Seducing the “Promiscuous Shopper”

From my experience, every industry has customers that are not loyal to ANY brand.  I call these folks “promiscuous shoppers.”  They have strange seductive powers.   They look so appealing–and what’s more, when you show them a lot of attention, they are attracted to you, showering your brand with their business.

In many cases, these customers haven’t found the right fit.  Occasionally, it’s an awareness issue.  That is, “Mr. Right Brand” is out there somewhere, but they just haven’t discovered him yet.  In other instances, the customer is well aware of her choices,  but no one brand has yet convinced her that they deliver a value proposition worthy of her loyalty.  But there is also the reality that some customers just don’t want to settle down.  They are incapable of being loyal and they go from brand to brand, chasing whoever gives them the best deal.  This latter situation is the most vexing for many brands and the place where a lot of time and money is wasted.

Think of your own behavior.  If you are anything like me, you have brands that get a significant share of your wallet because your needs and wants are met in a highly relevant, unique–and sometimes remarkable–way.  Then there are other brands that get your business because they meet your wants and needs in an acceptable manner AND because they buy your business (free shipping! double rewards miles!).

So given that every industry has some percentage of promiscuous shoppers what’s the marketer to do?

First and foremost you need to understand what percentage of your revenue and profits (don’t forget the profit part!) comes from these retail harlots.  Ideally you would have detailed consumer research to help you nail this, but you can get a good estimate by noticing what percentage of your revenue comes only when you run a really hot deal.   If you are finding that unless you run an aggressive promotion you have a hard time driving the top line, and that the same customers buy on deal over and over again (I’m looking at you Macy’s!), it’s time to get worried–and to get to work on your customer strategy.

Second, among the customers whose behavior is highly activated by these promotions, what percentage have the potential to be loyal, profitable customers?  Next, what levers (beyond price discounting) can be pulled to engage them further and grow them into loyal, profitable customers?  This level of customer insight likely requires some primary consumer research, but the ROI can be enormous.

We all recognize that aggressive promotions are often necessary to acquire new customers, drive deeper levels of customer engagement or simply to turn inventory into cash.  But if this is done without a clear, well thought out customer growth strategy, the potential to get stuck with a significant percentage of your customer base that is fundamentally profit proof is high.

The bottom line is this: not all “promiscuous shoppers” are worth seducing.   Your job is to stop spending time and money on those without the potential to be loyal, profitable customers and start spending the time on those that do.  Easier said than done, but well worth the effort.

Market Share Growth: Get in the Car and Drive

Most retail, consumer and luxury brands are starting to report positive sales and profit margin growth.  This is good news, but let’s face it,  the sales growth is against terrible numbers last year and the margin growth is through tight inventories and aggressive cost reductions.  And with easy comparisons until October, the news is likely to look pretty good for the next two quarters.

Unless the economic outlook improves dramatically, for most companies it will become clear that they are not getting back to pre-recession levels of business any time soon.  Going forward, growth is likely to remain muted and margin rate improvements are going to be tougher to come by.  So the real question is what are companies doing to drive market share growth?  For many companies that reduces down to this: what are they doing to drive share of customer growth?

When it comes to taking action on share of customer growth there are only two types of companies.  The first is the company that may have a corporate strategy (often exemplified by big binders of strategic and long-range financial plans sitting on shelves), but does not have a customer strategy. That is, they don’t have deep consumer insight, they haven’t developed actionable customer segmentation, they don’t have segment specific marketing plans, they don’t have truly useful customer value metrics and they aren’t part of the conversation age.  For these types of companies they need to commit to developing a customer strategy and they need to move with great focus and commitment.  Now.

The other type of company has a reasonably well articulated, pragmatic customer strategy (or they are close enough that they can realistically move into action).  With business improving and many competitors still trying to figure out what to do, these players have a once in a generation opportunity to press their advantage, whether that is through opening new stores, creating a compelling multichannel experience, developing a leadership position in location-based marketing or through many, many other possible leverage points.

The answer for both is the same: Get in the car and drive!