Page 26

By Greg Brown



ome things in life create great impact — a wedding, a divorce, having kids… these are the kinds of events that change a person. Pandemics fall into this category, too, demonstrating how shopping needs and habits evolve with the changing circumstances of life. If you are one of the many businesses that has seen an uptick in traffic as shoppers have shifted to online shopping for anything and everything, what’s your plan to keep these customers onboard once “regular life” restarts? Creating a retention strategy is a worthwhile effort and can help ensure your 26


new customer relationships are here for the long term rather than just for convenient transactions for homebound shoppers. Consider segmenting customers, applying characteristics of recency, frequency, and monetary value to their engagement behavior. This approach offers a smart, strategic plan for customer retention based on six key steps. Find and Engage with Your Most Valuable Customers Start by identifying your most profitable customers. The Pareto 80/20 principle, which recognizes imbalance within the mar-

ketplace, indicates that retailers can expect the vast majority of their revenue to be generated from just 20% of their customers. Score customers on a five-point scale, with points reflecting the recency, frequency of purchase, and monetary (RFM) value they bring to the merchant. With this point structure in mind, merchants can then evaluate other engagement behaviors that may add value to a particular customer, such as brand endorsement or social media activity. Using these characteristics as a guide, merchants can focus resources and invest in smart, targeted operations to drive customer engagement and retention.