Do You Treat Your Most Profitable Customers Differently?
Imagine these 2 situations
You stop by a shoe shop on the way home from work. The shop assistant smiles, says good evening and asks you what you are looking for. You browse the shelves, try 2‑3 pairs and buy one of them. He asks you if he can help you with something else. There is nothing on your mind, you pay for your shoes, and go on your way.
You stop by a shoe shop on the way home from work. The shop assistant greets you by name, in fact he immediately starts showing you the available shoes in your size only. You try 2‑3 pairs and since you are regular, he shows you 3 additional pairs you might like from the new collection. You thank him and while paying for your new shoes he recommends using shoe protection spray for the current weather. He also mentions he can send you an email or SMS when other pairs will be discounted, if you’re interested.
There is nothing wrong with the first situation. You paid for what you expected and got exactly what you required. Everything worked fine and without any problems. Even the result of the purchase is the same, but the second experience feels somehow… better.
On top of that, you are much more likely to keep coming to that shop to fix your new “shoe situation”, aren’t you? Or, even buy the promised discounted shoes that you have already tried on.
Customers are not equal
Did you know that Harvard Business School found that increasing customer retention by as little as 5% can increase profits between 25‑95%? What the average retail companies might not realize, is how much of a missed opportunity that is.
To be in a position to focus on your most valuable customers might sound like a luxury. After all, various businesses are thankful for customers of any kind.
Here is why
The likelihood of selling to an existing customer is 60‑70 percent. For new prospects, it’s just 5‑20 percent.
Repeat customers spend 33 percent more than new customers.
Depending on your industry, the cost of acquiring a new customer is anywhere between 5 to 25 times more expensive than retaining a current customer.
But every e‑commerce company is aware that some customers are more valuable than others. There is a variety of reasons for this, from the size of their purchases to loyal brand ambassadors not just purchasing regularly, but also spreading the word.
So how do you identify your most profitable customers? Investigate:
Total amount spent over a specific period of time
It can be on a weekly, monthly or yearly basis - choose the period of time that makes sense for your business.
Profit margin for the specific customers
Some customers buy high‑margin products or pay full price without waiting for the discount. Others may create extra costs of additional services. Evaluate them against your "average" customer: Do they tend to return more products? Do they require a specific or unusual approach, or even administrative process? You may be surprised what hidden costs you may find.
Customers engaging via multiple channels
Accenture Strategy’s latest Global Consumer Pulse Research suggests that the most profitable are actually the multi‑channel "experimental" customers. They are not impressed by just pure digital interactions. In the retail industry, customers who engage with companies through a variety of channels drive three times the volume of sales and more than twice the margin of store‑only customers.
Your most profitable customers already shop with you.
They want to keep shopping with you. Your task is simple: make sure they remember you. Excite and inspire them, regularly. Create experiences they won’t forget. At the right time, at the right place via the most suitable channel.
The key to success is in the answers to these 2 questions:
How do you identify your future high valued customers?
How do you approach them efficiently and convert them into the most valuable?
So how to identify them?
The customer just made a purchase. You shouldn’t focus to increase your sales and offer discounts. Your focus is to engage them and collect more data. So what you do? Calculate the prediction for the next stage (this can be, e.g. browsing products on your web from your new collection during a specific period of time).
At Exponea, we analyze how recent a customer purchased, how much he/she spends and what is the average frequency of purchases. Then you can act according to the segmentation of customers, who:
Made the purchase in the last few days
According to their average frequency of purchases, you realize it doesn’t make sense to push all the campaigns on them. Instead of that, try to engage them via multiple channels.
Are in the stage, when the probability of purchase is higher
The more direct, forceful and overt approach is accurate.
Didn’t make a purchase when expected, not even in the months that followed
There is an increased probability of churn. A reactivation campaign with a custom message could solve this. Think about a more engaging way than just a discount - Do they react more to the "wheel of fortune" or vouchers for the next purchase?
When you identified the high value customers, you want to convert them into the most profitable.
Technology can help you improve the services you offer. You could tailor your online retail offerings to meet their specific requirement that they appreciate. Each of these customers has the answers to the question:
“Why do I like shopping here?”
Most of the answers lie in having the correct customer experience and data management platform. Mostly thanks to specific use cases tailored to online retail and fast-moving fashion businesses.
Quick checklist, how to treat your most profitable customers differently
Do you send your newsletter right at the time when the customer is used to reading them?
Increase your email open rates. Determine the ideal distribution time for each user based on their email opening habits and reach them at the optimal hour.
You can apply the same scenario for ideal click time as well.
Do your ads reach the most engaged customers more intensively than the less engaged?
Create collaborative recommendations in Google Ads according to the history of customer behaviour. No, we are not talking about a simple solution as "last seen products". But the one that brings customers' interest - if they are interested in the product description or spent half a minute on your product detail page.
Do you serve email product offerings that fit customers?
Thanks to Exponea's AI team, we have multi‑level data on the customers. We identify the gender and proper sizes according to the individual customer's product browsing. Afterwards, the follow‑up newsletter contains only the right size products available in stock. The subject can vary, e.g.: We know 100% this will fit you.
Do you engage online shoppers to increase their interactions in real‑time?
Trigger responses and get higher conversions through streamlined marketing strategy. Display a banner communicating how many visitors are interested in the same or similar products, making a “social-proof” and incentive for the undecided visitor to act quickly and purchase immediately.
Alert the customer on how many identical item purchases were made previously on the same day. It helps the shopper to know how popular an item is with info on the number of people who purchased the same item.
Are you aware of the percentage of customers who will become repeat buyers after a personalized experience? More than 40%, according to the 2017 State of Personalization Report. Do not miss out on the opportunity to adopt these customers as highly valuable assets in your business.
Challenge your current personalization tool by expecting more. None of your online retail competition will hesitate unleashing the power of the experience cloud onto their customers.
Do you experiment using A/B testing across all channels?
Our next article will guide you on how to solve this personalized challenge for online retail businesses.
It contains a few enhancements which are implemented rapidly and have brought many companies additional revenue per visit and conversion of 5‑30%.
Yes, notify me
We will notify you as soon as the article rolls out! In the meantime, why don’t you check out our success stories?
5x increase in online sales
Thanks to automated A/B testing and personalized messages