Knowing your customer – their lifestyle, habits, likes and dislikes – is the most important element of every successful retailer, says Anthony Welfare, who shares an extract from his new book, The Retail Handbook …
Your customer is the key to your future growth in sales and profits. Understanding your customer will allow your business to grow with your customer and provide them – and the potential new customers they bring with them – with complete satisfaction for their lifetime.
Knowing your customer takes time and effort, but it is worth every second of your and your team’s time. Every penny that you invest in the customer will be returned in multiples if you make your customers happy and fulfil their needs.
Remember – a happy customer will tell five people, whereas an unhappy customer will tell 11 people. This is the most varied statistic in retail, but the moral of the statistic is to make your customers happy, and they will shop with you more and bring new customers to shop with you.
Once you have a happy loyal customer, you can guarantee that the people they tell will become loyal new customers, and they in turn will release more potential customers to you. We all like to moan, but we also like to tell our closest friends and family a great story about good customer service, and this personal recommendation helps to grow a good quality and loyal customer base.
In retail there is a concept called ‘lifetime value’ of a customer – this means looking at your customer over a long period of time. Think of your customer over the next five or 10 years of visiting your shops and websites. Think about how easy it would be to sell those customers lots more products and services once they have tried you and liked your service and products.
Making a customer loyal over the long term is much more important than selling them one or two products. For example, if you run a clothes shop selling ladies’ fashion, your perfect customer would be the lady that buys a few garments every new season – and also tells her friends how good your products are.
If there are two seasons a year and she buys a top and a skirt each time at £100, in one year she spends £200 – in five years she has spent £1000 with you. When she walks in for the first time, make her the most important person in the shop – look at her as having a potential lifetime value of £1000-plus. How differently would you treat a £1000 shopper versus a £100 shopper?
How would you set up your store and train your team to look at each customer as a ‘lifetime value’, not just a quick one-day transaction?
Gaining a customer for their lifetime is an ongoing process that can be implemented in many ways – the main idea is to think about the total value the customer will bring to your business, and use some of the profits from that regular customer as an incentive or discount to earn their loyalty.
Anthony Welfare is the author of The Retail Handbook, which follows a logical 11-part journey that centres around, and begins with, the customer. Based on 20 years of experience and a number of different retail businesses, this handbook guides the reader through the journey to make their business customer-focused, and realise the potential they have to make their retail business a success.
