IMPOSSIBLY FAST. DANGEROUSLY ACCURATE.
Many retailers are ignoring the biggest indicator of their future success — and it’s costing them.
As a retailer, your customer file is the most important asset you have. Do you know if yours is healthy? Do you know how to keep it that way?
Many retailers assume if sales are rising, all is well. But if you’re not looking closely at where those sales are coming from, and which of your customers are engaging, you’re not only missing millions of dollars in potential sales, you’re risking a downturn.
If you don’t have an accurate picture of your customer file, your bottom line might not be as healthy as you think.
Our Clario coaches get a lot of questions about how to keep a customer file healthy, and why it matters. Here are some of the discussions we’re having with marketers lately:
First, what’s a customer file?
Let’s start with the basics. Simply put, your customer file is your list of customers. It’s the data that’s captured and stored in your customer data platform (your CDP), and it includes three kinds of customers:
- New customers: people who recently made their first purchase
- Active customers: people buying regularly (each brand might define “active/regularly” a bit differently)
- Lapsed customers: people who haven’t bought in a while
- Potential customers: people who’ve subscribed to your email, catalog, or SMS but haven’t yet made a purchase
What does your customer file have to do with a healthy bottom line?
The strongest retailers have a well-balanced mix of customers in their file. They have lots of active customers, a continual stream of new customers, and a steady flow of lapsed customers that are coming back to purchase again.
The key here is this: A healthy customer file doesn’t happen by chance.
Maintaining a healthy file requires a continual focus on increasing the number of active customers — by turning first-time buyers into repeat customers, keeping at-risk customers engaged, wooing lapsed customers back into active status, and acquiring new customers.
What are signs of an unhealthy customer file?
Knowing how to read the metrics of your customer file is vital. It’s critical to be able to catch indicators that your business may be struggling, such as:
- A large number of one-time buyers who’ve never purchased again.
- A low number of customers that are reactivating.
- A dwindling amount of first-time buyers.
- A stagnant amount of active customers, with very little increase year over year.
Your customer file is literally your economic engine. The more active customers you have, the more money you make.
So how do you build a healthy customer file?
Here are some effective ways to improve your customer file:
1. Focus on acquiring high-value customers.
Instead of just throwing money at any new customer you can get, think about what you can do to find more of your best customers. If you’re currently attracting discount purchasers, what can you adjust so you’re also acquiring customers who will pay full price, spend more money, and buy more often?
2. Get your one-time buyers to make a second purchase.
Make sure you have a strategic onboarding journey for new customers — and that means more than just a welcome email. What about SMS or digital ads? How about after that? How can you continue their journey until they make a second purchase?
And remember, if you’re just lumping your first-time buyers into the same marketing strategy as your active customers, you won’t be nearly as effective at enticing them to stay.
3. Get your online shoppers to visit a store (and vice versa).
Get clear about what people are experiencing in your stores that isn’t possible on your website, and make sure they know about it. Perhaps you offer personal styling or sizing services in store? Point them to a nearby location to have that experience for themselves.
Similarly make sure your in-store customers know why they should visit you online. Maybe your website has a wider range of sizes and colors? Let them know, and invite them into new ways to interact with your brand.
4. Don’t forget about your lapsed customers.
If you’re doing the above work well, you’ll be retaining most of the customers who are a good fit for your brand. But always keep looking for ways to reactivate your lapsed audience. If you launch a new product line that might be relevant to them, or you’ve opened a new location, be sure to give them the chance to come back and check you out.
The health of your file is about more than profits.
Ultimately, staying on top of your customer file is going to allow you to plan. When you think about questions like “What kind of demand are we forecasting? Where should we be focusing our marketing dollars?,” you’ll learn a lot by understanding the state of your customer file.
A healthy customer file and a healthy understanding of which levers you can move to meet your goals is the smartest way to ensure a healthy bottom line.