All customers are created equal…but some are more equal than others

No, we haven’t been reading George Orwell, and yes, you should treat all customers like they’re worth their weight in gold. But you don’t have enough hours in the day for everybody and everything you have to do. Recognizing who and what is most important to your business can allow you to concentrate on the minority of customers who are responsible for the majority of your sales.

When we first bought our store, we did a little exercise with our client base. We looked at how much business we were getting from our top 300 customers. We were astounded to discover they were contributing more than 30 percent of our sales. We did the same check on our top 20 customers and found they alone were worth more than 5 percent of our store’s business.

Initially we found this rather scary—our success or failure was based on the whims of just a handful of people. But then we got to thinking: If these people were such loyal customers of our store and we didn’t treat them any better than the casual visitor, how much would they spend with us if we made them feel truly special?

We decided to split our customers into three categories. The first category was called simply the Customer. These were people who frequented our shop on a non-regular basis and had no personal relationship with us. They might have made a once-in-a-lifetime purchase, or perhaps we saw them only when we held our annual sale. They represented approximately 70 percent of our foot traffic, but brought us only roughly 30 percent of our sales and even less of our profit due to the high cost of acquiring them.

The second category was the Client. These people were reasonably regular shoppers. They knew us and we knew them. They constituted around 20 percent of the people who visited the store and provided around 40 percent of the store’s sales.

The third, and most important, category was the Enthusiast. These people made regular visits to our store and loved jewelry immensely. We were on a first-name basis with them, and they generated lots of revenue and profit. They accounted for less than 10 percent of our client base but contributed a larger portion of the sales and even more of the profit (they didn’t need expensive marketing to bring them back). They loved to see what new items we were offering, and when they bought jewelry, they told their friends about it. These people were a walking endorsement of what we had to offer.

So how did we handle each category?

We let the Customers take care of themselves. As for the Clients, we made sure they received preferential offers for customer evenings, contacted their partners when we knew an anniversary or birthday was coming around, didn’t charge them when their rings needed cleaning—those kinds of little benefits. But the Enthusiasts? We served them as if our lives depended on it!

We made sure the staff not only recognized them when they came in, but also knew what styles and gemstones they liked. The Enthusiasts would be invited to see products a day or two before they were debuted; we treated them to special wine and cheese evenings to launch new lines; and we offered to store their jewelry at no charge while they were away.

If you were to do all this in your store, the Enthusiasts would be encouraged to keep coming back. But it’s not only tangible things that make a difference. Enthusiasts will shop with you because they are passionate about jewelry and you make them feel special every time they come into your store.

If there is a human trait that motivates everybody, it is the desire to be recognized and valued. When asked why they shop with you, these customers might say it’s the competitive pricing or the unique product lines, but we all know the same product (often at better prices) can be found elsewhere. They love you because you love them back—often without knowing it. It is a mutual admiration society.