Mark Hunter

Point of Purchase - - CONTENTS -

In this col­umn, Mark Hunter or “The Sales Hunter” shares his in­sight on the dif­fer­ent kinds of cus­tomers. Read on…

In the re­tail in­dus­try, it seems as though we are con­stantly faced with the is­sue of try­ing to find new cus­tomers. At one time or an­other, we have all be­come ob­sessed with mak­ing sure our ad­ver­tis­ing, dis­plays, and pric­ing all “scream out” to at­tract them. This fo­cus on pur­su­ing new cus­tomers is cer­tainly pru­dent and nec­es­sary, but, at the same time, it can wind up hurt­ing us. There­fore, our fo­cus re­ally should be on the 20% of our clients who cur­rently are our best cus­tomers.

Go­ing af­ter new cus­tomers rather than putting more fo­cus on our best ones has be­come a real is­sue for a num­ber of dif­fer­ent groups. For ex­am­ple, golf, a sport played by mil­lions, has ben­e­fited dra­mat­i­cally from the pop­u­lar­ity of cer­tain golfers. How­ever, the pop­u­lar­ity that has helped cre­ate the rise in the num­ber of new play­ers has not changed the golf in­dus­try over­all. Many are now say­ing that there needs to be an in­dus­try push to en­cour­age the fre­quent golfer to play even more in or­der to grow prof­itably.

Like­wise, let’s look at the jew­elry in­dus­try as a re­tail ex­am­ple. In the jew­elry in­dus­try, this idea of fo­cus­ing on the best cur­rent cus­tomers should be seen as an on-go­ing op­por­tu­nity. To bet­ter un­der­stand the ra­tio­nale be­hind this the­ory and to face the chal­lenge, we need to break down shop­pers into five main types:

Loyal Cus­tomers: They rep­re­sent no more than 20% of the cus­tomer base but make up more than 50% of the sales.

Dis­count Cus­tomers: They shop the store fre­quently but make their de­ci­sions based on the size of the mark­downs.

Im­pulse Cus­tomers: They do not have buy­ing jew­elry at the top of their “To Do” list but come into the store on a whim. They will pur­chase what seems good at the time.

Need-Based Cus­tomers: They have a spe­cific in­ten­tion to buy a par­tic­u­lar type of jew­elry.

Loyal Cus­tomers: Nat­u­rally, we need to be com­mu­ni­cat­ing with these cus­tomers on a reg­u­lar ba­sis by tele­phone, mail, email, etc. These peo­ple are the ones who can and should influence our buy­ing and mer­chan­dis­ing de­ci­sions. Noth­ing will make a Loyal cus­tomer feel bet­ter than so­lic­it­ing their in­put and show­ing them how much you value it. In my mind, you can never do enough for them. Many times, the more you do for them, the more they will rec­om­mend you to oth­ers.

Wan­der­ing Cus­tomers: They have no spe­cific need or de­sire in mind when they come into the store. Rather, they want a sense of ex­pe­ri­ence and/or community.

If we are se­ri­ous about grow­ing busi­ness, we need to fo­cus our ef­fort on the Loyal and Need-Based cus­tomer groups and mer­chan­dise the store to lever­age the Im­pulse shop­pers. The other types of cus­tomers rep­re­sent a seg­ment of the busi­ness, but they can also cause us to mis­di­rect re­sources if we put too much em­pha­sis on them.

Let me fur­ther ex­plain the five types of cus­tomers and elab­o­rate on what to do with them.

Dis­count Cus­tomers: This cat­e­gory helps en­sure your in­ven­tory is turn­ing over and, as a re­sult, these peo­ple are a key con­trib­u­tor to your cash flow. This same group, how­ever, can of­ten wind up cost­ing you money be­cause they are more in­clined to re­turn prod­uct. In ad­di­tion, Dis­count shop­pers can many times be very vo­cal about pric­ing, se­lec­tion, etc. while in the store. If over­heard by other cus­tomers, it can re­sult in lost sales. One way to con­trol this is by en­sur­ing your mark­down area is lo­cated in a sec­tion of the store where con­ver­sa­tions are less likely to be eaves­dropped upon.

Im­pulse Cus­tomers: Clearly, this is the seg­ment of clien­tele that we all like to serve. There is noth­ing more ex­cit­ing than as­sist­ing an Im­pulse shop­per and hav­ing them re­spond favourably to our rec­om­men­da­tions. We want to tar­get dis­plays to­ward this group be­cause they will pro­vide a sig­nif­i­cant amount of cus­tomer in­sight and knowl­edge.

If we are se­ri­ous about grow­ing busi­ness, we need to fo­cus our ef­fort on the Loyal and Need­Based cus­tomer groups and mer­chan­dise the store to lever­age the Im­pulse shop­pers. The other types of cus­tomers rep­re­sent a seg­ment of the busi­ness, but they can also cause us to mis­di­rect re­sources if we put too much em­pha­sis on them.

Need-Based Cus­tomers: Peo­ple in this cat­e­gory are driven by a spe­cific need. When they en­ter the store, they will look to see if they can have that need filled quickly. If not, they will leave right away. They buy for a va­ri­ety of rea­sons such as a spe­cific oc­ca­sion or an ab­so­lute price point. As dif­fi­cult as it can be to sat­isfy these peo­ple, they can also be­come Loyal cus­tomers if they are well taken care of. Sales­peo­ple may not find them to be a lot of fun to serve, but, in the end, they can of­ten rep­re­sent your great­est source of long-term growth.

It is im­por­tant to re­mem­ber that Need­Based cus­tomers can eas­ily be lost to In­ter­net sales. To over­come this threat, pos­i­tive per­sonal in­ter­ac­tion is re­quired, usu­ally from one of your top sales­peo­ple. If they are treated to a level of ser­vice not avail­able from the web, there is a very strong chance of mak­ing them Loyal cus­tomers. For this rea­son, Need-Based cus­tomers of­fer the great­est long-term po­ten­tial, sur­pass­ing even the Im­pulse seg­ment.

Wan­der­ing Cus­tomers: For many stores, this is the largest seg­ment in terms of traf­fic, while, at the same time, they make up the small­est per­cent­age of sales. There is not a whole lot you can do about this group be­cause the num­ber of Wan­der­ers you have is driven more by your store lo­ca­tion than any­thing else. Keep in mind, how­ever, that al­though they may not rep­re­sent a large per­cent­age of your im­me­di­ate sales, they are a real voice for you in the community. Many Wan­der­ers shop merely for the in­ter­ac­tion and ex­pe­ri­ence it pro­vides them. Shop­ping is no dif­fer­ent to them than it is for an­other per­son to go to the gym on a reg­u­lar ba­sis. Since they are merely look­ing for in­ter­ac­tion, they are also very likely to com­mu­ni­cate to oth­ers the ex­pe­ri­ence they had in the store. There­fore, al­though Wan­der­ing cus­tomers can­not be ig­nored, the time spent with them needs to be min­i­mized.

Re­tail is an art, backed up by sci­ence. The sci­ence is the in­for­ma­tion we have from fi­nan­cials to re­search data (the “back­room stuff”). The art is in how we op­er­ate on the floor: our mer­chan­dis­ing, our peo­ple, and, ul­ti­mately, our cus­tomers.

For all of us, the com­pet­i­tive pres­sure has never been greater and it is only go­ing to be­come more dif­fi­cult. To be suc­cess­ful, it will re­quire pa­tience and un­der­stand­ing in know­ing your cus­tomers and the be­hav­ior pat­terns that drive their de­ci­sion-mak­ing process. Us­ing this un­der­stand­ing to help turn Dis­count, Im­pulse, Need-Based, and even Wan­der­ing cus­tomers into Loyal ones will help grow your busi­ness. At the same time, en­sur­ing that your Loyal cus­tomers have a pos­i­tive ex­pe­ri­ence each time they en­ter the store will only serve to in­crease your bot­tom-line prof­its (Mark Hunter, The Sales Hunter, is au­thor of “High-Profit Sell­ing: Win the Sale With­out Com­pro­mis­ing on Price.” He is a con­sul­ta­tive sell­ing ex­pert com­mit­ted to help­ing in­di­vid­u­als and com­pa­nies iden­tify bet­ter prospects and close more prof­itable sales. To get a free weekly sales tip, visit www.TheSalesHunter.com).

Mark Hunter The Sales Hunter

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