- WHITE PAPERS
They're your favorite customers and the ones who you instantly recognize when they walk into your store. You know these customers are important to your business, but did you know that these customers drive up to 80 percent of your total revenue? You've heard the 80-20 rule before: 80 percent of your revenue comes from only 20 percent of your customers, but we wanted put that rule to the test. It turns out, it's true.
Loyal customers ('VIPs') Drive 72 % if visits to a local business
We took a look at customer behavior at several thousand local businesses across the country and across a dozen different verticals like coffee & tea, restaurants, retail, and nightlife. We found that, on average, 20 percent of a small business's customers -- the customers who visited at least 10 times -- drive over 72 percent of a small business's total customer visits. That 20 percent drives 72 percent of all your revenue!
What can we conclude from this? You've got to make sure that you go above and beyond to keep these VIP customers happy and coming back again and again. These loyal customers are your main source of revenue, and you have to protect it.
8 Ways To Keep Your VIPs
1. Identify Your VIPs. First and foremost, whether you do it manually with a customer visit list (one of our customers used to use a rolodex of customer names to track visits), or are using a digital loyalty marketing platform on your POS to track the customers who visit or purchase the most, have a way to be able to identify customers when they walk in the door and when they hit your VIP visit threshold (we recommend 10+ visits). Don't just rely on your staff to recognize familiar faces when they walk in. Staff turnover makes that method unreliable.
2. Recognize Their VIP Status. Much like showing off your United Platinum or Starbucks Gold membership card, make your VIPs feel like they are part of an exclusive club, and give them something, like a VIP card or limited edition T-shirt, that they can sport with pride. Ike's Place, a popular sandwich chain in California, identifies his VIPs with a card so exclusive that only the customers that meet Ike himself get one.
3. VIP Only Perks. VIPs should get VIP treatment. Whether that means they get a free soft drink every time they visit or 10 percent off every purchase, make these customers feel that being a frequent buyer is something you really appreciate. For example, let them skip the line. Awesome customers, who bring in the bacon, shouldn't have to wait.
4. Show Off Your VIPs. Whether you have a cork board with pictures of your best customers, have a plaque with engraved names, or have a giant engraved beer mug that gets them a couple free refills while they are dining in, make sure they get recognition for other customers to see and be envious!
5. Offer VIP-Only Loyalty Programs. Since VIPs love to visit you already, offer them enticing rewards to earn. Great seats to a baseball game or free pizza for a year are good examples that incentivize loyal customers to visit even more than they already do. If you use a digital rewards program , you can even tier your reward program to get customers to choose what they want to earn. Chef Chu's, a Chinese restaurant in Mountain View, offers gourmet dinner for two after 20 points, or customers who save up to 500 points can eventually earn a free cooking class from Chef Chu himself! When small businesses use a customer rewards program to encourage their VIP customers, we have found, on average, a 15-percent increase in customer visits per month!
6. Celebrate VIP Birthdays. Offer free dinner or dessert on their birthdays!
7. Keep In Touch. Staying in contact with your customers is essential. Whether you connect with your customers via email, text message, social media, or in-store events, keep them updated on your business and community.
8. Amp Up Customer Service and Fix Their Issues Fast. If a customer has an issue, listen, resolve their problem as quickly as possible, and make it right. Get feedback from them and ask how you can improve next time. Three out of four people have spent more with a company because of positive experiences. Even if you have a fantastic VIP reward program at your business, it won't make up for terrible customer service. Lead by example and appoint customer service leaders on your staff to train others, and you'll be on your way to converting new customers to VIP customers as well.
Good luck protecting and growing your revenue, and I recommend starting first with your VIPs!