The branding experts at How to Build a Brand have crunched the numbers. We have set out to prove or disprove the old 80/20 rule (20% of a brand’s customer base will contribute 80% of that brand’s revenue). And what did we find?

We found that it’s not far off the mark. The top [approximate] 20% of your clientele (the most loyal of the loyal) will spend nearly ten times more than your average customer, and they will account for more than 70% of your traffic.

So how should that translate for your marketing department’s strategy? It’s like this: If you’re like most brands, a large amount of focus must be shifted from new customer acquisition to loyal client retention. Until you absorbed the above statistics, this may not have made a lot of sense. However, now that you know the facts, you can easily see why taking care of your biggest spenders is one of the biggest and best things you can do as you figure out how to build a brand.

How to Keep Revenue Flowing through the Top 20 Percent

how-to-build-a-brandTake care of the clients who are taking care of your brand’s word-of-mouth advertising—that’s a given. What isn’t always so easy to figure out is HOW to accomplish that. Here are some suggestions from the marketing experts at How to Build a Brand:

  • Stay in touch and top-of-mind. This can be accomplished through direct mail, emails, social media, coupons, etc. Stay at the forefronts of those minds that are already thinking about you. This is the equivalent of regular maintenance vs. crippling repairs that have resulted from neglect.
  • Create a loyalty programme that makes your most important clients feel like VIPs. Acknowledge how important these people are to your brand, and then reward them for all they do. This could equate to discounts, advanced sales, admission to special events, shout-outs on social media, or whatever else you think your top 20% would appreciate and reciprocate (Or if you don’t know, ask them. They will tell you what they want.)
  • Take advantage of a loyal client’s enthusiasm. The top 20% are going to be far more receptive to up-sells, add-ons, and special promotions and events. Start with the loyal ones—the “most likely ones”—and you will boost the probability that others will follow suit.
  • Analyse the progress and effectiveness of the programmes you offer to your loyal clients. Ask for feedback, attribute sales to their sources, and focus on those plans that result in the most revenue, loyalty reinforcement, or new client acquisition (through word-of-mouth advertising).

When you compare the ease with which you can keep already-loyal clients engaged, it makes more sense to dump the majority of your focus there, rather than on new customer acquisition. Here are a few reasons why customer acquisition is more difficult and costly than loyal customer retention:

  • Conversion rates for new customers is somewhere around one percent or less. You know how difficult it can be to acquire one new client. This proves that the difficulties you may be experiencing are largely universal.
  • Even when a discount is offered to encourage new customers to “jump on,” they are not very likely to stay long enough to pay full price the next time around. You see, they are not yet fully emotionally engaged, and are still thinking in terms of information—not yet making decisions from the heart. The battle isn’t won with that first discount offer; cajoling them into coming back is, in fact, the most challenging aspect of the acquisition.
  • Most new customers look for social proof (testimonials, referrals, and recommendations from friends and family). With this in mind, it’s easy to see why words from your loyal clients about your brand are far more effective than words from the brand itself.

Now, we don’t want you to think that your top 20% of loyal clients will never change. If this strategy is properly executed, your 20% will grow…as will your entire brand. The better your loyalty programme is for your client, the more appealing it will be for others who may still be only half-heartedly committed to your brand. If your loyal clients speak highly of your brand and the programme, of course, others will want to display loyalty, too.

In short, the moral of the story is this: Take care of what you have, so that others will want to be “what you have.” We can’t think of a better prescription for how to build a brand.

This is not the end of this conversation. There’s so much more to discuss regarding how to build a brand, and we’re ready to get on with it. Ask your questions and join the live conversation on Twitter at @milesfryer #BrandBrainsQandA. And then, for a life-altering, brand-building experience, sign up for our B.R.A.N.D. Building Bootcamp here. In this one-day, fully immersive branding experience, you will not only learn how to build a brand, you will learn how to maintain and grow it with visibility and profitability. Seats go fast, so sign up today.

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