Forget the doom mongers, here’s the thing: there is a small core of people who make up most of your revenue and they are quite smitten with you. To paraphrase a Sally Field acceptance speech, they ‘really love you’! You’ve persuaded them. They are convinced. They are happy to spend their hard-earned money with you. 

It’s not just me who thinks this. Experian, recently carried out a report into on-line retailing entitled: ‘Engaging Online with the Empowered Customer.’ Despite the rather dry headline, it did have a juicy nugget of information to pass on: 70% of revenues were generated by just 30% of customers. 

For marketers who remember Pareto’s classic 80:20 rule, these statistics ring true. Pareto has become a tenet because it never seems to lose its currency, however markets change and develop. Even if you grow your base of customers you’ll still find that the 80:20 rule holds. You will have more customers, presumably more turnover, but 80% of revenues will still come from 20% of them. The intuitive reaction is to target the ‘one-off’ purchasers in order to persuade them to buy more. In other words to encourage them to move into the 20% group. Experian’s take-out from their research was in tune with this: namely that on-line retailers were failing to capitalise on encouraging repeat purchases. 

But we are in a recession and what looked sensible yesterday doesn’t necessarily work today. Pareto may still be alive and well but our response to it might need to be rather different from the past. When economies are struggling everyone cuts back on spending and so, at the moment, all efforts are being focussed on getting people to spend. In the best of times it’s difficult, and expensive to ‘acquire’ a new loyal customer. In a recession it’s doubly hard, and the costs feel even more painful.

Here’s the proof: say 10,000 customers contribute £1,000,000 of income. If Pareto holds, then 2,000 of them will contribute £800,000 (£400 per head) and the remaining 8,000 will contribute £200,000, or £25 per head. If you want to get another £100,000 of income, what looks easier? Getting your 2,000 loyalists to spend another 12.5% (£50 each), or recruiting another 4,000 new customers?

I think you’ll agree the smart option is to get passionate about your best customers. Now is the time to thank them. Now is the time to give them the incentive to spend more with you - or at least spend at the same level. It’s all about loyalty: them to you, but more importantly you to them. 

Make sure they ‘opt-in’ to a dialogue with you. Don’t be too coy – remember these are the ones that love you. Then start talking! It’s surprising what a simple thank you will do. What about a discount on the next purchase? How about a free gift? Be daring: ask them to recommend you to their friends.

You get the point. Your current loyalists are the soft underbelly of your business’s revenues, you neglect them at your own risk. And this is where e-marketing can help. It’s a low cost and immediate way of keeping in touch. No long development cycle, and with the benefits of complete ‘trackability’, and the option to run test matrices to see what works best. 

Achieving the balance between e-mail based marketing, and on-site or on-line based campaigns is a fine call, and needs careful consideration. My recommendation, look at your online sales and find your top 20% then get a four to eight week programme of communications going with them. Use a range of offers and techniques. And if it works think about rolling it out to the other 80%.

You’ve made your investment in some key customers, and it’s paid out. Now’s the time to cuddle up close until the economic frosts start to thaw.