Recovery plan for marketers – why target loyal customers

March 26, 2020

As workers prepare to move out of quarantine and resume business as usual, it’s vital that marketers focus their efforts carefully. Here Samba CEO David Vyskočil describes a proven but often overlooked way to rescue sales and meet targets – by nurturing your best customers.

Only 10% of our own customers follow the advice I’m about to propose – usually they say they don’t have enough manpower. But if you follow these steps, you’re tapping into a proven method for increasing sales and achieving KPIs on a minimal budget. If you’re using an AI-assisted data analytics platform like Samba, your campaign can be all set up in minutes, leaving you time to craft compelling offers and write the copy. But even small businesses with a basic emarketing setup can follow this advice – all you need to get started is a customer database and an email newsletter.

  • Why are loyal customers so vital in 2020?
  • How do you segment your customer database with RFM?
  • How big should your database be for RFM?
  • How can you treat your customers special?
  • What results can you expect to see?
  • About the author – David Vyskočil

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Why are loyal customers so vital in 2020?

When you treat people a certain way repeatedly, whether in business relationships or otherwise, they come to expect that treatment. Good or bad, this expectation becomes your reputation. Referrals are the holy grail of any business that’s serious about growth. And there’s a formal measure of how likely your customer is to recommend you to their friends. This is called the NPS – the Net Promoter Score. You ask customers two questions:

•  “On a scale of 0 to 10, how likely are you to recommend us to your friends or family?”

•  “What is the main reason for your score?”

Responses are then grouped into three:

•  “Promoters” (loyal) score 9-10

•  “Passives” (satisfied, but not loyal) score 7-8

•  “Detractors” (dissatisfied) score 0-6.

Businesses with a high NPS rating for their industry tend to grow 2.5 faster than average. And that’s why we at Samba have introduced NPS questions for our own customers.

So if you want to turn loyal customers into brand advocates (ie evangelists) and so grow your business, you need a stepping stone. Targeting your best customers to make them feel special is a proven method. Since 80% of your business comes typically from 20% of your customers, this group should only need a gentle nudge to buy something. And if you make a conscious effort to delight them, they may even recommend you to their friends, too.

How do you segment your customer database with RFM?

You can choose your best customers your own way – for example based on customer lifetime value. But a system dating from catalogue shopping in the 1990s has shown reliable increases in conversions and sales. RFM combines three measures – rating customers according to how Recently they shopped with you, how Frequently and how much Money they spent. Under the classic RFM model, your database is split into 11 customer bands – with the Champions and Loyal Customers in first and second place. If you’re just getting started with segmentation, I’d suggest grouping the Champions and Loyal customers into one target group.  

How big should your database be for RFM?

You can start pretty small. But it’s a good idea to have at least 100 customers in each segment, so that when you’re looking at open rates, click rates and conversions, there’s a big enough sample to spot any trends. Also bear in mind that you’ll be devoting hours to adapting a special email template, crafting a compelling subject line, headline and content – so that time had better be worth investing, in terms of sales achieved.

The database that you use to segment your customers might list sales transactions in your physical stores. At Samba we aggregate the online data with this offline data to get the full picture. To get you started on targeted campaigns, we typically need 180 days (6 months) of the offline transaction history. Alternatively you can do RFM calculations in Excel, or through some CRMs and analytics tools.

How can you treat your customers special?

You might offer your best customers their own VIP newsletter, feeding them interesting content while they’re stuck at home working during the lockdown. Or you could keep them in the know about any new products. You could set up an automatic flow email campaign for them (something we can help with at Samba). And then you can further segment your list based on open and click rates and products purchased. This will drastically improve results.

If you’re only targeting your very best customers – your Champions - you might consider writing them handwritten thank you notes, rewarding them for their business, and offering them early exclusive access to new products (free shipping or access to a special VIP section on your eshop. Think about what they might appreciate and enjoy, and try offering that.

For band 2 Loyal customers, try upselling them your higher value products, ask them for reviews and offer them discounts via a special Loyal Customers email. As with your Champions, regularly update them on your best products and services.

What results can you expect to see?

Even doing a little of these actions will likely improve conversions when compared with a typical email newsletter. And you can repeat the process by targeting another customer segment – such as those at risk of churn.

About the author – David Vyskočil

David is CEO of marketing platform Samba.AI, which is the simplest, fastest way to go omnichannel.  He is an expert in business strategy and how companies can harness the power of advanced analytics to gain a competitive advantage and retain it over the long haul.  Samba is trusted by 1,120 companies including Office Depot, global advertising agency Dentsu, and furniture giant IKEA. The company also works with fast-growing medium-sized clients including pet store chain Superzoo, various online pharmacies and supermarkets. Samba’s platform, smooth onboarding and ongoing business consultancy enable brands to quickly get closer to their clients. This consistently leads to higher sales (often 25% more), reduces cost of acquisition (often by a third), and improves conversions (often by 30%) – all by creating a seamless customer experience across channels.

This was part 2 of the 5 part Survival Series for marketers

Coming up are:

3. What to sell to protect  margins in difficult times?

4. Launch rescue campaigns

5. Evaluate your actions and find what works best

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