Is digital the end of Luxury Brands?

Is digital the end of Luxury Brands?.

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Top 20 Global Marketing & Communications Mistakes

Top 20 Global Marketing & Communications Mistakes.

 

This is really just one mistake made over and over again, i.e. companies not understanding their customers.  A company must not only understand the need the customer wants to fulfill but also understand any cultural and language information that relates.

How do you know what your customers what?

Understanding what the customers want is incredibly important to running a successful business.  It allows you to invest in areas the customer values (and would be willing to pay for) while cutting investment in items/features that the customer doesn’t value (and would NOT be interested in paying for).  So how do you know what the customer wants?

While there are many ways and I encourage you to use several of them, one of the basic methods is to look at the data you already have.  If you are able to track purchases at the customer level, you have an incredible amount of power in understanding customer behavior at your fingertips.  One great way to understand different segments of your business is to create a Customer Preference to Purchase chart.  Group your customers based on their average purchase frequency and average purchase value.  Then for each group, list where the top 50% of sales are coming from (or profit if you have widely varying margins).  Group your products/services at different levels to see what differences come up.  I created one for a made-up burger joint below.  Basically, both the average customer (box in the middle) and the high value customers (box on top right) are burger and fries customers.  The high frequency but low average purchase customers (bottom right) basically just stop in for coffee in the morning.  Note that at this level I didn’t separate out my single patty from the double or triple patty.  Drilling down to that level may help important depending on what you are trying to accomplish.

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Another useful way to populate the boxes is to look at how this segment differs from the norm.  It can be as simple as comparing the percent of business a given product category does for your customer segment vs. what it does in total.  For example, dessert may be 20% of the high frequency/high purchase value but only 5% of your total business.  This means that high frequency/high purchase value customers are four times as likely to buy a dessert.