Target Practice

How to identify, engage and upsell the high-value customer

Published in Convenience Store Products

By
Steve Dwyer, CSP Reporter

IRI

CHICAGO -- As patrons stroll into your convenience stores, you have a predominantly blurred, abstract and indiscriminate snapshot of who they really are.

Sure, there’s John Jones, who frequents three times a day; and Mary James, who enters during the morning and evening commute times. The fact is, about 20% of your customers are responsible for 80% of your sales. They’re platinum spenders who keep your top and bottom lines humming along. They’re the ones who compensate for customers who spend much less per trip. They’re the high-value shopper, and it’s in your best interest to fully understand their needs and habits.

But if you fail to target these shoppers, it may not bode so well for revenue growth, profitability and market share, according to research firm IRI. Such insights were shared during IRI’s recent Best Practice Webinar, “Targeting High-Value Shoppers in CPG & Retail.”

Forty-seven percent of grocery sales come from roughly one quarter or less of total grocery customers--the high-value variety--while 70% of drug chain sales come from this high-value shopper and 60% of mass merchandising sales from this small but vital representation. 

Clark Passino, principal of new media solutions for Chicago-based IRI, told webinar participants that leading industry retailers are developing a better understanding of which customers provide the best opportunity to grow, and then engaging them with more tailored communications, media placements, merchandise assortments and pricing.

“Granular data and analytics are helping brands find households. … Going after the customers that are heavy purchasers are worth it,” said Passino. “Know who shoppers are and create value from that knowledge by transforming it into relevant and consistent experiences across shopper touch points.”  

In a live poll of webinar participants during the event, two key insights were established: Forty-two percent of retailers stated that their customer base was “concentrated” among specific shopper demographics. Even more (47%) indicated customers were moderately concentrated.

How do these retailers execute engagement of these concentrated patrons? Sixty-five percent said they use a mix of internal and external resources to conduct target marketing programs to their most valued customers, compared to those who build capabilities fully internally (9%), completely outsource the effort (11%) or regard target marketing as not relevant (15%).

Other webinar takeaways included:

Channel boundaries are blurring.Fifty-seven percent of consumers go online before purchasing in a store. They often look at an average of 10 retail options before they make the brick-and-mortar excursion. 

Impact on shareholder value. Two retailers were cited in the webinar for their approach to high-value shoppers and the impact it had on shareholder value. Kroger (5.2% share growth), said Passino, “does a great job focusing on the customers that matter the most,” while Supervalu experienced “a precipitous: share decline (36.5%) for not concentrating enough on the [high-value] shopper.”

Think about adjacent categories.In going after heavy category buyers, incorporate activity occurring in adjacent categories—those close to the ones under the microscope. For example, if you are attempting to maximize the spend of high-value customers for energy drinks, make something actionable for another allied energy category—such as energy bars or energy shots. Draw them into the aligned category where they are not buying as much.

Go after hard-to-reach buyers. There are always going to be customers who never respond to emails or other outreach techniques. On the other hand, people who are at a certain “life transition point,” such as an expectant mother, might be hard to reach but are also amenable to marketer engagement once the connection is made. People in this camp want to respond, but need direction. Retailers and CPG marketers need to capitalize by performing more intensified engagement efforts to bring it about. 

Keywords: 
loyalty, trends