In the retail industry you are constantly faced with the issue, or opportunity, to try and find new customers. It’s possible to become obsessed with making sure your advertising, displays, and pricing can be heard above the competition and attract new business.

While pursuing customers to increase sales is prudent and necessary, it can also wind up hurting you. Instead, it’s best to focus on loyal customers who, in most retail businesses, make up around 20% of your client base.

Understanding the five types of customers

Your best current customers are known as an ongoing opportunity. To better understand the rationale behind this theory, and to start building customer loyalty, you need to learn about the five main types of customers:

1. Loyal Customers

2. Discount Customers

3. Impulse Customers

4. Need-based Customers

5. Wandering Customers

Here’s a helpful description of each of the five customer types, and how to deal with them:

Loyal Customers

Your loyal customers represent an average of 20% of your customer base and yet they make up more than 50% of your sales.

It’s important to keep up regular communication with your local customers via several methods including telephone, mail, social media, email, and even more. These people are the ones who should be influencing your buying and merchandising decisions as nothing will make a loyal customer feel better than being asked for their input and then being valued for it.

You can never do enough for your loyal customers and the more you do for them the more they will recommend your business to others around them. And everyone knows that positive word of mouth is pure gold for strengthening your business and brand.

Discount Customers

The discount customers tend to shop at your store frequently, but they tend to make their purchasing decisions based on the size (and frequency) of your markdowns.

The discount customers help ensure your inventory is turning over and, as a result, they are a key contributor to cash flow. They can also end up costing you money because they’re more likely to return a product. And to top it off, discount shoppers aren’t always easily turned into loyal customers.

Impulse Customers

Impulse buyers don’t have a particular item in mind when they walk into your store, but rather they walk in on a whim. Generally, they’ll tend to purchase what seems good at the time.

The impulse client is the one we all like to serve. There’s nothing more exciting than assisting an impulse shopper and having them respond well to your recommendations. Target displays should be directed towards this group as they can provide you with a significant amount of customer insight and knowledge. 

Need-based Customers

A need-based customer possesses a specific intention to come in and buy a particular type of item.

Customers in the need-based category are driven by a specific need and when they enter your store, they’ll be on the urgent lookout to see if this need can be met. If it can’t then they won’t waste any time and leave straight away. 

Need-based customers buy for a variety of reasons: a specific occasion, a specific need, or an absolute price point. Although it may be a difficult process, they can be turned into loyal customers if they’re taken care of. They may not be the most fun to deal with but they can be a great source of long-term growth.

Even though they can be easily lost to Internet sales or a different retailer, it’s possible to overcome this through personal interaction with one of your salespeople. If a need-based customer is treated to a level of service not available anywhere else then you have a very good chance in making them a loyal customer.

Wandering Customers

A wandering customer has no specific need or desire in mind when they walk into your store. Rather, they crave a sense of community or exciting experience.

If you want to grow your business then you need to target the loyal customers and merchandise your store to leverage the impulse shoppers. While the other three types of customers represent a segment of your business, they can cause you to misdirect your resources if you pay too much attention to them.

The wandering customer produces the highest amount of walk-in traffic but the smallest in terms of sales percentage. There’s not much you can do about this group because the amount of wandering customers in your store is determined mainly by your geographical location.

Although they may not represent a significant portion of your immediate sales, they can be a real voice for you in their communities. Many wanderers shop for the interaction and experience they get from it. Shopping is no different to them than it is for another person to go out to eat. Since they are looking for interaction, they are likely to tell others about their experience in your store. This makes it impossible to ignore them. 

Serving the five types of customers

Retail is an art backed up by science. The science side comes from the financial information and research data you have access to, otherwise known as the ‘backroom stuff’. The art side is in how you operate your floor, your merchandising and people, and ultimately your customers.

For a lot of people in retail, the competitive pressure is at an all-time high and it’s only going to increase. To be successful you need to possess patience and understanding when it comes to your customers. You need to be an expert on their behaviour patterns that drive their decisions.

Understanding these decisions will lead you to turn discount, impulse, need-based, and even wandering customers into loyal ones to help grow your business. At the same time, it is critical to ensure that your loyal customers have a positive experience every time they enter your store. This will only serve to increase your bottom-line profits.