value insights

How to Understand your Best Customers- Valutrics


Who are your ideal customers? You have good and bad customers. Bad ones continually haggle about prices, pay late, constantly complain, grab all your promotions and leave you as soon as another company comes along. The ideal customers, on the other hand, are the ones that pay on time, give you as much notice as possible, share information, become partners giving you useful feedback. You know the ones – they are a pleasure to work with. But who are they? What makes them different? What do they really want? How can you help them even more? Are they online? Targeting, satisfying and keeping the ideal customer is crucial.

Ideal customers are worth more than you think. Pareto ’s 80:20 law suggests that 80% of your sales come from only 20% of your customers. Research suggests that your best 20% of customers generate 140% of your profits. This means that many of your other customers generate losses. A company’s best customer could be worth 30 times the worst customer. Chris Anderson’s Long Tail theory challenges Pareto and suggests otherwise .

Regardless, you need to know who are your best customers. Are all of them online? So we need to know our ideal customer ’s profile – who they are, where they are, what they want, what they spend, any distinguishing characteristics. How do we recognize them on a data-base? What questions should we ask them about themselves? We need to know them better than they know themselves!

We need to understand their mindset, their attitudes and aspirations. We also need to know the barriers to buying online – their fears and phobias. We need to know where our proposition sits with their needs, their lives, their jobs – ‘ their worlds ’ – both online and offline.
We also need to know their purchasing process – the stages they move through and the information needs they have at each stage. We need to know their information processing stages – how they acquire information (what channels) – how they learn about products andoffers, what words they search with, what words (and images) arouse them to take action.

How their perception screens out some offers and filters in others.
In general, the online customer is different from the offline customer. The online customer has more power than ever before. Despite living in an information-cluttered and time-compressed world, the online customer is empowered like never before: more information, transparent prices, more rights. They also realize the value of their time and attention.
Witness the rise of permission-based marketing and the demise of the effectiveness of intrusion-based marketing. Remember, assumptions you might have about existing offline customers may not apply online. Even the same customer may display different characteristics online and offline.

Engaged Customers and Customer Engagement?

If you can understand and influence engagement better than your competitors, then this will help you develop loyalty to a brand and the website.

The ideal customer, or most valuable customer, does not have to be someone who buys a lot. The ideal customer could be an influencer who is a small irregular buyer, but who posts ratings and reviews as his reviews can influence another 100 people. ‘Engaged customers ’ are probably going to become brand zealots if we keep them engaged. Therefore it is important to identify ‘engaged customers ’ and start a brand ambassador programme to further strengthen the relationship and energize their word-of-mouth.
We can monitor the quantity and frequency of blog posts, forum discussions, reviews, profile updates, etc. This identifies opportunities and also acts as an early warning system to any future problems. Consider targeting brand evangelists rather than just purchasers. Some companies actually ask customers to give a product rating or even post a product review as a standard part of their after sales contact strategy. This way the more engaged customers identify themselves by their own self selection.

You should use the engagement checklist to determine how involved a customer is with your products or services. A customer who doesn ’t care about the product is likely to be less committed or less emotionally attached to the firm providing the product. On the other hand, a customer who is engaging is likely to be more emotionally connected to the brand.

We need to know about the sentiment, opinion and affinity a person has towards a brand. This is often expressed through repeat visits, purchases, product ratings, reviews, blogs and discussion forums and, ultimately, their likelihood to recommend a friend.
Ask yourself ‘how well are we measuring engagement of our different online audiences and then closing the loop by using this data to identify the advocates and deliver more relevant communications’?

Customer engagement checklist


1 Does the customer segment buy your product or service more or less frequently compared to your competitors?
2 Does the customer frequently purchase (defined as more than . . . x purchases per month)?
3 Is the customer a frequent visitor to the web site (defined as more than . . .x. . . .visits per month).
4 Does the customer spend above average site visit duration (. . .x minutes) each time they visit your site?
5 Does the customer engage in key service interactions? e.g. Choosing and comparing different products
6 Does the customer engage in minor service interactions? e.g. Checking status of the account


7 Does the customer visit the discussion areas or blogs?
8 Does the customer participate in discussions by posting comments regularly (x . . .per month)?
9 Has the customer written a product review?
10 Has the customer created any other user generated content (including uploading photos or videos)?
11 Has the customer made any connections relevant to the brand in social networks?


12 Does the customer express an opinion in customer service calls?


13 Does the customer refer other customers to the site?
14 Are you monitoring and acting on engagements in the above areas?



Research shows that socializing, catching up on news, shopping/browsing, being entertained and being educated are typical reasons people give for going online. So, socializing through e-mail, chat rooms, blogs and social network sites is the killer application in the B2C markets. Billions of e-mails are sent every day and SMS (text) messages are catching up. Leveraging the strong desire to socialize should not be underestimated. It is one of Maslow ’ s basic defined needs.
The second most popular activity is finding out about products, regardless of whether they are to be purchased online or offline, so we need to facilitate the process of mixed-mode buying – browsing online and buying offline. Internet users are active, not passive; they enjoy their power and love to exercise it.
Comparison shopping puts them in control. The empowered online customer has more knowledge than ever before from sharing information with others and from comparison sites or shop-bots. How well do you know the comparison sites for your products and services? Seek them out and monitor them continuously.

Surprisingly, not all online customers hate real physical shopping. They just like getting good deals and being in control . The convenience of online shopping may grow in importance as time-compressed customers realize the time saving nature of online shopping. Time saving can satisfy several needs simultaneously as the time saved can be spent fulfilling a range of unfilled needs.
Incidentally, many products fail to sell in large volumes online since the products don ’t pass de Kare-Silver ’s ‘electronic shopping test ’   which measures the likelihood of online retail purchases.

However, mixed-mode shopping (i.e. online browsing) suggests an effective Internet presence is essential for multichannel business. The data shows that some products such as tickets, books and electrical goods have a much higher conversion rate of browsers to buyers. Of course, the Internet is still having an important although decreasing role in the purchase decision for those who browse online and buy offline as part of mixed-mode buying.
It ’ s simple: if customers can ’t find the right information about your products and service propositions, then you don ’t even make it into the ‘considered set ’ of brands being con-sidered by a potential customer.
The third most popular online activity is entertainment. After adult entertainment comes games, music and checking up on the latest news about the favourite band, sports team or celebrity.
It is no surprise that popular sites offer these key activities of socializing, product information, purchasing and entertainment through e-mail and chat, search engines and product guides, shopping, community and games.
For the B2B market, international benchmarking studies, suggest that the main drivers for adopting e-commerce are cost-efficiency and selling – tapping into the global market. B2B e-marketplaces deliver cost savings through global sourcing, auctions and bids as well as reducing supplier numbers, reducing inventories, access to wider/deeper products and services. Enlightened businesses are also using the Internet to get closer to customers, serve them better, build the brand and reach more customers. Some enlightened companies understand how good e-marketing adds value to the brand and many Financial Directors now understand the importance of the brand since IAS 38 (International Accounting Standard) requires companies to value their intangible assets such as brands on the balance sheets when they are acquired (IFR 2005) . This motivates B2B organizations to add value and ‘ sizzle ’ to their brand via the web site as it not only boosts customer satisfaction scores and builds brand assets, but also boosts market capitalization.



Once you know why people go online, you can apply a very simple marketing formula:
1 Find out why people buy and what are their aspirations and expectations. Then . . .
2 Reflect the reasons, aspirations and expectations in your communications. This way you give customers what they want instead of what you want. Of course, you have to be able to deliver the promised benefits. Otherwise repeat sales die, negative word of mouth spreads and the online activities damage the brand. Don ’t promise what you cannot deliver.
Existing offline customers can be encouraged to go online before they are besieged by other, competitive, online offerings. Remember someone, somewhere, is analyzing and targeting your market right now.

Tempt customers by offering channel choice and, something customers can ’t get elsewhere, the online value proposition (OVP) . Tell them how it works and how they can use it. Other motivators such as the social aspect can be used: For home users, and sometimes, for business users also, it is an important social tool enabling conversations with participants known and unknown, from near and far. Also useful member-get-member promotions amongst existing customers help members to help others with useful information about interesting offers. Word-of-mouth and referrals are a powerful tool. Remember, reassurance is vital since security is a major fear and phobia.

We suggest that you consider the 6Cs of customer motivation to help define the OVP:

1 Content –

We know that relevant content is still king. Online content should provide something that supports other channels. Often this means more detailed, in-depth information to support the buying process or product usage. As well as text-based content which is king for business-to-business there is also interactive content which is king for consumer sites and particularly brands. Remember that context is also king. Context provides the right information, personalized for the right segment using the right media to achieve relevance.

2 Customization –

Mass customization of content delivers personalized content viewed as web site pages or e-mail alerts. This is commonly known as personalization or tailoring of content according to individuals or groups – see for a great example.

3 Community –

Community, these days known as ‘social networks ’. Online channels such as the Internet are known as ‘ many-to-many ’ media meaning that your audiences can contribute to the content. For consumer retail, review sites such as Epinions ( www. are important for informing customer perceptions of brands. Similarly in business markets some specialist communities have been set up. For example, e-consultancy ( ) has forums and reviews which discuss issues in the supply of e-business services.

4 Convenience –

Convenience is the ability to easily find, select, purchase and in some cases, use products, from your desktop at any time; the classic 24/7 availability of a service.

5 Choice –

The web gives a wider choice of products and suppliers than traditional media. The success of online intermediaries such as Kelkoo ( ) and Screentrade ( ) is evidence of this.

6 Cost reduction –

The Internet is widely perceived as a relatively low-cost place of purchase. In the UK, Vauxhall have keyed into this perception by offering Vauxhall Internet Price (VIP), in other words lower prices than through dealer-based distribution. Similarly a key component of the easyJet OVP when it launched was single tickets that were   cheaper than phone bookings. This simple price differential together with the limited change in behaviour required from phone booking to online booking has been a key factor in the easyJet online ticketing channel effectively replacing all other booking modes.