Who are these people and why are they giving you all that money?

A number of years ago, I was attending an executive committee meeting. The president of the company was there. So was the CFO, COO and VPs of sales and purchasing. In my hand I had a list of names I had gathered from a report I had run. I asked the group, “have you guys heard of any of these people?”

I read the first name and looked around. No signs of recognition. Then the second and third. Nothing. I kept reading names until someone got impatient and interrupted me, asking me to get to the point.

The point was that I was reading a list of the company’s best customers, people who had purchased many tens of thousands of dollar’s worth of goods and services from us. One of the people in the top ten (an OCD sufferer perhaps) had visited one of our stores to make a purchase over 60 separate times over 18 months or so. (This is truly remarkable. We were running a specialty consumer electronics store, not a 7-11.)

And none of the leaders of the company (including me) knew these people by name.

Pity.

Less than 3% of our customers 

provided 26% of our sales. 

Conversely, 73% of our customers 

provided less than 20% of sales.

A little more research revealed just how important these folks were to the bottom line. For example, less than three percent of our customers were responsible for twenty-six percent of our sales. Conversely, seventy-three percent of our other customers provided less than twenty percent of sales. (The remaining folks were between those two extremes.)

During this period, most of our advertising budget was invested equally among all of our customers. So the crass perspective is that the ROI was extraordinary with our best customers. One could also make the case that our best customers were also the most loyal, so we’d have to do something really bad to have them switch to a competitor.

Well, with the stakes so high, and competition so much more prevalent today, I would advise you to do the extreme opposite of taking these folks for granted. I would recommend making every effort to give them every reason to love you. Like these folks do.

Pagliacci Pizza: My call really is 

important to them.

I love Pagliacci Pizza in Seattle. They make a really good pie. Not the best pie I’ve ever had (that was in Florence), but a really good pie. But that’s not the reason I love them. I love them because when I call up, the phone is answered immediately. If the lines are full, I hear a recording of an extremely pleasant woman’s voice. Instead of a hollow and clichéd “your call is important to us.” She says, “As one of our best customers, you know we get slammed sometimes and that we’ll be with you in a second or two.” And always, always within a few seconds, a live person picks up the call. “Is this the Lee residence?” they always ask. They always ask if we would like to hear about the specials. They always ask if we would like salad, gelato or soft drinks. They always confirm the order. They always deliver within the promised thirty to forty minutes. My call really is important to them.

What they haven’t always done is charge me for my pizza. Every once in a while, their regular customers are given their order free of charge. (Maybe only once, but so what?) It's just a “thank you” for being a regular customer. Which I will remain forever. (In fact, because I like them so much, even if they someday screwed up an order or delivered late, I’d forgive them with hardly a thought.) 

We tell all our friends. 

Pagliacci does other endearing stuff. They send out an oversize newsletter that features big pictures of their employees. I read it. Their pizza boxes are printed with scenes from the neighborhoods they serve. Pagliacci is part of the very fabric of the city.

There are other businesses in town that could consider me “a regular.” But they do nothing out of the ordinary in acknowledgement of my out-of-the-ordinary patronage. I suppose I continue to buy from them because they have a convenient location, or because of habit. But such a relationship is tenuous. And that may mean that someone else could come along and fairly easily claim my business.

I wonder if they know my name?