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Make new friends, but keep the old: 3 opportunities for uncovering revenue from your existing customers
How do you build on the value of your existing customers? Columnist Jordan Elkind says that by segmenting your customers and using the right tools, you can gain valuable insights.
The prevailing challenge that anyone, not just marketers, will always run up against is the issue of having to prioritize a seemingly infinite number of plans against a very finite arsenal of resources — be it time, money, manpower or simply brainpower.
And retailers committed to evolving with the ever-changing landscape of marketing demands have to regularly (and quickly) find answers to questions that emerge during rapid test cycles around what’s driving revenue, which tools are working best to hit near-term goals and how to cultivate customer loyalty to nurture relationships that will continue to bear fruit for the foreseeable future.
With the right tools and focus, the proverbial pot of gold can be found within your most accessible segments.
Incremental revenue is key
One easy way to drive incremental revenue is through segmented email campaigns. It’s a widely understood principle that 80 percent of your revenue will come from 20 percent of your customer base and that repeat shoppers are the strongest drivers of sustainable business growth.
To realize the potential of your most valuable group of customers, take care to test promotions for groups of customers you’ve determined to be price-sensitive and respond better to discounts (as opposed to those who are trained to expect discounts, which is another matter altogether).
For example, it doesn’t make sense to apply a 15-percent discount on a group of customers who would have paid full price anyway and risk sacrificing margins on a costly campaign. Establish a baseline of the revenue that would have been generated had you not implemented anything differently, and isolate testing variables to see which subset of customers generate the most gains.
Disengaged doesn’t mean gone for good
Just because customers aren’t engaged (and definitions always vary), it doesn’t mean they will be forever dormant — sometimes they need the right engagement method at the right time.
Dig deeper into the makeup of customers who have purchased in the past but not recently, and target these consumers by being upfront with your commitment to regaining their business. Test in small batches, and see which re-engagement campaigns resonate with groups that are predicted to bring in revenue but have not logged much activity.
Although they may not have opened or clicked an email in months, or even years, identify other channels through which you can reach these customers — and again, focus on testing for incremental revenue, not one-time wins with the same tried-and-true methods.
The “almost” VIP customer
It’s important to show appreciation for your highest-value customers by targeting them for exclusive promotions, hyper-localized events, white-glove service and other loyalty-driven programs. The “almost” VIP customers sit on the edge of your top-tier customer base.
If one were to organize the different lifetime values generated by each customer, the platinum tier are your VIP customers, whereas the gold, silver and even bronze groups need extra nurturing but will respond well to your incremental growth efforts.
Continue to fine-tune your efforts within this testing environment, understanding that the purpose of incremental growth is to avoid rolling out changes to groups like your platinum-tier customers since that won’t make a significant impact compared with pushing silver-tier customers to gold status.
It’s time to shift the focus from just growing your lists to increasing the value of your existing customers and building on the initial cost of acquisition investment. Rather than giving into the pressure to recoup the cost of churned customers, segment your customers by value tiers and put forth an action plan that will steadily turn bronze customers into silver, and later gold-tiered, or even platinum all-stars.
It may sound like marketing alchemy, but with the right tools and insights, you’ll realize the answer was right in front of you.
Opinions expressed in this article are those of the guest author and not necessarily Marketing Land. Staff authors are listed here.