In retail, your best current customers are a never-ending opportunity. To grasp this theory and the challenge of customer loyalty, one must first grasp the following five customer types:
- Loyal: They make up less than 20% of your customer base but over 50% of your sales.
- Impulse: They don’t have to buy something on their list, but enter the store on a whim. They’ll buy whatever seems the best deal at the time.
- Discount: They frequent your store but buy only when you have sales.
- Wandering: In the store with no specific need or desire. Rather, they seek adventure or community.
- Need-based: They are driven by a need to buy a specific item.
If you want to grow your business, you must target loyal customers and merchandise your store to appeal to impulse shoppers. While the other three customer types are important to your business, focusing too much on them can lead to resource misallocation.
Here’s a breakdown of each customer type and how to deal with them:
As a result, you must keep in touch with them regularly via phone, email, and social media. These are the people who can and should influence your purchasing and merchandising decisions. Nothing makes a loyal customer happier than being asked for their opinion and valued. You will never be able to do enough for them. People will often recommend you more if you do more. Positive word-of-mouth is priceless in business.
We all enjoy serving this clientele segment. Nothing beats assisting an impulse shopper and seeing their positive response. Your displays should target this group because they will provide you with valuable information about your customers. They are also quick to buy when prompted.
This category helps to maintain cash flow by ensuring inventory turnover. However, their propensity to return products can end up costing you money. Discount shoppers, on the other hand, are difficult to retain.
This is the most popular but least profitable segment for many stores. You can’t do much about this group because their numbers are largely determined by your store’s location.
Remember that while they may not contribute significantly to immediate sales, they serve as a true community ambassador for your company. Many wanderers shop for the interaction and experience. For them, shopping is as common as eating out. They are also likely to tell others about their in-store experience because they are seeking interaction. While wandering customers should be avoided, they cannot be ignored.
This group is driven by a specific need. They will assess the store’s ability to quickly meet their need. If not, they’ll leave. They buy for various reasons such as an occasion, a need, or a budget. Even if they are difficult to please, if treated well, they can become loyal customers. While salespeople may not enjoy serving them, they often represent your best long-term prospects.
Customers with needs can be easily snatched up by Internet sales or a different retailer. To overcome this threat, positive personal interaction from a top salesperson is required. You have a good chance of converting them into loyal customers if you provide a level of service unavailable online or in other retail locations.
You can help your business grow by using this knowledge to convert discount, impulse, need-based, and wandering customers into loyal ones. A positive shopping experience for your loyal customers will also increase your bottom-line profits.