Tuesday, June 28, 2005

Marketing Quintiles

I'm just reading another book called The Next Economy by Elliott Ettenberg. I've been borrowing so many crappy marketing books from the library lately that I had almost given up.

Then this gem of a book shows up.

Ettenberg asks us to break up our existing customer list into quintiles (20% sections) based on how much they buy from us and how often. Then we look at the top three quintiles and focus all our marketing on them.

We actually ignore quintiles Q4 and Q5 because they cost us more money than they pay.

This may sound callous, or like we're wanting to ignore poor people. But there is no correlation between quintiles for a certain business and level of income or net worth of the customer.

I can see this in my own life. I am a regular customer at the Firestone car maintenance place here in my hometown. They have had my business for probably ten years. We do regular oil changes and then whenever they find some other problem, we ask them to fix that too. They never add on unnecessary stuff and they always let us look at the old parts to see what the problem was.

So, I am probably in their Q1. They should treat me like a king. (They do treat me pretty good, but not different from other people.)

I am also a regular shopper at Giant Eagle grocery store. They have my business every week. So I am their Q1 shopper.

Then, when I look at car dealers, I have no affinity. I am a terrible customer. First, I shop around for the cheapest deal. Second, I hardly ever buy new cars, I wait until they totally break down. My Monte Carlo is over 10 years old and running great. My Dodge Dakota is seven years old and also running fine.

I must be a Q5 customer for the car dealers where I've bought cars. They should be ignoring me or even discouraging me.

Same for clothes shopping. Meijers, Wal-Mart, who cares? Whatever's cheapest. Q5.

So, every one of us is simultaneously a Q1 and Q5 customer somewhere. There is no inherent prejudice against the poor with this model. And it allows the businessperson to focus their efforts on their best customers. You've already heard me talk about Attracting Perfect Customers (best, most holistic marketing book ever) on my previous blog, this is the same concept except extended to be a bit more scientific.

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