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The Five Types of Shoppers |
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.
Recently, 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 Tiger Woods and others. 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, 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 our customer base but make up more than 50% of
our sales.
- Discount
Customers: They shop our store frequently
but make their decisions based on the size of our
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.
- 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.
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If we are serious about growing our business, we need to
focus our effort on the Loyal and Need-Based customer
groups and merchandise our store to leverage the Impulse shoppers. The other types of customers represent
a segment of our business, but they can also cause us to
misdirect our resources if we put too much emphasis on
them.
Let me further explain the five types of customers and
elaborate on what we should be doing with them.
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.
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 our
clientele that we all like to serve. There is nothing
more exciting than assisting an Impulse shopper and
having them respond favorably to our recommendations. We
want to target our displays towards this group because
they will provide us with a significant amount of
customer insight and knowledge.
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
Need-Based 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
our 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 our
business. At the same time, ensuring that our Loyal
customers have a positive experience each time they
enter our store will only serve to increase our
bottom-line profits.
Mark Hunter, “The
Sales Hunter”, is a motivational sales speaker and
industry expert who addresses thousands each year on how
to increase their sales profitability.
For more information on his sales training or to
receive a free weekly sales tip via email, contact “The
Sales Hunter” at
www.TheSalesHunter.com.
Reprinting of this
article is welcomed as long as the following is included:
Mark Hunter, "The Sales Hunter",
www.TheSalesHunter.com,
© 2007
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Other articles regarding Sales Development Training by "The Sales Hunter" that
you might find interesting include:
Good Salespeople Continue to be in Demand
The First 30 Minutes of the Day
Understanding Your Business:
10 Questions to Ask Yourself
29 Sales Territory Questions
Questions to Ask a Sales Force
Growing the Business
What Does Success Look Like?
What to Look For in a Professional Selling Skills Program
What is Sales Development?
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