BrainTrust Query: Identifying and Leveraging VIPs
Through a special arrangement, presented here for discussion is a summary of a current article from Retail Contrarian, the blog of the Dynamic Experiences Group.
Of course all customers are important to the success of a retail business, but the top customers are even more important. Let’s call them VIPs. There are three types of retail VIP customers.
One set of VIPs are customers who buy the most over a given time period. I like to measure spending over an 18-24 month period. This makes it easier to spot customers who are falling down or coming up the list. The number of VIP buyers a retailer tracks depends on how big the business is. Most retailers track the top 50 to 100 per store.
I like to break the VIP buyers into two groups. The top 10-20 customers are my Top VIPs; the rest of the top 50-100 customers are my Current VIPs.
Another group of VIPs aren’t actually big spenders but are still vital to a store’s success. These are either loyal advocates who bring in a large number of new customers, or someone in the community we benefit from being associated with. Examples include: someone famous, a political mover and shaker, and well-known businesspeople. Call this group the Community VIPs.
Most retailers have identified their Current VIPs but haven’t necessarily segmented the Top VIPs or officially identified their Community VIPs. It’s important to not simply identify the three different groups of VIPs, but to also to leverage each group.
Does the retailer keep track of when a Current VIP last visited the store? Do they call or send a note or gift to Top VIPs to invite them in to see the newest products? Is the store making sure their Community VIPs are getting special invitations for key events?
Loyalty cuts both ways. The customer who spends a $2,000 a year deserves more attention and an even better experience than the one who spends $50 a year. As always, the goal is to WOW every customer, but elevate the WOW and personal service to an even higher level for the VIPs. This also enables a store to create incremental visits and sales from their VIPs.
Discussion Questions: To what degree should a store’s best customers and word-of-mouth generators be catered to? How should retailers be assessing and targeting their VIPs? Which VIP group identified in the article — Top VIPs, Current VIPs or Community VIPs — should be receiving significantly more attention?