The Importance of Small and Medium-Sized Customers to E-commerce Companies

Sep 08, 2012 (09:09 AM EDT)

GUANGZHOU, China, Sept. 8, 2012 /PRNewswire/ -- The rapid development of e-commerce has contributed greatly to the personalization of the market, making personalized consumption possible, since the enterprises will try to meet the customer's requirement for personalized consumption through means like customized production.

Customers are the core resources an enterprise counts on to win in the market, as well as the object the enterprise serves and the starting point of and customer relationship management. The rapidly developing world economy has brought a much wider array of choices for consumers, which also show a trend of diversification, making personalization now the key feature of consumptions. Marketers' focus has shifted from mass marketing to classification marketing, and to word-of-mouth marketing, with a constant segmentation of products, services and markets. These have explained the reasons for the personalization of the market, customers' consumptions and the enterprises' production.

The 20-80 Rule tells us that the most important part only takes up a small portion, about 20%, and the remaining 80%, though being the majority, come secondary. Soobest thinks that 80% of a website's revenue is created by 20% of the core users, and that is why the company sticks to the 20-80 Rule and finds out that 20% of key customers, for whom they offer most quality service. Yet things keep changing, including marketing strategies and the circumstances of e-commerce, which has lead to SooBest's reconsideration of this rule. The feature of personalization of customer consumption emerging, the company has been paying more and more attention to that remaining 80%.

According to the Long Tail theory put forward by Chris Anderson, Editor-in-chief of the Wired magazine, as long as the channel goes wide enough, those non-mainstream products in small demand can still compete with merchandise sales and the mainstream merchandise in huge demand. And SooBest thinks that through applying this theory to customer relationship management, the remaining 80% of the long-tailed customers, also called "non-major customers", can be seized. Gathering the value of these people can even result in a profit which is much bigger than that created by the 20% key customers. Therefore, in addition to its focus on women dresses, sexy intimates, men watches, outdoor clothing, and charm jewelry, SooBest also gradually tries to meet the demand of other users seeking some secondary items, like electronic products, furniture, luggage, etc.

Companies should be able to take full advantage of both the Long Tail theory and the 20-80 Rule, so as to get an insight into changes in customer demand, and to analyze the customers' value to the business. By taking into consideration the type of their businesses, market positioning, and the corporate power, the companies can decide which they should concentrate on, the 20% or the 80%, namely the small proportion of key customers or the mass small customers. Nevertheless, taking care of both the two parts also makes a choice.

Although the small customers do not come with very strong purchasing power, attractive portfolio, or active consuming behaviors, they can still have a huge impact on the corporate image when gathered together. The result will be more new customers and thus huge profits for the enterprises.

To adapt to the new economic situation, as well as the consumption characteristics of secondary customers, SooBest conducts their customer relationship management by more proper and effective means, to get a sublimation of those customers' value and, therefore, greater profits.

1. Web2.0 Interactive Marketing
Web2.0 advocates opening, participating, sharing and creating. So SooBest uses Web2.0 tools like Blog, RSS and SNS, to make its customers change from passive to active, via participations and interactions. SooBest expects these can help understand the psychological needs and the personalized performances of the customers. Therefore, new experiential elements, interactive elements and personalized elements are added to the marketing process to attract the attention of a large number of small online customers, and to make them become its customers.

2. Precision Marketing
This means meeting customers' demand and lowering the costs by an enormous collection and accumulation of consumer data, and then distributing the information to the optimum groups at the best time in the best ways. The enterprise can go for database technology to conduct comprehensive management, which means the customers of high reaction rates can thus be distinguished. In this case the enterprise can establish a stable long-term relationship with these customers.

Soobest's precision marketing strategy is now based on precise positioning and the company does this by relying on their own means of information technology, accurately grasps of customers' demand, and personalized communication and service system. SooBest is able to master each customer's propensity to consume, through collecting, sorting and analyzing the user data via the technological platform of its site. And then different transmission methods, like e-mails, are used for its one-to-one interactive marketing to the targeted audience. Finally the feedbacks from the customers and the market will result in constant modifications and improvements.