable growth in today’s highly competitive (and data-driven) era.

Let’s all celebrate CLV day next Monday. (Get it? CLV=155 in Roman numerals, and Monday is the 15th day of the 5th month….)

All the other stuff we chatter about (e.g., customer experience, in-store technology, personalization, and branding) follows after you get good at customer valuation. But too many retailers are getting the cart before the horse by jumping into those tactics without a clear understanding of how their customers differ and which ones are likely to be the best in the future.

While working with a bank as they laid out a customer ranking/prioritizing strategy, my one ignored piece of advice was: “Never let your customer’s see your prioritizing strategy.” It’s the old watching the sausage-maker story. Even with this perfectly reasonable article I doubt anyone reading it felt misty with the love being shown. As usual, the story ends with “…and maximum ROI.” There’s a TV commercial that says “First Class exists to remind you you’re not in First Class.” Of course every retailer wants to make as much money as possible by serving its customers well. The quicksand lies in the word “prioritize.” When you start to differentiate your customer by “precedence in right or rank” as the word is defined, you end up on a slippery slope. My pet peeve, as an example, are airlines who stupidly have two carpet runners heading into the gate. One has a sign for “Priority” customers and the other for riffraff. Both are made from the same material, both are filthy … and they are right beside each… Read more »

The best customer is also different by retail category. For mass/discount, the best customer can be the largest total revenue or largest number of purchases per visit. In luxury segments it maybe different depending on the product line and also other context like cross sell, personal networking to bring in other clients etc. Retailers need to define that well and then apply the right rewards. For some it is discount, but for others it is experience. Not all rewards are created equal….

It is great to see that many retailers are focused on analyzing and identifying the needs for their most valuable customers. The key is to modify your programs and services to the preferences of your most valuable customers. It is also imperative that you let your associates know who these customers are so that they provide them enhanced, personalized services when they visit your store. They typically leave because of bad customer moments (return hassles, rude associates, etc.) but few retailers focus on the why to lure them back into the fold. Winners focus on the why! According to our “BRP 2018 Special Report: Personalization is Key to Customer Loyalty,” while many retailers can identify their most valuable customers, only 53% have a process in place to communicate this information to an associate, and of that 89% feel that the process needs improvement. What is even more telling is that 47% of retailers do not currently have any process in place to communicate most valuable customer status to their associates before the point of checkout.… Read more »

Not all customers are created equal and “best customer” does not mean the same thing to all retailers. Are best customers the ones who purchase the most per year? Or the most per shopping trip? Or the ones who purchase the highest number of items? Or the ones who return the last number of items? Or the ones who purchase at full price? Or the ones who influence the most other customers to purchase a particular item?

Define what “best” means for your company. Monitor what the best customers as well as what other customers buy. Listen to what all customers are saying, find the patterns, and associate the patterns with different groups of customers. This all boils down to knowing your customers and listening to them. Listening needs to occur all the time because customers change their preferences, interests, and tastes.

Josh’s piece is a wonderful, clear description of an approach to identifying and understanding best and potentially best customers in a retail customer base. He is also correct that a retailer must evaluate and prioritize initiatives by how they impact those two customer segments in particular.

Modeling customers on potential value can provide lists of qualifying customers; however, you must break down those groups through thoughtful analysis to better understand who they are and how they interact with your retail or ecommerce environment. What products do they prefer? Which of those products tend to skew to those valuable customers? Analysis such as this will provide the insight to ensure that you build your marketing, as well as product assortment, merchandising and promotions, to benefit those customers in particular.

Yet another topic that has plagued the industry since I started in it in 1976. In the supermarket biz, we’ve had low-tech “Express Lanes” forever, yet those customers are small average transactions and often low-margin, “cherry pickers.” I remember when my store implemented a large order, premium customer lane with three associates staffed on each terminal to move the large orders faster.

Fast forward to 2018 … we now have technologies that can capture the meaningful insights from all the data, and most often, “dark” data that systems don’t even “see,” to identify those most profitable customers. I am seeing only a few examples of retailers truly leveraging these capabilities, both in-store and online. I believe the opportunity is virtually limitless. Retailers must take a new look at the tools available today to start taking better care of their best shoppers.