The Five Types of Retail Customers

Wednesday, August 12, 2020

Everyone has different shopping preferences, which may vary by product type or time of day. For instance, when shopping for a tech gadget, I may want a lot of knowledgeable help, promptly. Whereas when shopping for clothing, I might want to browse quietly with few interruptions. Understanding the different types of retail customers will help your team know where to focus their energy and why.

According to sales expert Mark Hunter, there are five retail customer profiles: loyal, discount, impulse, need-based and wandering. Let’s take a deeper dive into these types and learn how to sell to each.

1. Loyal Customers
Representing 20% of your customer base, this group can account for more than 50% of your sales according to Hunter. Retaining this group is critical, especially when you consider that a 10% increase in customer retention can result in a 30% increase in revenue.

  • Use POS sales data to identify this group: Run a report of all customers from the last 12 months and sort by net spend and gross margin.

  • Segment and create a regular and personalized marketing approach.

  • Solicit their input and tailor your buying and merchandising decisions accordingly.

2. Discount Customers
Although they are often frequent shoppers, markdowns drive their decision-making process which can deeply erode margin. However, they are drivers of inventory turnover and can be key to your cash flow strategy.

  • Use POS sales data to identify this group: Run another customer report and look at who has a high ticket count or net quantity sold, but at a low gross margin.

  • Segment and create sale communications geared to this group.

  • Ensure your return policy is structured to minimize sale returns.

3. Impulse Customers
Without any particular agenda, this group will buy when inspiration strikes. Creating an exciting store experience is key to amplifying their spend.

  • Gear merchandising and in-store marketing efforts to this group.

  • Capitalize on their spontaneity and design ways for them to share their experience instantly.

  • Plan store events and opportunities to excite and drive this group towards loyalty.

4. Need-Based Customers
This is the customer who has a specific purchase in mind and needs prompt, knowledgeable help. Employees should be trained to spot this group quickly and treat them with exceptional care, as they can become loyal customers once they know their needs are met painlessly.

  • Product training is key.

  • Checkout should be quick, painless and secure; mobile checkout is a plus.

  • Enroll this group in an email campaign designed to bring added value to their purchase.

5. Wandering Customers
They come in the store seeking an experience, as opposed to a specific product or purpose. Store location can make all the difference in attracting this type of customer.

  • Provide a friendly, welcoming and convenient environment for all shoppers.

  • Find ways to make this group feel a part of the store with non-product related interactions.

  • Know when to just let a customer browse and direct your energy to other customers.

Teaching sales associates which customers to focus on and why will help tailor their experience appropriately, boosting your bottom line. Use your cloud POS software to collect the customer data that will help you identify these personas, and you'll be watching your sales soar in no time.