Marketing to VIPs: An Overview

Identifying VIPs — and getting the most out of your relationships with them — should be a major focus of any mature lifecycle marketing strategy. Like so much else in the marketing world, this used to be intensely manual, often laborious, and prone to inefficiency. With today’s tools and the right mindset, however, optimizing VIP relationships is within reach for any business.

The 80/20 rule (more formally known as the Pareto Principle) states that, for many events, 80% of effects come from 20% of causes. It’s a concept that resonates particularly well in the business world, as business’ very best customers typically account for a disproportionate percentage of overall revenue. In the US alone, Adobe found that 40% of e-commerce revenue comes from returning or repeat purchasers, who represent only 8% of all visitors.

These small, highly valuable customer segments are your VIPs, and they need special attention.

Identifying VIPs

It’s impossible to take care of your VIPs if you don’t know who they are, but uncovering a useful segment of these customers is actually highly contingent upon a number of customer traits taken alongside the specifics of your business. Total revenue alone isn’t always a great indicator, nor is total number of purchases. In the first case, customers making a single large purchase only never to be heard from again might qualify; high-volume, low-value purchasers would invariably end up qualifying in the second. And while these segments definitely warrant their own bespoke marketing efforts, they’re probably not good fits for VIP messaging and offers.

There is no one-size-fits-all definition. VIPs look and behave differently across different verticals. A subscription business’ VIPs will almost never account for the same percentage of revenue as those of an e-commerce shop or mobile gaming company, but they’re no less valuable from a business perspective.

In other words, VIP behaviors are deeply tied to specific business types. E-commerce VIPs buy regularly without discounting. Subscription VIPs have a long tenure at a high tier of service, with incremental e-commerce cross sells if applicable. VIP gamers transact frequently over a long period. Ticketing VIPs frequently buy in larger volume, often for multiple events.

Go deeper when necessary. It’s impossible to identify VIPs accurately without deep visibility into customer data. For example, the top 10% of mobile gaming customers account for 70% of in-app purchases, but it would be a mistake to say that these are VIPs. In fact, .19% of players drive 50% of mobile gaming revenue — and courting these “whales” effectively will make or break a mobile game’s success.

It’s inherently risky to rely so heavily on a tiny fraction of customers, but failing to understand this revenue distribution is even riskier, as it naturally leads to less personalized, less efficient marketing to business-critical customers.

So what’s the right approach? Trust your intuition as a marketer. You know your business better than anyone, from your internal KPIs and desired customer behaviors all the way to the promotions and new product offerings likely to skew any single metric in favor of false positives. This gives you the ability to reason about — and dynamically redefine — the VIP segments that most impact your business.

Here are just a few general attributes that often help identify VIPs:

• Average order value
• Total lifetime value
• Number of orders
• Customer service/support history
• Referral activity
• Length of tenure as a customer
• Performance across other metrics, e.g. high-percentile on-site behaviors, email engagement

Mixing and matching these and other customer attributes should be the cornerstone of any VIP identification strategy. Explore your data, identify trends, and see which traits in combination define your very best customers — and update these criteria regularly in response to your changing business.

Understanding the specific traits of your VIPs also helps identify “pre-VIP” customer cohorts. These customers may be promising newcomers, established customers who meet most of your VIP criteria, or they may meet all of those criteria to a lower threshold than true VIPs. In all of these cases, the goal should be to craft offers and messaging designed to encourage the behaviors necessary for inclusion in full VIP cohorts.

The key to doing all of this quickly and efficiently is operationalizing all of your customer data, whether by engaging a technology partner or by securing dedicated internal technical resources. While this may appear daunting at first, the payoff is absolutely worth the up-front effort.

Building a Successful VIP Marketing Strategy

Once you’ve found the VIP segments that make sense for your business, it’s time to develop a marketing strategy that maximizes their value. But remember: these are already your best customers, so think big, be smart, and leverage your tools effectively.

Broadly, we can break this into three major areas of effort:

Enhancing the VIP relationship. Your best customers should always feel appreciated. In fact, they expect it — fully 75% of consumers approve of giving top customers preferential treatment. Don’t fall into the trap of thinking this just means exclusive discounts and offers, however; those have their place, but your top customers shouldn’t need much extra incentive to purchase. Instead, think about ways to make VIPs’ relationship with your brand more significant.

Consider using special rewards programs, early access to products or features, and VIP-only newsletters that let these customers know they’re in a special category all their own. And if they happen to have any customer service issues, be sure you can recognize them quickly to deliver white glove service.

Investing in your VIPs. VIPs are your most valuable customers, so don’t be shy about spending more to keep them engaged. Adopting a multi-channel approach makes a lot of sense here. Direct mail is particularly well suited to reaching VIPs. It costs more than email, but receiving a piece of physical mail has more impact. Direct mail’s overall response rate is nearly 6x that of digital channels’, and its ROI is comparable to social media marketing.

Moreover, it’s possible to combine the convenience of digital with the efficacy of direct mail. Several vendors (e.g. Lob, Bond) allow marketers to send direct mail programmatically via API calls, complete with merge variables for superior personalization. This best-of-both-worlds approach removes a significant amount of friction from incorporating direct mail into your marketing toolkit.

You don’t need to stop there, either — creativity counts. In addition to personalized notes and postcards, surprising your VIPs with occasional gifts can yield impressive results.

Leveraging your VIPs. Just courting your VIPs is only half the battle; effective marketers should always look to expand their VIPs’ impact. Sometimes this is as simple as creating VIP-lookalike audiences on social media for acquisition purposes, but it can also go deeper.

Your VIPs already love your brand, so encourage them to be influencers. Incentivize referrals and sharing your social content. Get your VIPs to share their own stories. Sponsor VIP events that you can turn into additional content for your newsletter and social media pages. Highlighting the authentic, human connection you share with your customers amplifies the value of your VIPs well beyond their individual LTV.

Measure Everything

The final key to a strong VIP strategy is a familiar one: measure, measure, measure. Whatever you do, track the impact to your business both immediately and over time. Are your VIPs who you think they are? How efficiently can you migrate regular customers into the VIP cohort? Does your messaging resonate? How well are your VIPs driving referrals, and how much are those newly-referred customers worth?

Much like VIP identification, effective measurement lies at the intersection of your marketing intuition and data operability. Think deeply, think creatively, and ask intelligent questions about your various campaigns’ performance, then marshal the technical resources necessary to answer those questions. Then, armed with knowledge, iterate. As you refine your VIP marketing approach over time, you’ll drive increased loyalty, referrals, and revenue — and that’s a VIP performance in itself.