Something has been bothering me for months. At a conference in Dallas earlier this year, I heard the Chief Data Officer at Google explain how the largest and most advanced companies in the world ignore their data. They go with their gut.
Furthermore, this same speaker explained how brands - big and small - don’t seek to understand who their most valuable customers are. They make offers that apply to all while ignoring the more profitable segments of their business.
Think of it like this next time you’re in line at Starbucks getting a cup of coffee: we’re all there for a cup of joe, but many of us for different reasons. Some customers want convenience, ambiance, brand affinity, status, taste, price… there are a lot of factors. But for the customers that buy coffee the most - what motivates them?
Can you identify what differentiates the top 10% of your customers? ‘Top’ means LTV, profitability, contribution margin… pick the term you want, but it’s the top segment for driving meaningful revenue at your business.
Imagine for a moment you run Starbucks. The top 10% of your customers prize speed, quality, and taste (95% order the same thing every time). Would investing a ton in new product development for these customers make sense? Or could we create an app where these customers can schedule a pickup ahead of time (and the app saves their order)?
I’m not saying you can’t find profitable ways to roll out products or market to the rest of your customer base. I am saying that you should start with the customers spending the most money with you. It sounds like common sense, but this comes back to what’s been bothering me for months - how many brands ignore their most valuable segment (and am I doing it too)?
Chances are this is something you’re guilty of, too. I’ve recently changed an offer to make something that would cost more and be more valuable to people who want more from me. It seems simple, but it is different and easily overlooked.
Take loyalty programs, for example. Most brands have a simple point-based system. The more you spend, the more points you get. Sometimes, you can get 2x points or get a special offer. Wow. Profoundly basic and ignores the customers who spend the most with your brand.
What do your best customers want? Premium service? Faster delivery times? Guarantees you never go out of stock? Early access to releases? The list literally goes on and on. Have you thought about crafting a program designed specifically for them?
I came across a great example of this recently. Milk Bar’s First Bite: Delivered Club. From their website:
“First Bite Club: Delivered invites you behind the doors of the bakery to try the limited-batch items we are most excited about, straight from the bench, long before they make it to the Milk Bar menu.”
They send their famous desserts out to you early, including content that explains how they developed it. Customers love it.
It’s not cheap, but it’s sold out. Highly profitable. Amazing service. They spent time thinking through what their best customers would want more than anything - early access and content explaining how it came to be. Exclusivity.
Milk Bar charges for those things, and their customers willingly pay for it because of how much they value those things.
What can you do differently for your best customers? I don’t care if you run a service, saas, or ecom store - some people spend more and want more from you. So give it to them and charge them accordingly.
This is what I’m working on in my businesses. Seems silly not to cater something special to people willing to pay me for it.
Matthew Holman is the esteemed founder of Subscription Prescription, an influential platform that produces exceptional content and fosters a thriving community for ecommerce founders and operators. With a profound commitment to education and empowerment, Matthew also serves as the visionary creator of Commerce Catalyst, a testament to his unwavering dedication to fostering a knowledgeable and empowered ecommerce community.
In addition to his roles as a founder and creator, Matthew assumes the significant position of Head of Partnerships for QPilot. In this capacity, he spearheads the development and implementation of a groundbreaking software solution that empowers ecommerce merchants to efficiently manage their repeat and scheduled orders. Through QPilot's dynamic capabilities, Matthew adeptly navigates the intricate landscape of ecommerce, offering merchants a sophisticated platform to optimize their operations and drive continued growth.
Matthew Holman's indomitable spirit and artistic approach to the ecommerce realm have solidified his position as a respected figure within the industry. His unwavering commitment to excellence and his passion for community-building have left an indelible mark, inspiring countless individuals within the ecommerce landscape.