Posted on: 09 June 2015

Using CRM to build loyalty in all of your customers is simply unachievable

When choosing which customers to focus on, Shweta recommends starting with the 80/20 rule. “Of your customer base, it is approximately 20% of them who are contributing 80% of your turnover,” Shweta begins. “Figure out who that 20% is and focus on them because they will make the biggest impact.”

Next she suggests plotting those customers in The Customer Segmentation Matrix to help you get the maximum effect for your effort.  The figure below shows the matrix, where:

  • the high spending, high margin customers sit in box ‘A’
  • the low spending but high margin customers sit in box ‘B’
  • the high spending, low margin customers sit in box ‘C’
  • the low spending and low margin customers sit in box ‘D’

Once you know where the top 20% of your customers sit, you can tailor your relationship-building approach according to the segment.

“ ‘A’ customers will need some sort of solid customer relationship management,” says Shweta. “These are the ones you really want to stick around. Maybe you need to employ some loyalty strategies, maybe you just need to interact with them on a more regular basis.”

Example tactics include personal invitations to events, opportunities to pre-order new products and exclusive membership to a customer loyalty scheme.

“ ‘B’ customers are where you want to employ strategies that increase their spending. This may involve cross-selling or up-selling strategies,” says Shweta. These include buy one get one half price offers, or product bundle offers, using email marketing and social media.

“ ‘C’ customers are already doing good business with you,” she says.They are spending the money on you, but you are not getting the returns you should be. Here you need to think less about relationship strategies and more about your own operational efficiency strategies to increase the margins in your business. In this case, you need to ensure you are consistently providing value so content marketing becomes more important.”

“Of course ‘D’ customers are the ones who will need the most work – you need to increase their spending and increase their margins,” she concludes. More generic marketing strategies such as pay per click, advertising in your local press and having a voice in relevant social media networks will work towards this.

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