Which customers are your most valuable?
4th February 2015
One of the most important questions for companies looking to understand customer retention is how their clients are interacting with their business over time. This is why many enterprises choose to invest in customer relationship management software as part of their accounting systems.
To better understand this phenomenon, recent research from overseas has attempted to calculate retention patterns among customers. The study found that a company's most valuable customers are often those that can appear to be lost from an organisation.
To understand how different customers interact with brands, the research looked at buying patterns and compared these to the value each customer brought to a business. The study found that the most valuable customers go through clumps of purchases - where they will spend a lot with a business in a short time - followed by long periods of inactivity.
Importantly, these customers end up spending more than those who are making a steady number of purchases without these peaks and troughs in demand.
For businesses, this presents a unique opportunity to change the way they approach selling goods and targeting their marketing efforts to individuals who might be in between these bursts of activity. By targeting these individuals, companies may be able to trigger another burst of engagement with the company.
Small-business owners may also need to change the way they think about customers who haven't made a purchase in a while. Rather than writing these off as a lost cause, sales managers will need to think about new ways to reach these individuals effectively.
By rethinking this approach, and backing it up with effective analytics and tracking, companies can be sure they are effectively understanding the different ways that customers interact with their brand.
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