Retailers spend a lot of time trying to figure out what customers want.
We attend trade shows, talk to sales representatives, study competitors, read industry publications, watch trends, analyze social media and listen carefully when a vendor tells us that a particular product is going to be “huge.”
All of those things have value, but there is another source of market research sitting right inside your business.
Your customers.
More specifically, your best customers. They have already voted with their wallets. And if you study what they buy, when they buy it, how frequently they return, how much they spend and what products they purchase together, they can provide a surprisingly detailed roadmap for your marketing strategy.
The question is whether you are listening.
Not All Sales Are Created Equal
A retailer looking at a sales report may see $2 million, $5 million or $10 million in annual revenue, but revenue is the end result of thousands of individual decisions.
Some customers visited once. Some visited ten times. Some purchased one category. Others purchased across multiple categories. Some primarily bought discounted merchandise. Others regularly purchased at full price. Some responded to promotions. Others came in regardless of whether there was a sale.
Those customers should not necessarily receive the same marketing message.
The first step is identifying who your best customers actually are. And I would caution against defining “best” solely by the size of one transaction. A customer who spends $500 once and disappears may be less valuable than a customer who spends $200 four times a year for five years.
Frequency matters. Longevity matters. Margin matters. And repeat business matters enormously.
Start With What They Actually Buy
Retailers sometimes market according to what they want customers to buy rather than what customers have demonstrated they want to buy.
The distinction is important.
Suppose your best customers disproportionately purchase comfort footwear, premium accessories and replacement insoles. That buying pattern is telling you something about them.
They may value comfort over price. They may be willing to pay for quality. They may respond to educational marketing about fit, construction and product benefits. They may also represent an opportunity for related-product marketing.
Now imagine another group primarily purchasing fashion merchandise when it is newly introduced. Their behavior suggests something different. They might respond to new-arrival emails, preview events and early access to seasonal merchandise.
The merchandise is giving you clues about the customer. Your job is to connect those clues.
Look for the Second Purchase
Retailers naturally celebrate the first sale, but I think the second sale may be more interesting.
The first transaction tells you that you successfully acquired a customer. The second transaction tells you that the customer decided to come back.
That’s an entirely different accomplishment.
Retailers should study what happens between purchase number one and purchase number two.
How long does it take? What does the customer buy the second time? Does a customer who initially purchases Brand A tend to return for Brand A again? Does that customer migrate into another brand or category? Does buying a particular product predict a future purchase?
This is where transaction history begins turning into a marketing roadmap. If customers who purchase one category frequently purchase another category within 90 days, you have just discovered a marketing opportunity.
Don’t wait for them to figure it out. Communicate with them.
Your POS System May Know More Than You Think
Many retailers have invested thousands of dollars in point-of-sale systems and then use them primarily to answer two questions: “What did we sell yesterday?” and “How much inventory do we have?”
Modern customer data can tell us much more.
Retailers should be able to identify groups such as customers who purchased within the last 30 days; customers who haven’t purchased in six months; customers who purchase three or more times annually; customers who consistently purchase a particular brand; customers who buy children’s products and may need the next size; customers who purchase premium merchandise; customers whose average transaction is increasing; and customers whose purchasing frequency is declining.
Each group represents a different marketing opportunity.
Sending all of them the same email because they happen to be in the same database is convenient, but it isn’t necessarily smart.
Recency, Frequency and Dollars
Retail doesn’t always require complicated analytics. Three simple questions can tell you a tremendous amount about a customer: How recently did they buy? How frequently do they buy? How much do they spend?
Marketers have used variations of this approach for decades because it works.
A customer who purchased three times during the last six months and spent $800 deserves different attention than someone who made one $59 purchase four years ago. Yet, many retailers treat both customers identically because both email addresses appear on the same mailing list.
Your database should not merely be a list of people you can contact. It should help determine whom you contact, why you contact them and what you say.
Watch What Customers Buy Together
One of the most useful pieces of information in retail is the relationship between products.
A shoe retailer might discover that purchasers of certain footwear frequently purchase socks, insoles or care products. A furniture retailer might discover that customers purchasing a sofa frequently return for occasional tables, lamps or accessories. A clothing retailer might identify predictable relationships between apparel categories.
These aren’t merely merchandising insights. They are marketing opportunities.
If 35% of customers who purchase Product A eventually purchase Product B, what happens if you proactively introduce Product B to the other 65%? That is marketing based on demonstrated customer behavior rather than guesswork.
Amazon built an enormous business partly by becoming exceptionally good at recognizing relationships between products. Independent retailers don’t need Amazon’s technology to apply the same principle on a smaller scale.
Sometimes a spreadsheet and curiosity will do the job.
Your Former Best Customers Matter Too
There is another group retailers frequently overlook: customers who used to be great customers.
If someone purchased six times over two years and then disappeared for twelve months, something changed. Maybe they moved. Maybe their needs changed. Maybe they found a competitor. Maybe your store disappointed them. Or perhaps they simply haven’t been given a reason to return.
That group deserves attention because you have already paid the expensive cost of acquiring them. Create a report of previously frequent customers who haven’t purchased recently, and then communicate with them differently.
“We miss you” can be more relevant than “20% off this weekend.”
You might even call a handful of particularly valuable former customers. Besides potentially generating sales, you may learn something uncomfortable but extremely valuable about your business.
Don’t Discount Customers Who Don’t Need a Discount
Customer data can also help retailers avoid one of my least favorite marketing habits: unnecessarily giving away margin.
Suppose one of your best customers purchases from you four times annually, frequently buys new merchandise and rarely purchases discounted products. Why would your first marketing strategy be to send that person a 20% off coupon? You may be discounting a transaction that would have occurred anyway.
Your best customers may value things other than price: early access, new-product notifications, special ordering, expert advice, convenience, recognition, invitations to special events and better service.
Before automatically reaching for a discount, examine what your customers’ behavior says they value. Sometimes the best promotion isn’t a promotion at all.
Turn Customer Behavior Into Next Month’s Marketing Plan
At the beginning of every month, I would encourage retailers to spend an hour studying customer behavior rather than immediately deciding what promotion to run.
Ask questions such as: Who were our best customers? What did they buy? Which customers returned? Which customers didn’t? Which categories were commonly purchased together? Which customers increased their spending? Which good customers haven’t visited recently? Which first-time customers should receive a follow-up?
Build part of the month’s marketing calendar around the answers. Now, your marketing isn’t based entirely on what competitors are doing, what vendors are promoting or what somebody thinks might work.
It is based on what your own customers are actually doing.
Listen to the Footsteps
For years in the shoe business, I learned that customers don’t always tell you exactly what they want. Sometimes they show you.
They show you through the brands they repeatedly purchase, through the sizes, colors and styles they select, through how often they return and through what they purchase together. They even show you something when they stop coming.
Every transaction leaves a footprint. One footprint doesn’t tell you very much, but thousands of them begin forming a trail.
Follow it. Because your best customers may already be telling you where your marketing should go next. You just need to listen.
Alan Miklofsky is a semi-retired business consultant and longtime independent footwear retailer. He spent approximately 40 years operating The Shoe House, Inc., doing business as Alan’s Shoes in Tucson, Arizona, before selling the business in 2022. Alan founded Shoes.com as a Yahoo Store in 1998. He has contributed articles to Footwear Insight, Shoe Retailing Today and Specialty-Retailer.com and continues to advise retailers and businesses on financial performance, marketing, merchandising, operations and growth strategy.
