For most brands 10% of customers account for 40% of revenues. These are VIP or 'gold' customers.
A further 30% of customers account for another 20% of revenues. They are what we call regular customers. So, 40% of customers account for 60% of the revenue and probably 90% of the profits of a retailer.
There are 3 points to this analysis.
1. It really hurts a retailer financially if they lose any of these regular and VIP customers. Winning new customers is much harder than retaining valuable customers.
2. Our analysis shows if retailers can get these customers to shop 10% more each year it doubles their profits.
3. These customers are your gateway to new customer acquisitions
Retailers have forgotten the art of CRM. The 'R' (relationship management) being something they can do better than their online competitors, because they can make human contact count.
In our view, retailers need to throw the kitchen sink at customer engagement including but not exclusively offering, subscriptions and memberships, loyalty, credit, improved payment capabilities, personal shopping services,
VIP programmes, gold, silver and bronze services, clever use of vouchers, gift cards, curated ranges and personalised promotions.