Why You Need to Identify and Cater to Your Best Customers
Delighting the customer or outside-in innovation is an increasingly popular business model that aims to please your top customers and encourage return patronage. It’s based on the Pareto Principle, which assumes that 80% of profit comes from 20% of customers (give or take). To put it simply, outside-in innovation is all about finding your best customers, ensuring they stay happy, and creating marketing strategies aimed at acquiring more customers just like them.
Is the Customer Always Right?
Customer service professionals have long since operated under the notion that the customer is always right, but is catering to your customers actually worth it financially? When it comes to your top customers, absolutely. Delighting the customer is more profitable and results in higher margins than traditional top-down, inside-out thinking. Keep in mind we’re not talking about sucking up to the tough customers who keep your customer service department in business. We’re talking about your best customers who are willing to pay full price with no hassles. These are the customers that will queue up in anticipation of your next product release. They’re the diehard Apple fanatics who will show up in droves for the new iPhone regardless of its price. No discounts or promotions needed — they simply want your product.
Without performing the right research you may not find or recognize them as they are likely your low-profile, low-maintenance customers who purchase frequently, at full price, without any complaints. Unknowingly, these loyal, happy customers make up a substantial percentage of your profit and boost your bottom line. They’re your dream team of customers and your brand needs them.
Let’s assume that your new marketing campaign resulted in gaining 20 new customers, but you also lost 20 existing customers who felt left out of the new campaign. Although you may have ended up with the same number of customers, your margins are now significantly lower since it costs much more to attract new customers than it does to keep existing ones. Failing to identify and cater to these top customers equals lost revenue and increased spending — so how do you avoid this?
How To Identify Your Best Customers
In most instances identifying your best customers comes down to recency, frequency, and monetary value:
How recently have they made a purchase?
How frequently do they make a purchase?
What is the monetary value of their purchases?
Customers who have visited and purchased recently, are more likely to purchase again than customers who have not. The same goes for frequency; customers who buy more frequently are more likely to purchase again than customers who buy infrequently. And of course, you cannot neglect to identify your top overall spenders.Sounds simple enough right? But in reality, it isn’t always easy to hone in on your top customers. Although it may come down to numbers, in theory, it’s also about much more than that.
Targeting future customers based on the best ones you currently have, means you need to know more about them such as their demographic, location, and buying behaviors. With this information at hand, you can craft engaging marketing strategies that cater to and target these dream customers.
Gatsby makes this simple by collecting invaluable social data that allows you to delve deeper into who your customers are and how they behave. We identify influencers from within your existing customer base that have the potential to become authentic brand advocates. Once activated, these customers organically promote your brand to thousands of their followers who have similar interests and are likely to become customers too. These are the customers that will help you grow your customer dream team. No muss, no fuss, just pure organic growth.