How to Increase Retail Sales: Targeted Marketing Strategies

By: on August 16, 2016

Increasing your sales is at the core of everything you do as a small or midsize retailer. Because we know how important this is, we’ve created this four-part series to offer tips and insights on increasing retail sales for your store.

In the first article of our series, we explore strategies to increase sales by leveraging your existing customer base. Key takeaways include focusing on the quality rather than the quantity of sales and delivering consistent positive customer experiences.

Here in part two, we offer advice and insights for identifying your most valuable customer segments and creating targeted marketing strategies to keep them coming back to your store.

All the insights in this series take advantage of common point of sale (POS) system features. If you fall into the 64 percent of single-store retailers who are running their business without a POS system, or if your POS system is outdated, check out our user reviews for some of the best POS options on the market today.

Gather Valuable Customer Data With the CRM Capabilities of Your POS

Let’s jump right into the importance of your store’s POS system. To successfully execute a targeted marketing strategy, you’ll need some sort of customer relationship management (CRM) capabilities to capture and store valuable customer information.

This may have you asking: “Does this mean I have to purchase CRM software?” Fear not; most POS systems on the market today include basic customer management capabilities. We’ve actually identified this as a must-have POS feature in our research.

A detailed, organized customer database houses crucial customer contact information, such as:

  • Contact information
  • Demographic information
  • Purchase history
  • Personal info (e.g., preferred name, birthday)

A customer profile example by Springboard Retail

Even more important than collecting the data is the ability to analyze it, identify trends and assign values to various customers segments. This analysis is the cornerstone of your targeted marketing strategy, and your customer management is the engine that makes it happen.

Analyze Customer Data to Identify Valuable Segments to Target

Once you have a customer tracking system in place and have accumulated a significant amount of customer data, you’re ready for the actual targeting.

“Targeting” is simply identifying your most valuable customer segments by analyzing customer purchase history details. (And, it really is simple with the right tools in place.)

There are various methodologies for assigning value to customers and segmenting them. Kevin Donnelly with retail software vendor Shopify offers a detailed, informative strategy for determining customer values, the results of which can help you determine the customer segments worth targeting.

We’ll walk you through Donnelly’s key steps below.

POS-enabled reporting options available with Shopify POS

Gather customer data regarding recency, frequency and monetary value (RFM):

“To use RFM to organize your customers, you’ll need to grab three pieces of data about every individual customer: The date of their most recent transaction [recency], the number of transactions they’ve made within a consistent timeframe (a year will work best) [frequency] and the total amount they’ve spent during that same timeframe [monetary value].”

Kevin Donnelly, Shopify

Can you see just how crucial a role customer purchase tracking plays in all this?

Once you’ve got your data, you’ll determine customer RFM value:

Donnelly recommends thinking of these scores as categories that are based on the value the customer has for recency, frequency and monetary value.

To determine these values, you’ll first score a customer on each of these factors separately. You’ll need to determine a scale on which to rank customers, e.g., from one to three with one being least valuable, two being somewhat valuable and three being the most valuable.

“This might seem a bit confusing, but don’t worry, it’s not as complicated as it looks. Remember: This scale is just a way to help you visualize which groups of customers are most valuable.”

Kevin Donnelly, Shopify

Obtain overall RFM value by simply adding up customers’ individual RFM scores:

Once you’ve assigned recency, frequency and monetary value scores, you can then add a customer’s three scores together to determine their overall RFM value. The highest overall scores have the greatest RFM value.

You can see an example of what this scoring process might look below:

Recency Frequency Monetary value Total RFM score
Customer A
Customer B

Customer A in this example has visited the store more often than Customer B, but Customer B is overall more valuable because of his or her recent visit (recency) and the amount of money spent (monetary value).

Keep in mind, this is just the beginning. Once you’ve defined your customer segments, you should search for common threads among the customers in each segment.

Maybe your most valuable customers share demographic similarities (e.g., they might all live within five miles of your store, they might all be women or they might all be around 30 years old).

Insights such as these will enable you to target your marketing efforts toward valuable demographics with the hope that you’ll acquire more highly valuable customers.

Use Email Marketing to Reach Your Target Customers

Once you’ve determined your most valuable customer segments, the fun begins. It’s now time to build marketing strategies that target these specific customer segments and demographics. The easiest way to do this will be with email marketing campaigns.

Email marketing is a viable, low overhead strategy for reaching specific customer segments (that is, as long as you’re getting customer’s emails and saving them in your customer database). Pull email addresses from the customer segments you discovered and send them content and promotions tailored to their needs, interests, past purchases etc.

If you have an e-commerce website, email marketing is a no-brainer to get site visitors. But it’s just as valuable for brick-and-mortar stores. With the right kind of targeted messaging and offers, you can leverage email marketing to actually get people in your store.

Successful content might include announcing new merchandise in a way that creates a story around the product. Additionally, special in-store offers such as buy one, get one promotions and coupons that must be used in-store can be effective.

For every $1 spent on email marketing, the average return on investment (across all industries) is $44.25.

While most retail POS systems can gather customer info, you’ll likely need to add email marketing software to your arsenal. Don’t worry though, this doesn’t have to break your bank. There are plenty of affordable email marketing platforms for you to choose from, including MailChimp and Constant Contact. Just be sure the system you choose integrates with your POS, so you can easily pull from your customer data to create and organize email lists.

As for the actual execution of your emails, there are multiple strategies you should employ. If you’re just starting or revamping your email strategy, it’s a good idea to send an introductory email. Introduce yourself, your store, brand, products etc.

This is also a great opportunity to offer a coupon for a discount or maybe even a buy-one-get-one deal in your store.

You want to deliver something useful and memorable, so your recipients are more likely to open and read future emails.

Bob Phibbs, CEO at the Retail Doctor, stresses the importance of delivering personalized content to your customers.

“Once you have your email list, use it in a personal way. Personally invite customers into your store with something specific they might enjoy. Even just thanking your best customers for their business in a personal way brings them back in. When they do come in, thank them personally again.”

Bob Phibbs, CEO at the Retail Doctor

This level of personalization is completely in line with our research on delivering positive customer experiences. By reaching out in a personal and authentic way, you can humanize your brand and establish a relationship of trust between you and your customers.

This relationship serves as the foundation of customer loyalty, which we’ll discuss in our next “How to Increase Retail Sales” segment.

Where Do You Go From Here?

Now that you have a blueprint for targeted marketing, what’s next?

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