As a direct marketer, the importance of finding your best customers seems like a pretty straight forward notion. Given limited resources, targeting your best customers in the most effective manner in order to produce the most beneficial outcome is an obvious strategy.
But who are your best customers? This question may not be so obvious? It is a question that can vary based on numerous factors, such as: the type of product or service you provide, your specific marketing and company goals, and other business considerations. When pondering this question, you should take into account different aspects of customer behavior:
- Customer Lifetime Value: What is the total purchase amount your customers are likely to spend with you over the lifetime of their relationship with your brand?
- Length of Relationship: How long do your customers maintain a relationship with you?
- Purchase Behavior. Consider your customers’ average cart size, the value of items they purchase, i.e., highest value items, frequency or consistency of their purchases. You can consider the seasonality of their purchase behaviors. Seasonal shoppers may be your best customers when it comes to holiday campaigns but may be dormant during other seasons.
- Response Behavior. Consider your best customers’ responsiveness to offers and their elasticity of response, e.g., how large or small of a discount is required to induce response. Consider the overall profitability of these customers. Consider other aspects of responsiveness. For example, do they fill out surveys, sign-up for newsletters, or join your loyalty program.
- Social Behavior. Consider whether customers enthusiastically advocate your brand, either by offline word of mouth or through blogging, positive reviews or participation in forums. These customers may not be directly spending the most money with you, but by creating positive buzz about your brand and expanding your social reach, they are generating referrals and indirect revenue far beyond their personal spending.
By initially giving careful consideration to defining your best customers, you are likely to gain a clearer understanding of both your customers and brand value. This valuable insight that will enable you to engage in more impactful segmentation and data modeling strategies and, ultimately, more profitable marketing programs.