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- Fuzzy Logic or New Math?
Bio on Dick Abbott:
Dick Abbott, President Abbott & Shapiro LLC isa jewelry store owner for 32 years with a 43 year career in computer systems design and programming. He worked as a consultant for 18 years to a number of Fortune 500 companies. Dick has devoted the last 15 years to developing software specifically for the independent retail jeweler. Has been a guest speaker/seminar presenter at IJO, RJO, numerous JA state affiliate gatherings and other industry group get togethers. He has a passion for applying technology to help overcome some of the challenges facing the jewelry industry.
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Article Written by Dick Abbott:
Fuzzy Logic or New Math?
405 = 7821
88 = 998
7 = 5776
All of these equations are correct. Fuzzy Logic or New Math? No - retail reality.
The numbers above are extracted from two of our customers’ reports. I made the equations hopeful to make a point.
The equation 405 = 7821; 405 refers to the number of best customers who were responsible for half the stores sale and 7821 is the number of customers required to make up the other half of the sales in this store.
In the same store where the equation 7 = 5776 would be found, 7 refers to the number of very best customers that spent the same amount as did 5776 of the customers that made the least expensive purchases.
The equation 88 = 998 tells us 88 customers spent an amount equal to 998 other customers in a small town store with a modest amount of traffic.
Everyone is created equal but that ends when they become your customers and I urge you to treat them as special as they are to you. They can shop anywhere but they have chosen to shop with you so make them feel as good as you could about them making that choice. The better they feel about your business the more apt they are to recommend you to their friends who would have a fairly high probability of being good customers as well.
Do the numbers surprise you? I’ve reviewed hundreds of these reports and can tell you with a great degree of certainty that 5 to 6% of your customers represent 50% of your business.
Know who the top 5 or 6% are, let them know you appreciate them regularly with birthday and anniversary cards. Let them be the first to know about any special events the store is planning, send a small Thanksgiving gift that’s appropriate for the Thanksgiving table like a cut flower arrangement or a gift basket just because. Make arrangements with your local florist to deliver to your top 50 or 100 customers, you can generally get better pricing on larger orders. Your customers won’t expect it and the sentiment will resonate throughout the Christmas season. Your customers’ friends and relatives will know about it as well. It will cost you but no more than mailing to the last 2000 customers in your database and has much more potential for producing results. You want your store to be “top of mind” with these customers when it comes to gift giving occasions.
As for the group in between the top and bottom dwellers (about 20%) keep them coming back with store currency or a rewards/loyalty program of some sort where they earn points or dollars with every qualifying purchase to be used at a later time. This is a good strategy to create future sales. Its going to be a rough year make sure you’re doing all you can to retain your very best customers. They mean a lot to you and are more likely to have the means to purchase luxury goods.
