Different Types of Customers

If we try to classify customers in various types, we can have say that there are 5 Types of Customers. We are constantly trying to find new customers for our business. 

We try to make sure that all our marketing activities like advertisements, displays, and even pricing are designed to attract new business. 

This focus on finding new customers is certainly necessary, but, at the same time, it can cost us fortune. So as a first step, our focus should really be on 20 percent of our clients who currently are most loyal to our business.

This idea of focusing on the best customers currently should be an on-going process. To better understand the rationale behind this, we need to categorize customers into five main types:

Loyal Customers: They are not more than 20 percent of our customers, but give us more than 50 percent of our sales.

Discount Customers: They shop with us quite frequently, but their decisions are based on the discounts or schemes we offer.

Impulse Customers: They do not have any particular product in their mind. They do look out for products. They purchase what appeals to their mind at some moment.

Need-Based Customers: They have a well defined need and buy a product which completely fits in to their need.

Wandering Customers: They have no specific need or desire in mind when they go out to market. Rather, they want a sense of experience and/or community.

If we are serious about growing our business, we need to focus our effort on the loyal customers and merchandise our store/outlet to attract the impulse shoppers. The other three types of customers also matter to our business, but by putting too much emphasis on them, we may make our marketing campaigns or pricing strategies mis-directional.

Let me further elaborate the five types of customers and what we should be doing with them.

Loyal Customers

Naturally, we need to be communicating with these customers on a regular basis by telephone calls, messages, email etc. These people are the ones who can and should influence our buying and merchandising decisions. Nothing will make a Loyal Customer feel better than taking their input and showing them how much you value it. In my mind, you can never do enough for them. Many times, the more you do for them, the more they will recommend you to others.

Discount Customers

This category helps ensure your leftover inventory gets sold and, as a result, are a key contributor to cash flow. This same group, however, can often effect your costing as you will be trying to attract them by offering heavy discounts, thus bringing your pricing down.

Impulse Customers

Clearly, this is the segment that we all like to serve. There is nothing more exciting than promoting a product to an Impulse shopper and seeing them respond favorably to our recommendations.

We want to target our displays towards this group because they will provide us with a significant amount of customer insight and knowledge.

Need-Based Customers

People in this category are driven by a specific need. When they enter store/outlet, they will try to see if they can have their need filled quickly. If not, they will leave. They buy for a variety of reasons such as a specific occasion, a specific need, or a price which meets their criteria for product. It can be difficult to satisfy these people. But they can also become Loyal Customers if they and their needs are well taken care of. Salespeople may not feel very good to serve, but, in the end, they can often become your greatest source of long-term growth.

It is important to note that Need-Based Customers can very easily get diverted to online sales or a different retailer. To overcome this threat, positive personal interaction is required, usually from one of your top sales professional. If they are attended to their satisfaction and better than another retailer, there is a very strong chance of these becoming your Loyal Customers. For this reason, Need-Based Customers offer the greatest long-term potential, surpassing even the Impulse segment.

Wandering Customers

For many reasons, this is the largest segment in terms of traffic, while, at the same time, they make up the smallest percentage of sales. There is nothing much you can do about this group because the number of Wanderers you have is driven more by your store location than anything else.

Keep in mind, however, that although they may not represent a large percentage of your immediate sales, they are a real voice for you in society. Many Wanderers shop merely for the sake interacting with others and pass time. Since they are fond of for interacting with others, they are also very likely to communicate to others the experience they had with you. Therefore, although Wandering Customers cannot be ignored, the time spent with them needs to be minimized.

Selling is an art, backed up by science. The science is the information we have from various research data. The art is in how we work & behave on the floor, our merchandising, our people, and, ultimately, our customers. Competition pressure is increasing and it is only going to become more difficult to sell in days to come. To be successful, we will require patience, understanding our customers and the behavior patterns that drive their decision-making process.

Using this understanding to help turn Discount, Impulse, Need-Based, and even Wandering Customers into Loyal ones will help us grow our business. At the same time, ensuring that our Loyal Customers have a positive experience each time they enter our store will only serve to increase our bottom-line profits.