Multichannel Customers May Not Be As Valuable As We Thought

How valuable are your customers? Everyone says that multichannel customers are your most valuable asset. In most cases, they purchase more often, have higher average orders, and better response rates. It seems that if we could magically transform single channel buyers into multichannel mavens our growth would be unlimited.

If only it were that simple.

Experts (including myself) have anointed multichannel shoppers as the best customers and encouraged companies to drive buyers to other channels. In some cases, this is true and works wonderfully. If your company never offers discounts, then your top performing segment consists of multichannel customers.

If you offer discounts (even if they are limited to select groups), your single channel buyers may be more valuable than those crossing channels. Why? Because multichannel customers tend to be more Internet savvy. They shop for coupons and discounts before they place their order. If they find offers from your competition, they will go there. If they find offers from you, they reduce their profitability.

The best customers are the ones who contribute the most to the profitability of your company. This isn’t intended to negate the value of other segments. Some provide cash flow while others aid in liquidation. But, if we are looking for the best customers, we have to focus on the ones who help you be successful.

Traditional segmentation of recency, frequency, and monetary value doesn’t provide enough information to identify the best customers. Adding channel information helps some, but it still doesn’t answer the question of “how valuable is this customer?”

To define the value of a customer, you have to have all the pieces including margin, fulfillment costs, and marketing expense factored in. If you don’t, you are basing your decisions on faulty information. Isn’t it time that you clearly defined all of the metrics that make your business successful so you can use them to grow to your potential?

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Comments on this entry are closed.

  • Amir @ClickFox

    You also need to define the value/cost of each type of experience for each customer group. When you’re able to analyze customer experience across all interaction touchpoints you can better understand what your best move should be.

  • Debra Ellis

    Hi Amir,

    Thank you for your insightful comment. I agree. Your relationship with your customers are only as good as their last experience. If you aren’t measuring the effectiveness of your service, then you are positioning yourself for failure.

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