Redefining the High-Value Customer

Traditionally, marketers have identified big spenders as their best customers. But that’s changing—quickly. Indeed, today’s profile of a valuable customer varies from brand to brand and industry to industry. But one constant remains: The amount of money that customers spend is no longer the sole attribute that defines their value.

“We haven’t completely moved away from the [idea that] people who spend a lot of money are deemed to be the best customers. Money has been and always will be one of the factors [that defines a high-value customer],” says Jeremy Epstein, VP of marketing at Sprinklr, a social media management platform. But, he says, some companies are taking a more holistic view of what makes a customer valuable.

“What we’re seeing is an evolving class of companies that are becoming more mature in their perspective. We’re definitely seeing a growing definition of ‘best customer’—with revenue being a part of it,” Epstein adds. “Influence, engagement with the brand, and advocacy on behalf of the brand—those are now the factors that [marketers at] leading companies are zeroing in on.”

Epstein cites Kimpton Hotels, Virgin America, and Microsoft as examples of companies rethinking the definition of a high-value customer. “They’re identifying how conversations [among customers] are happening on the social Web,” Epstein says. “[These brands] are determining who are their Net Promoters [and] brand advocates, and then dissecting how [those customers’] influence plays a role in profitability and revenue growth.”

Marketers, Epstein says, should take note of this approach and embrace it. That is, they should adopt a more modern, reflective view of their best customers that factors in social influence and passion for the brand along with money spent.

Indeed, large and small companies across industries are embracing this new definition of a high-value customer. Here are three examples of companies whose brand marketers are redefining “best customer.”

Brand advocates, social supporters, and long-time patrons are the main ingredients of “best customers” for marketers at Barberitos, a Southwestern grill and cantina chain. “A brand advocate is very important…that’s someone who likes several aspects of the business,” says Al Moses, marketing director for Barberitos. Moses insists that die-hard brand advocates make some of the best customers because they’re like an extension of a marketing team through their recommendations. “Word of mouth is the strongest form of marketing in the history of mankind. It was the first, and it will be the last. Someone who loves what you do is going to go around and talk about it.”

In addition, Moses says social sharers are also big enchiladas at Barberitos. “In today’s [marketing environment], social support is very much needed. That’s where you see your brand advocates come through,” he says. “[Marketers] only have a small amount of time with people on social. [Customers] spend a lot of time on social, but they don’t want to talk about everything, [just what matters to them]. So marketers [should] want to talk to them on social as a friend—a best friend.”

Moses adds that long-time patrons also are some of Barberitos best customers. “When they come in, they’re most likely bringing other people along with them,” he says. “[Long-time patrons] are the foundation of the house. We don’t exist without them.”

By defining valuable customers outside of money, Moses says marketers at Barberitos can focus on improving customers’ quality of life. “The last thing we think about is the money aspect of it,” he notes. “Of course, we have to be profitable, but want to give customers healthy food…. It helps them live a better life.”

Nutrex Hawaii
As with Barberitos, Nutrex Hawaii considers influencers to be high-value customers. Marketers at the all-natural supplements provider say identifying their most influential customers is critical to growing the brand through customer acquisition and repeat sales. “We depend on the people who are influencers,” says Sheryl Biesman, director of marketing at Nutrex Hawaii. “Our products are heavily researched [by potential customers], and for the most part, [customers] buy them because someone has influenced them to make that purchase.”

Biesman says that although the traditional revenue-based definition of a high-value customer will always play a role in pinpointing some of the brand’s best customers, it is the company’s influencers in the healthcare and nutrition industries who bolster the company’s name, establish trust with potential customers, and boost the reputation of the fledging brand. “Sometimes it’s a healthcare professional who has patients; maybe it’s someone who teaches yoga or is a private trainer. Anyone in the health and wellness arena who may influence a potential customer is important to us,” Biesman says.


The marketing team at Nutrex Hawaii not only identifies those influencers and best customers, they reward them. “One of the big things we do is…ask customers when they make a purchase on our website how they heard about us, and they check off which category [of friends, family, professionals, or other influencers] helped them to make that purchase,” Biesman explains. “If the reference is a friend, relative, or professional then we will follow up directly with that influencer with a thank-you note or, at times, a gift through mail or email.” She says those rewards honor the influencers who instill trust of the brand into potential customers.

Those customers closest to prospects are often those ones whose influence translates to sales. “Friends and family members are highly influential because their testimonials are so strong as they explain how the products affected their lives,” Biesman says. “People are so excited and passionate about how their lives are improving. When other [potential customers] hear that, they want to know about the product and where they can get it.”

For B2B data provider Avention, high-value customers are those who can teach its marketing team how to do business better. Specifically, customers who inform Avention marketers about its strengths and weaknesses, as well as what works and what doesn’t, are those ones adding the greatest value.

“If you examine your best customers and you examine where you’ve been successful in [selling your products and services], then you’ll know how to run your campaigns and who to target in the future,” says James Rogers CMO at Avention. “From a marketing perspective identifying these types of [customers] helps in two ways: one, [marketers can home in on] other opportunities within those same businesses; and two, it helps provide insight for the marketing team as to which [other companies] might be valuable customers and which are likely not.”

Rogers explains that once Avention has uncovered those best customers, then marketing and sales teams make an effort to find customers with similar needs for their products and services. Those potential customers are likely to also become some of the company’s most valuable. “There’s opportunity to leverage those [best customers],” Rogers continues. “A lot of the companies in the B2B space are extremely large companies—Fortune 1000 or Fortune 2000 companies. So we can then market into other regions and other divisions of that same company.”

Knowing your most valuable customers, Rogers says, will lead to better marketing messages not just for current customers, but also for prospects. “That’s the other thing that’s really interesting [about identifying your best customers],” he adds. “When you do that [type] of segmentation, you can immediately identify your successes. It gives [marketers] insight into industries and companies and how to tailor your marketing [campaigns] so that the message is actually relevant to them.”

But Rogers warns that marketers should look past traditional signals and characteristics to segment a brand’s best customers and embrace the more modern definition of a valuable customer. “A lot of [B2B] companies already know to look at the ‘industry codes’: revenue, number of employees, location. Those are normal, typical segmentation approaches,” Rogers says, adding that companies should embrace hyper-segmentation when considering who might be a high-value customer. “Look for those business signals and ideal profiles and hyper-segment by those attributes—such as [a company’s] increased spending, hiring of new employees, or product releases. Take that incremental segmentation, and prioritize, list, and then market to the companies that meet the criterion [of a best customer].”

Q&A: Speaking the Language of the High-Value Customer

Wilson Raj, global customer intelligence director at data software giant SAS, discusses how marketers can pinpoint their best customers, shares how to craft messages for them, and reveals ways marketers can know which high-value customers should get the most attention.

The idea of defining a best customer outside of revenue is still an anomaly for some marketers. How should brands identify their most valuable customers today?

Well, a best customer is two main things: both financial and social—in other words, the influence value. Obviously, segmentation is not a new thing, especially in terms of identifying who customers are and when a business should provide them offers. But traditionally, segmentation has been focused more on the first aspect—that is, money. And the majority of customers are valued on how much they spend. The financial value can include how recently did customers [make a purchase] with us, how often they spend, and, of course, how much. It’s what’s known to some as RFM: recency, frequency, and monetary. You can add a little more detail than that with the attitudinal and demographic characteristics of the customers.

But increasingly, you also have social value. This stems from the digital world where consumers can be brand supporters or brand detractors. Social value is important in a number of ways from a business perspective. It can help market the brands and services of a company to other consumers with positive word of mouth. [It also] can help increase the upsell and cross-sell of products through recommendations. And…brand ambassadors can actually reduce attrition or churn of existing customers.

When you add those three areas up—recommendations, reducing churn, up- and cross-selling for the brand—that social value also translates heavily to financial value. So, it’s a more holistic view when the best customer is not just someone who’s spending a lot, but also is maximizing the brand.

How should marketers design campaigns for socially valuable, influential customers?

This type of segmentation supports the targeting of consumers in a good way. It affects the message appropriateness and extends past a message into interaction with the customers.

But marketers should definitely consider the mix of channels—in other words, the media mix in which the message is delivered. So is it an email, followed by an SMS text? Or is it some kind of Web offer or maybe an invitation asking customers to come to the store?

This type of segmentation helps marketers make the right judgment call to present the right offers to current and potential customers. It also helps marketers forecast which messages are great for the customer and are financially prudent for the business. So, all of this helps as you continue to engage with the valuable customers.

If marketers were to compare high-value customers to each other—brand advocates, social sharers, engaged consumers—how do they identify the most valuable group?

It depends on the brand. Some will place more weight on the group that affects the business in a financial way; others focus on the social.

But one way to tell [which group is the most valuable] is considering the cost of serving those customers. If the group supports your brand, but it’s not economically smart to market to them—in terms of higher cost to serve or operationally you’re not able to deliver the right experience or content—then marketers need to balance those costs and benefits, as well. So again, it depends on the goals of that brand. Marketers should always consider that balance of the social, financial, and the cost of sending messages to those high-value customers.

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