Statistically, virtually all markets have a head and a tail, i.e. a few power buyers who account for a significant portion of sales, and a great many more buyers who buy infrequently. Given the choice, it’s a safe bet that sellers will invariably pick “heads” over “tails”.
Is it the right wager?
The “head” is occupied by two categories of buyers. One is the individual consumer who spends disproportionately more than others on lattes, cars, mp3’s, sporting events and vacations. The other category is the organization with the means to buy in volume – enterprises, school boards, associations, hotel chains and governments.
The restaurateur soon recognizes the diner who comes in daily, the airline the 250K mile flyer, and the software vendor the 10,000 networked devices under IT management. Frequent (repeat) and big-ticket buyers are hard to come by, and cause pain when their allegiance shifts (Express Scripts loses UHC). That’s why we reward their loyalty with inducements – added services, privileges, status (platinum level buyer) and discounts.
Yet, the tail represents a market opportunity for others. The Funeral Director, the portrait artist, and the termite exterminator don’t count on repeat business. Nor do record producers who seek to market best-selling albums. All these sellers largely rely on a sufficient number of one-time transactions to succeed in their businesses. Their inducement lies in creating a valuable experience that travels by word of mouth.
What is the right wager?
To me, the preferred choice is both heads and tails. Approach each transaction as the opportunity to create value and earn a satisfied customer. Satisfied people sing your praises and bring other customers, some of whom may eventually become frequent or high volume buyers.
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