Evaluating High Value Customers

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The true beauty of personalization and the next generation of marketing automation is the ability to understand and build a relationship with each customer without the significant expenditure of actually “knowing” each customer on a personal level. It’s the ability to provide the mom and pop feel mostly lost in today’s digital fast lanes and large brick and mortar chains. It’s the lost ability to know exactly how to treat Mr. James, who visits your store on Thursdays, always smiles and speaks about his children at the cash register, who is loyal to a fault and goes to your store not only because he needs that product but also because he genuinely likes you and your store. Customers want that personal touch from their everyday corner store with the prices, selection, and convenience of a larger retailer, and there is nobody more important to marketers than the venerated high value customer.

In the modern digital world, how do you define a high value customer?

My favorite definition comes from an old Ad Age article that pretty much nails the definition on its head. Kevin Clancy and Peter Krieg from Copernicus Consulting use these defining characteristics to classify High-Value Customers:

Less Price Sensitivity – That’s right, they don’t budge from your brand if your competitors offer a discount.

Struggle with Big Problems – There’s a reason they keep coming back to you. They have a constant need to help them solve a problem. Find out that problem and how to solve it and you have their unwavering support.

Interested in New Services – These customers are always looking out for the next new thing you can offer and will often be the first buyer wave.

Willing Advocate – Customers rave to their friends and others about you. What else can you ask for?

Socially Connected – High-Value Customers often have large networks both off and on digital sources.

The definitions are pretty easy to understand, but the real problem is how do you use your current data sources to find out whether or not they are price sensitive or socially connected?

Before we take a dive into the ways data can help you classify High-Value Customers, I want to take the time to disagree with the above definitions (Sorry Kevin/Peter). There is a big difference between a High-Value Customer and a High-Potential Customer, the difference being that a HVC is already a proven advocate that is constantly conversion, while an HPC is a customer who interacts highly with your service but has huge room to increase basket size, upsell and cross-sell to, and generally needs more marketing bait to bite.

For instance, a customer socially connected and interested in new services can be determined by click path history, site visits, and reviews, but if they are not bringing in revenue, they are a high potential customer, not a HVC. High Potential Customers typically have high rest of market spend but low current sales. Targeting HPCs is a whole different discussion, and we’ll break into that topic at a later date.

So how do you use your data to define and evaluate High-Value Customers? HVCs can be found by evaluating loyalty program membership, recent activity, overall spend, and customer habit change.

4 Easy Ways to Evaluate High Value Customers

  1. Loyalty programs are a no-brainer, easy way to find HVCs. By integrating loyalty data into your delivery providers and personalization tools, you’ll be able to extract valuable loyalty activity and create useful, personalized touches on your other communication channels. Integration is easier said than done in some cases however, especially to make the loyalty information actionable.
  2. Recent activity can be used to temporarily classify a customer as high value until further qualified. Frequent site visits, clicks through email and website, followed by a recent big purchase basket puts a user in this bucket. Be wary of this approach, as some targets that engage in a flurry of recent activity may still be in high potential mode, so you may have to segment these customers in a different category.
  3. Overall spend is a simple enough way to classify HVCs but there are details that help add and remove people from this category. Timing is critical – if a customer has high overall spend but for the last several months they have not been interacting or buying, you may want to move them into a nurture bucket for more general marketing message or send them a re-engagement email with a big discount (you don’t want to typically discount high for HVCs).
  4. Customer habit change points to increased interest in categories outside of their normal purchase pattern. A customer buys toys from you consistently with low basket size and overall spend, not a typical High-Value Customer, but starts looking at or buying from another category such as office supplies. This change in habit can mean that they have extended their product trust into brand trust for you, prompting their movement into the HVC bucket.

There are multitudes of ways you can use data to help determine who is a HVC in your personalization tools, and it is important to note the goals of your marketing campaigns and also how you want to approach different segments of customers. As always, it’s vital to first research and validate your approaches to HVCs before moving forward. Since we touched on several ways to classify High-Value Customers, a sensible subject to move to next would be how to keep HVCs engaged. Also, I’ve written a small piece on prepping your omnichannel strategies for this holidayyou might find interesting.

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About Author

I juggle marketing, business development, and multiple other hats at marketing personalization and automation company nectarOM. Recent innovations in marketing tech has me hooked on analytics and also the creative side of data usage. In my free time, I like to immerse myself in the Dallas start-up scene and frequently visit the numerous coworking spaces and incubators around time. I don't like to call myself a total geek, but I'm kind of into science fiction (Star Wars extended universe anyone?) and continuously try to find zen in balancing piano, writing, gaming, and lifting.

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