Can High Margin, Low Frequency Customers Be Converted Into More Frequent Purchasers?

The simple answer to this question is “yes.”

For those of you who utilize RFM (recency, frequency, monetary) analysis or some derivative to decide which customers or prospects get what messaging when, you probably want to take a look at some tactics to upgrade the high margin, low frequency customers.

These are the folks who are worth good money. They have already demonstrated some affinity for your brand. So, how can you get them to shop more often?

You might want to consider touching them more often in order to stay top of mind and send highly relevant offers that entice them to take action more frequently. This is a risk/reward proposition. If you use direct mail, the big question becomes, will the increased activity result in more frequent purchases and justify the additional spend from an ROI standpoint and an incremental margin dollars standpoint?

From an email perspective, extra cost and ROI aren’t typically the major concern. The bigger issue is, how will your subscribers respond to changes in email frequency. There are four possible outcomes:

  1. They unsubscribe or mark your emails as spam
  2. They disengage
  3. There’s no noticeable change
  4. You get more sales and engagement

Regardless of the channel used, ROI and incremental margin dollars have to be weighed against the extent to which you alienate customers. If you are not currently including frequent touches to your high margin customers through multiple channels, there is a greater opportunity their purchase frequency will increase.

For the record, we’re seeing strong results on direct mail campaigns targeting the lower frequency, high margin customers. The additional marketing does make sense as additional dollars and transactions are being obtained.

We recommend testing a subset of this segment to assess lift vs. fallout. We currently help our customers with these campaigns and analyze the results to adjust their direct mail campaigns targeted towards this segment.

If you want to talk further about this, feel free to contact us.

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