BRTLNG
Let’s begin by considering the customer segments every business has.
- Best Customers: This elite group represents the top 20% of the base, contributing to 60% of revenue and a remarkable 150-200% of your profits. They are the cornerstone of the business, exhibiting high loyalty and purchasing frequency.
- Test Customers: These are part of a significant segment, roughly 40% of the customer base, who have engaged with your brand on a trial basis but have not made subsequent purchases. They are currently dormant and represent a re-engagement opportunity.
- Rest Customers: This segment constitutes the middle 40% of your customers. They are neither the most loyal nor completely inactive, but they consistently contribute around 30% of the revenue, playing a supportive role in the business’s financial ecosystem.
- Left Customers: These are the individuals who have churned from the brand after a single interaction. They are the ‘one and done’ customers, whose journey with the brand was short-lived, whether due to unmet expectations, dissatisfaction with the product or service, or simply because they had a singular need that was fulfilled.
- Next Customers: This segment encompasses the potential customers who are yet to engage with the brand. They are the prospects and the key to the business’s future growth.
- Guest Customers: These are the anonymous/unidentified visitors. Successfully enticing them to reveal themselves and opt-in for communication transforms these hidden prospects into potential profit-centres.
We can sequence these as Best-Rest-Test-Left-Next-Guest (BRTLNG). Understanding these segments will help us solve the mystery of the missing profits.
- Next and Guest Customers: ‘Next’ customers are pivotal to the profit conundrum, often being a primary cause for profit erosion due to disproportionate spending on customer acquisition. A substantial portion of the adtech budget is squandered in this pursuit, resulting from misdirected acquisition efforts and the inefficient reacquisition of past customers. Moreover, without timely identification and engagement, ‘Guest’ customers risk slipping through the cracks, especially as a cookieless future looms, which could sever retargeting opportunities and erode potential revenue streams.
- Best and Rest Customers: These groups harbour significant untapped revenue potential for the brand. Unfortunately, the current engagement strategies fall short. The ‘Best’ customers aren’t receiving the exceptional, differentiated experiences they deserve, which I have coined as “Velvet Rope Marketing,” akin to a VIP treatment. Meanwhile, the ‘Rest’ customers are missing out on the compelling, personalised omnichannel experiences necessary to inspire more frequent purchases.
- Test and Left Customers: Efforts to address customer dormancy and attrition in these segments are often inadequate. Brands typically overlook direct re-engagement tactics with these groups, inadvertently relegating them to reacquisition campaigns where significant funds are expended just to re-establish contact. This not only forgoes new revenue possibilities but also results in costly attempts to reinitiate dialogue with customers who may have otherwise been retained more economically.
Enhancing engagement with the Best and Rest, deploying cost-effective retention strategies for Test and Left customers, and optimising acquisition spends to not only optimise for Next customers but also to identify and convert Guest customers are strategic imperatives to stem the leakage of profits and foster sustainable growth.
