Blog

Entries in consumer (2)

Thursday
Nov292012

Part 2: What is the Value of Loyal Retail Pool Customers? (From: Inside the Mind of the Loyal Retail Pool Consumer)

 

 

By Larry J. Bloom

In our previous post in this series, we provided evidence that 55 percent of consumers indicate they purchase most of their pool products from a single specialty retail store. We coined the term Loyalists for this group. If Loyalists are real, then retailers ought to be able to identify who they are and what they are worth. But most swimming pool retailers have not analyzed their sales data to sufficiently understand Loyalist value. So we set out to see how real store data correlates with survey findings.

Measuring Loyalist Value

In 2012, we analyzed five years worth of customer data provided from multiple swimming pool retail stores that included well over 150,000 customer records. As a first criterion for loyalty, we screened the data to identify those customers who made purchases for four consecutive years. As a second criterion for loyalty, we screened the same data to identify customers who made at least three purchases during the most recent season. Here is what we found:

• 54.6 percent of pool customers made purchases every year for the prior four years and accounted for 71 percent of total sales.

• 54.6 percent of 2011 pool customers made three or more purchases during the year and accounted for 83 percent of total sales.

Loyalists are real!

Our research confirms that more than 80 percent of retailer revenue can come from 55 percent of their customers. These are Loyalists who purchase three times per year or more. While we are careful to point out this sample cannot be generalized beyond its respondents, these results leave little doubt that Loyalists (in terms of annual customer frequency and multi-year longevity) are real and extremely valuable to the pool retailer. Here are some other facts we uncovered about Loyalists:

• On the average, Loyalists purchase 6.7 times as much per year as Nonloyalists.

• Every Loyalist is worth on the average approximately $515 per year compared to only $80 for the Nonloyalist.

• The top 10 percent of four-year Loyalists averaged $1,770 in 2012. What’s more, they represented 25 percent of total Loyalists’ purchases.

• 72 percent of Loyalists have shopped at the same specialty retailer for at least 6 years with the average being 10 years.

• The average Loyalist has a lifetime value of $4,120; the top 10 percent have much more.

While not the only important customers, Loyalists are the lifeblood of every specialty pool retailer. Loyalists have purchased most of their products from one specialty store in the past and are likely to purchase from that store in the future. That is, unless specialty retailers fail to maintain the advantages these customers respond to. Our research confirms that getting and keeping Loyalists is extremely important to the success of a specialty retailer. Future posts will address how well retailers are actually doing.

Your turn!

Whether you are a retailer or not, what percentage of your business comes from loyal customers and how do you maintain their business over time? 

Thursday
Nov292012

Part 1: How Well Do Pool Retailers Understand Their Customers? (From: Inside the Mind of the Loyal Retail Pool Consumer)

 

 

By: Larry J. Bloom

How well do you know your customers? Many swimming pool retailers would say, “I know them very well! I’ve been helping them with their pools for years."

However, we beg to (politely) differ. Most retailers do not fully understand their customers’ expectations, nor do they appreciate what makes them stand apart. While busy retailers may see very little difference among their various customers, the little differences that exist will make a big difference in the success of their business. Unfortunately, retailers who don’t pay attention may find themselves littering the bankruptcy landscape.

How can we make such audacious assertions?

It’s because they are based on evidence. With the help of P.K. Data, we conducted a ground-breaking survey of pool owners and correlated the results with real-world pool consumer purchase data and one-on-one interviews. This multidimensional study was the first of its kind. Our goal was to understand the characteristics of pool owners that are loyal to a single specialty retail store compared with those that are not — a subject that’s been largely uncharted. This article is the first in a series that will share the results. 

Is there such a thing as a loyal customer?

Who and what are loyal customers? Are they really out there? Will they identify themselves and share what makes them tick? We took a novel approach to find the answers — we asked them! A representative sample of the approximately 5 million in-ground pool owners were asked to categorize themselves by this question: Where do you shop for most of your pool product needs? Here is what we found:

• 55 percent purchase from a single specialty retail store. We call these Loyalists.

• 15 percent shop at more than one specialty store. We call these Specialty Channel Shoppers.

• 30 percent shop mainly at other outlets. We call these Multi-channel Shoppers.

What do retailers know about Loyalists? 

On the average, 55 percent of a retailer’s customers are Loyalists. Loyalists have purchased most of their products from one specialty store in the past, and it is reasonable to expect them to purchase from that store in the future. That is, unless pool retailers fail to maintain the advantages these customers desire. 

But exactly what advantages do Loyalists seek and respond to? And how are retailers doing in providing these advantages? Are Loyalists worth the effort? What is the potential for Loyalist defection? How can a retailer win? What about the Nonloyalists? If you are a retailer and have all the answers, you are way ahead of the game. Unfortunately, our research confirms that there is a huge gap between what Loyalists desire and what retailers are providing. 

We will answer these questions and more in upcoming blog articles derived from our research. And we hope to stimulate discussion, debate and crowd-sourced solutions for the benefit of the industry along the way.

Your turn!

In fact, let’s start here. Whether you are a retailer or not, how well do you think specialty pool retailers understand their customers, and how do they use that knowledge to help their business? 

>> Read the next post in this series: Coming Soon