4 Customer Relationship Groups & How to Deal with Them

Not all customers are created equal. There are strangers, barnacles, butterflies, and true friends – making it essential to understand the value of each customer and adapt your marketing strategy accordingly. Different relationship groups require different approaches, not only due to their varying interests, purchasing behaviors, and customer experiences but also because their potential profitability differs for your business.

While many sources emphasize customer groups such as impulse buyers, bargain seekers, and discount customers, this article simplifies the classification into more manageable relationship groups. We will explore four types of customers, how to manage customer relationships with each, and strategies to avoid when dealing with them.

What are the 4 Types of Customer?

Before determining how to manage customer relationships or approach specific customer groups, it’s crucial to view each relationship as an investment. Building customer loyalty is challenging, requiring consistent investment in customer relationships. Your relationship management strategy should be tailored to each customer group or segment. This article focuses on evaluating whether pursuing such loyalty is a worthwhile and equitable effort.

Strangers

A stranger doesn’t necessarily spell danger here, so hold off on rushing to conclusions. Typically, these "strangers" are customers with low projected loyalty and minimal potential profitability. They neither shop regularly nor hold a high customer lifetime value. Why is that? Good question. Often, their status as a stranger isn’t immediately apparent.

What can you do about it? That depends on the type of stranger. Some customers remain strangers simply because they have no desire to develop a deeper relationship with your brand. In such cases, it’s best to let them go. It’s understandable you love your brand and products and believe you can sell to anyone, which is a positive mindset. However, it’s equally important to manage customer relationships wisely by choosing your battles.

If a customer falls into the stranger category, they could either be a disengaged long-term customer or a new customer. If they are new, you should at least be able to identify that. In such cases, offering a wow-worthy customer experience could be your best chance to engage them. Need ideas? Jump ahead to the ‘True Friends’ section for tips on converting strangers into loyal customers.

No matter your approach, be cautious. Long-term customers with low engagement have a slim chance of evolving into butterflies or true friends. Be mindful of what you might sacrifice when trying to win them over.

Stranger danger just became barnacle danger. Avoid these guys at all costs - with “costs” being the operative word in that sentence. Barnacles are customers that have a low overall spend and customer lifetime value, yet remain in your customer base for longer than most customers. Their projected loyalty is high, but their projected profitability is on the floor.

Imagine your business as a ship. I’m sure you can imagine what advice comes next. That’s right - wash the barnacles off your ship, or at least clean things up a bit. That’s not to say that you should banish customers and never again serve them, but rather a warning against investing in customers that don’t invest in you.

The reason for this analogy is that barnacles cannot be turned into decoration for your boat or somehow become advantageous. That’s why your best bet is either getting rid of as many barnacles as possible or not wasting resources on attempting to turn them into your most loyal customers.

Butterflies

Things are finally looking up. For many especially those in finance butterflies are often seen as ideal customers. Why? They require minimal effort to maintain and, though not brand ambassadors, they spend significantly more on your products than other customer groups.

But are they truly your best customers? Not quite. Despite generating high revenues and having low retention costs due to their infrequent purchases, they lack a crucial element perhaps the most valuable trait a customer can offer loyalty and customer-based brand equity.

Don’t get us wrong butterflies are fantastic. Yet, they fall short of becoming true friends who advocate for your brand and drive new customer acquisition.

Can you convert them? Hopefully. Success largely depends on how you approach them. A personalized relationship management strategy is key here. Hopefully, you have some customer data any insight will help. Examine their purchasing habits or notable dates like loyalty anniversaries, birthdays, or holidays such as Valentine's Day.

While butterflies hold more potential than strangers, a word of caution remains their projected loyalty is still low. Be careful not to waste money or resources on excessive incentives. Thanks to their revenue and potential profitability, they warrant more effort than strangers, but don’t be fooled into chasing false promises.

True Friends

You’ve achieved it the holy grail of customer loyalty. You’ve made someone love and value your brand as much as you do. So, you’re done now, right? Not quite. These customers your true friends should serve as your main source of inspiration.

The first step is to analyze this customer group in detail. Identify the common traits they share. What attributes do they have in common? Which marketing strategy or campaigns have been most successful with them? What rewards, loyalty programs, or products have these customers experienced that your butterflies, barnacles, or strangers haven’t?

Still, you’re not finished. Yes, these customers have the highest projected loyalty and customer satisfaction, but that doesn’t mean you’ve maximized their potential value. This is where you need to ask how they can generate even greater value for your business.

You might be thinking about more sales and revenue now and you’d be right but it’s about creating those outcomes differently. Keep selling to your true friends, of course, but remember they are more than just customers. Their value lies in their loyalty. The distinction? Loyalty leads to referrals, positive word of mouth, and brand advocacy things you can rely on to drive growth.

However, don’t just count on it; incentivize it. Reward your true friends for referrals, social engagement, and other actions that help grow your brand without requiring traditional marketing campaigns.

Barnacles

No, we’re not talking about the sea-dwelling kind but the metaphor fits. Barnacles are customers with high loyalty but low profitability. They stick around for a long time, make repeat purchases, and seem committed to your brand but their spending never quite justifies the cost of maintaining the relationship.

Why is that? Often, these customers are limited by budget, only buy discounted items, or require more service than the revenue they generate. On the surface, they may appear valuable due to their loyalty, but their long-term presence can quietly drain your resources.

What can you do about it? First, identify whether there’s any room to grow their value. Can you upsell or cross-sell? Could you nudge them toward higher-margin products or reduce the service cost required to keep them?

If that’s not possible, it may be time to reallocate your efforts. As much as you might appreciate their loyalty, it’s crucial to focus your resources where they can drive real business growth. Remember: long-term loyalty isn’t always synonymous with long-term value.

Conclusion

This model should never be used to justify poor customer service for "low-value" customers or to focus solely on the high-spending "cash cows" of the customer base. Instead, it offers a relationship management strategy designed to prioritize investments in customer relationships, marketing activities, and more. It serves as a framework to guide how customer groups should be segmented on a broader level. Categorizing customers into these four key customer relationship groups and then further segmenting within those groups is a far more strategic approach than immediately segmenting based solely on customer lifetime value or potential profitability.