Are We Investing In the Right Customers?

For decades, the growth strategy of most large retail chains was built around a simple idea: to sell more, you need more customers.

The logic remains valid. Without continuously renewing the customer base, sustainable growth is difficult to achieve. Yet the obsession with acquisition often obscures a less visible reality: a disproportionate share of revenue already comes from customers the company knows, identifies, and actively engages with.

In many retail chains, between 20% and 25% of customers account for more than half of total revenue.

The strategic question is not whether these customers matter. They do.

The question is how much of their spending still happens somewhere else.

“For many companies, the greatest growth opportunity is not attracting new customers—it is capturing a larger share of the spending of the customers they already have.”

The Problem with Treating Every Customer the Same

Despite the fact that a relatively small group of customers generates a substantial portion of revenue, commercial investments are often distributed evenly across the entire customer base.

Mass promotions, blanket discounts, and campaigns aimed at everyone frequently consume a significant share of marketing budgets.

These initiatives can certainly drive short-term sales, but they share an obvious limitation: they fail to distinguish between customers whose economic contribution to the business is fundamentally different.

As a result, a meaningful portion of commercial investment ends up subsidizing behaviors that would likely have occurred anyway.

The occasional shopper receives the same benefit as the customer who visits every week and generates several times more revenue.

From an economic perspective, this is difficult to justify.

Companies segment suppliers, categories, and store formats according to strategic importance. Yet many still treat customers with vastly different value profiles almost identically.

“Most commercial initiatives reward purchases. Very few are designed to develop the customers who contribute the most to the business.”

Your Best Customers Are Not Necessarily Exclusive Customers

There is another reality worth acknowledging: high-value customers rarely shop exclusively with a single retailer.

Even customers with strong purchase frequency typically distribute their spending across multiple competitors.

This means that the greatest opportunity is not always increasing the number of visits or transactions.

Often, it is capturing purchases that are currently taking place somewhere else.

The relevant question is no longer how much a customer spends with us.

The relevant question is how much they spend in the category overall.

The difference between those two figures represents the available growth opportunity.

From Rewarding to Capturing

This shift in perspective has important implications for commercial strategy.

The objective should no longer be simply to reward existing loyalty.

It should be to influence future purchasing decisions.

The most effective incentives are those capable of changing behavior: increasing participation in specific categories, driving frequency during key moments, or shifting spending from competitors to your own chain.

The goal is not merely to recognize your best customers.

The goal is to capture a larger share of their wallet.

A More Profitable Growth Strategy

At a time when customer acquisition costs continue to rise and consumers have more choices than ever, it makes sense to reconsider where commercial resources are allocated.

Your best customers already know your brand.

They already trust it.

They have already demonstrated a willingness to spend.

The opportunity lies in deepening that relationship.

Because when a minority of customers generates the majority of revenue, the most profitable growth strategy is not necessarily finding new buyers.

It may simply be persuading your best customers to choose your chain one more time instead of someone else's.

“The question is not who our best customers are. Most companies already know that. The question is how much we are investing to ensure they continue choosing us.”

If you would like to explore how to identify customers with the greatest growth potential and capture a larger share of their spending, let's talk.

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Sources

• Fader, Peter. Customer Centricity: Focus on the Right Customers for Strategic Advantage. Wharton Digital Press.

• Reichheld, Frederick. The Loyalty Effect. Harvard Business School Press.

• Bain & Company. Research on customer retention, customer lifetime value, and profitable growth.

• Kumar, V. & Reinartz, W. Customer Relationship Management: Concept, Strategy and Tools.

• McKinsey & Company. The Value of Getting Personalization Right—or Wrong—Is Multiplying (2021).

• Ehrenberg-Bass Institute for Marketing Science. Research on multi-store shopping behavior, buyer repertoires, and customer purchasing patterns.