Focus marketing to your customers who spend the most

If your resources are limited, there are two types of customers you should be targeting with your marketing and advertising:

  1. Customers who are most likely to come back and buy again
  2. Customers who spent the most per-order

The first one is part of customer segmenting and customer loyalty.

The second one is more subtle and often ignored. So lets talk about them a bit.

These customers spend more per order which means they have a higher Average Order Value than the average customer.

This means they are also likely to be contributing a higher amount of profit (depending on your margins). That means you'd earn more getting them to order again.

So if you only have say 1,000 units of marketing to spend and you can only attract 1,000 new orders, these customers will be mostly likely to be more profitable.

Now in the real world you can analyze them a bit more in-depth to see response rates, likelihood of a repeat order, etc. But for rough decision-making, targeting your customers who spend the most is a good option.

(The best option would be to combine both this and the #1 type above, the likely repeat buyer who spends the most. Or as I call them, the VIP segments.)

To find these customers you can rank your customers by their Average Order Value and then target the top 20%. Or you can use the automatic segments in Repeat Customer Insights, targeting the Whale or High AOV segments.

Either way, using your limited marketing resources on them is going to be a better idea than a broad blast.

Eric Davis

Measure which customers you're retaining and which you're losing

In order to keep your best customers, you need visibility into what's going on with them. Repeat Customer Insights will help you track down where you're losing customers and how to better target new ones.

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Topics: Customer segmenting Average order value

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