Building a base of loyal customers is one of the most profitable things a retailer can do. Our research shows that around 30% of customers show significant loyalty to their favourite shops with most purchases being made at a stable, slow rate. Although, a small number of customers stand out for their exceptional value.
30% of customers show loyalty to their favourite shops, purchasing at a stable, slow rate
Although they only make up 5% of customers, these star shoppers regularly return to their preferred brands to make several high-value purchases, and account for a high percentage of total sales. Each individual brings in thousands to tens of thousands of pounds in revenue and contribute to a large amount of retailers profits.
5% of customers contribute to a high percentage of sales and profits
Keeping these loyal customers loyal is therefore of great importance to retailers. While systems exist to capture information on this group, currently the frequency of customer returns is something that is not factored in. The Clear Returns model identifies the best customers by factoring in their lifetime profitability and returns behaviour to give a much clearer picture of customers.
Lifetime profitability and returns behaviour can give a much clearer picture of customers
It can be easy to mistake ‘over-shoppers’ for extremely loyal customers if their returns are not taken into account and therefore marketers targeting efforts may be mismatched. In fact you may be offering incentives to encourage over-shoppers costly behaviour when you think you are rewarding your loyal customers!