Customer ValueNot all customers are the same. Some were here just the other day, while others haven’t been back in almost year. Some come in frequently, some only a couple of times. Some spend a lot each visit, others not so much. Despite these differences, businesses usually treat all customers the same. That’s a mistake you don’t want to make.

For example, many local merchants have an email newsletter club. One of my favorite restaurants sends me an email every week or two with some news about what’s happening on their menu, upcoming events, or special promotions. They send the same email to all their customers at the same time. Comparing this to what you ought to be doing is like comparing a world war II bomb to a modern “smart bomb” that hones in on its target like a laser.

Instead of sending the same message to all your customers at the same time, what you really want to do is to send the right message to the right customer at the right time. One way of providing this more personalized approach is by segmenting your customers, and sending a different message to different customer segments based on their value to your business or their stage in the customer life cycle.

More than any other, sophisticated marketers use 3 key factors to segment customers:

  1. Recency. How long has it been since someone came in?
  2. Frequency. How often do they purchase?
  3. Monetary value. How much do they typically spend per visit?

For a recent customer, send a message thanking him for his business and asking for feedback. For a customer who hasn’t been back in a long time, send a special “we miss seeing you” offer.

For a low frequency, high value customer, try to convince her to come in more frequently, perhaps using a loyalty system to reward her for more frequent shopping.

For a high frequency, low value customer (for example, at a restaurant, this might be someone who comes in often for lunch but seldom for dinner), give an offer that’s good only for a large purchase amount (e.g. $10 off your next purchase of $40 or more).

Have you ever wondered why a grocery store puts a coffee shop or a bank teller into their stores? The answer is simple: it increases visit frequency. Customers stop in to get a coffee or to deposit a check, and while they’re there, they do some grocery shopping.

A loyalty program is a great way for a local merchant like a liquor store, restaurant or spa to increase visit frequency. Customers will return more frequently because they know with each visit, they earn points towards future rewards. Your loyalty system should allow you to segment your customers by recency, frequency and monetary value, and give you the tools to send the right message to the right customer at the right time. That’s a message you’ll want to send, and it’s one your customers will be excited to receive.

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