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Don't Lose Sight of Your High-Value Customers

  |  May 29, 2013   |  Comments

While high-value segments might not be huge from a session or consumer perspective, they're adding to the bottom line.

Earlier this month, I was at a conference and overheard an electronics retailer talking about how the company had run a campaign and sold 20,000 iPhone cases for $19.99 each. That, the retailer said, was a success to their monthly bottom line, but the company noted that the customer had a low lifetime value, as they were usually one-and-done customers (on a low margin item no less).

I thought to myself: well, that's great. But what if you'd sold 100 large-screen LCD TVs?

If this electronics retailer had put as much effort into creating a targeted campaign around selling just a few more televisions, there's a good chance the return would have been just as good, if not better, than focusing on moving a ton of lower-priced items.

But this retailer isn't alone, or even an anomaly. The reality is that most companies focus on high-volume segments, and in doing so they lose sight of high-value segments. And that's a huge mistake, because while high-value segments might not be huge from a session or consumer perspective, they're adding to the bottom line. And if you can get just a few more of these types of customers, they can have a huge impact.

Let's look at another example. In its latest Ecommerce Quarterly report, Monetate found that conversion rates and average order value (AOV) for U.S. military personnel and their families stationed on army bases around the world are much higher than for U.S. consumers overall.

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Those serving in the military and stationed on bases have a high propensity to buy because there are no other shopping opportunities nearby. As a result, they shop with a completely different mentality than the average U.S. consumer. Typically, they are buying many items in one session, and they prefer to buy all of those products from one website. For instance, a private on break may come to your website and spend $500 in one visit on shirts, shoes, and pants.

But that's not the only reason this is a customer segment that's highly valuable. There's also a social component to these visitors, and I'm not talking about Facebook or Twitter.

Think of what happens when that private receives his $500 package in the mail. He's still on the base, and when he opens up all of his new clothes, that's exposure to many other likeminded shoppers who see that he received a package and hear about his experience shopping with your brand. It's almost like he's a pop-up shop within a highly valuable consumer space, and you can turn him into a brand advocate who can drive even more high-value customers in your direction.

So how can you make sure that private becomes a brand advocate? Since you know this segment has a higher propensity to buy, and since you know their AOV tends to be higher, look at them differently.

Try welcoming Army base visitors to your website with targeted, specific messaging, offering free shipping or a discount. You can likely give them a bigger incentive to buy because if their AOV is two or three times higher than the average customer, you have the margin to give them a bigger reward.

While this is just one example, it's also a microcosm that proves how important it is to focus on these high-value customers. Once you identify these segments, you know this is where to put more market value.

If we go back to the electronics retailer, he thought he was moving the needle by selling a ton of iPhone cases. But if he'd focused on selling the giant TVs, a little bit of effort could have gone a long way.

Finding your high-value segments and altering your messages and offers to appeal to those visitors can result in a big win for your customers. And beyond that, it can increase the number of high-value visitors to your website, which can have a big impact on your bottom line.

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ABOUT THE AUTHOR

Nathan Richter

Nathan Richter advises top enterprise clients including Best Buy, QVC, Urban Outfitters, Sports Authority, and PETCO on website optimization. A veteran of digital marketing and online retailing, Richter has extensive hands-on experience helping enterprise clients implement successful multichannel marketing campaigns. Richter has directed online marketing and site optimization programs for David’s Bridal, QVC, The Franklin Mint, and dELiA's.

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