Maximize Revenue with a Complete Picture of your Customers’ Capacity to Spend
Luxury brands face tough competition to capture and retain high net worth customers. They are now facing competition from non-luxury brands, who have been gaining traction, and wallet share, among HNWI and UHNWI. In 2016, Nike was ranked the most valuable apparel brand in the world, overtaking Louis Vuitton, and Kia, a non-luxury vehicle, came out on top in J.D. Power’s quality car survey.
Luxury brand or not, the competition is fierce to both attract and keep the attention of HNWI customers. Their business can make a huge impact on your business. A Bain & Company study found that a 5% increase in customer retention can increase a company’s profitability by 7% and that the average amount spent by a repeat customer was two-thirds more than a new customer.
Because of the current landscape, it is imperative for brands, both luxury and non-luxury, to prioritize and segment their customer base and identify who they should focus their time and budget on in their marketing campaigns. One approach is to use transactional history, however, spend history does not equate to spend ability, so you need to be more granular.
Previous spending is a key component, but it should not be the only data point you’re using. Instead, focus your efforts on identifying the low spend, high net worth customers among your current database. Think about it – a customer may have purchased something for $100 when they actually have the capacity to buy something that’s $1,000. Use this information to personalize your sales and marketing outreach and present higher cost items.
Remember, not all existing customers have the capacity or ability to spend more with you. Identifying those that do are critical to enhancing revenue and driving a higher customer lifetime value.
Contact us for more information on analyzing your customer base and identifying those with the capacity and net worth to spend more.