Retailers should repeat the phrase, ‘treat our best customers well,’ three times in front of the mirror every morning.
Retailers should repeat the phrase, ‘treat our best customers well,’ three times in front of the mirror every morning. If they don’t, they risk being sucked into the vortex of ‘price trumps all,’ with its increased commoditization and plain vanilla stores that fail to differentiate.
Not that it is wrong to promote heavily in the hope of satisfying a store’s most frequent, loyal, high-spending shoppers. Who doesn’t love a deal? It just may not be necessary all the time: Markdown dollars represent just 11% of the spend of the Top 10% of grocery shoppers; this compares with nearly 36% of the Bottom 10% decile.
This is one insight of many in a study of more than 2 million grocery shoppers that details the disproportionate benefit to stores of their Top Shoppers. The study by Concept Shopping, Inc., conducted over a 12-week period ended June 30, 2009, doesn’t delve into the other food-store traits that win these shoppers over – perhaps that should be the next version. It does, however, quantify the shopping behaviors of these coveted consumers.
A glimpse at their data: The Top 10% visit the store more than twice a week (2.41), spend $39.96 per visit ($96.30 per week), and represent nearly 40% of the store’s total sales (actually 38.9%).
Compare that with the Bottom 10%, who visit 0.18 times per week, spend $9.15 per visit ($1.65 per week), and represent 0.7% of the store’s total sales. The study stratifies shoppers into ten tiers.
A measure of Top Shopper loyalty: 95% continue to shop at the store throughout the year vs. only 34% of the store’s worst shoppers. “Shopper churn is a fact of life for every marketer,” notes William Young, vice president of sales and marketing for CSI. “Shopper loyalty continually ebbs and flows through retail banners and store types, but sorting shoppers by their value helps identify which ones should be courted and which ones can be ignored.”