October 2011 - Who Are Your Premium Customers

tips premium customersGo where the money is
Everybody wants to get more out of their customer database these days. Are you getting the most out of yours, or are you leaving money on the table?

When many businesses think about boosting sales, they think about sending out promotions or prospecting for new customers. But what if increasing sales were as close as mining your own customer base for untapped revenues?
 

Skimming the cream
For example, instead of sending out a promotion to your entire customer base, what if you mined out the top 25% of your customer base instead? These customers have already demonstrated an affinity with your company. They are more likely to respond to your offer and purchase more when they do. You will get more for your marketing dollar by mailing directly to this “cream of the crop” than by sending to your whole customer list.
 

To boost revenues even further, personalize the mailing. Pair offers by demographic or past purchase history. If you don’t track past purchase history, even personalizing by name can boost response rates if you do it in a creative way.
 

Which top 25% of your customer base you use depends on your marketing goals. You might want to select the 25% who purchase from you most frequently. Alternatively, you might want to choose the 25% who spend the most money with you. On the other hand, you might pick the 25% who generate the highest profit margins.
 

Even better newsNot only are you likely to generate higher revenues from one of these groups, but by focusing on the top 25%, you cut your printing and mailing costs by 75%!

Personalizing your campaign will increase your costs, but you could still end up spending less money. Instead of sending out 25,000 postcards to your entire customer base at a cost of $.40 each (a $10,000 print and mail campaign), for example, you might send out 6,500 postcards to your top 25% at $1.00 piece—a $6,500 print and mail campaign. If your budget is really tight, you might focus on the top 10% of your customer base instead.
 

Enjoy the fruits of your labor!
You’ve worked hard to develop your existing customer base. Why not make the most of it?