Customer Growth Strategy · Customer Insight · Retail

The curious case of the downward migrator

When I joined Neiman Marcus as the head of strategy & multi-channel marketing, one of the first things I read was a McKinsey study outlining actions they thought we should take to strengthen our customer base. Among the many recommendations was the idea that we should focus on what they called “downward migrators.”

I came to learn that what they meant by a “downward migrator” were those valuable customers who were decreasing their engagement with us (through lower spending, fewer transactions or longer duration between purchases). The business case centered on the idea that since we had already invested in acquiring and cultivating these relationships, it might be relatively easy (and high ROI) to turn this trajectory around.

From my experience working on customer growth strategy as part of the senior team at a couple of big retailers–and now as a consultant–this is an often neglected and significant area of opportunity.

The first step is to pay attention. If you don’t measure it, obviously you don’t know if you have a potential issue or not.

The second step is to understand the drivers. Reasons for downward migration fall into two basic situations: those you can do something about (product, pricing, customer experience, irrelevant marketing, etc.) and those you can’t (the customer moved out of the trade area, their economic situation or needs have changed). Don’t chase your tail worrying about something that is not actionable.

The third step is to develop specific plans to address your gaps.

The fourth step is to get into action, being sure you have ways to measure your progress.

A lot of time and energy goes into acquiring new customers. Not enough goes into following the journey (and profitability) of those customers once they are engaged.

If you aren’t careful, before you know it, those customers have migrated themselves right out the door.

And winning them back from the competition is typically no easy feat.

 

One thought on “The curious case of the downward migrator

  1. The concept of tracking, quantifying the $ impact and the ROI of ‘trajectory change’ for downward migrators is a great strategy with immediate and long-term bottom-line impact. This is also a viable approach for assessing the impact of turning around lackluster employee performance. I like the imagery.

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