How to Address the 4 Different Types of Loyal Customers

How to Address Loyal CustomersIn a previous post, we discussed the 4 types of loyal customers as described by Werner Reinartz and V.Kumar in their article, “The Mismanagement of Loyalty.” The authors described four types of customers that may show up as “loyal” customers:

  • True Friends
  • Barnacles
  • Butterflies
  • Strangers

The authors point out that all 4 of these customers may be described as “loyal.” Depending on how you conduct your survey, all four of those types of customers tend to show up as though they are repeat business, but several of them do not bring the profit margins that warrant focusing your attention on reaching them. Reinartz and Kumar suggest the following strategies for addressing these groups.

Strategies for Addressing the Four Different Types of Loyal Customers

  • True Friends: These are the truest of loyal customers. They think highly of your company/product, and continue to come back for more. They also bring in the most profit. The authors suggest that these customers should be rewarded the most with exclusive products of high value and other elite benefits. However, they warn against over-contact. True Friends are already bringing value to your business, and exploiting them may lead to burnout.
  • Butterflies: Butterflies are also profitable, but much less loyal to the company. They should be given a hard sell in the early stages of their purchase, while they are still interested in the company’s products. However, once it appears that their purchases have dropped off, you should stop investing much time and effort into selling to them.
  • Barnacles: Barnacles tend to be less profitable. Although they think highly of your company and its products, they spend very little to make dedicating resources to them profitable. Ideally, the best course of action is to try to sell them products that are related to what they already have, and otherwise spend resources elsewhere.
  • Strangers: Strangers may often seem like loyal customers, but they rarely bring in much value and otherwise don’t show other signs of customer loyalty. The authors suggest that this group should be left alone, because they bring in very little value and are not otherwise benefiting your company.

Customer loyalty is valuable, but spending time and effort treating each “loyal” customer equally will not provide you with the profit margins you were hoping for. Your best course of action is to try to figure out which type of loyal customer category best describes your specific customer, and use a strategy to address them accordingly.

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