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It’s a well-known fact that it’s easier to sell to an existing customer vs. acquiring a new one. To back this up Mcallister Marketing claim that “acquiring customers is five times more expensive than retaining existing ones.” What’s more, the likelihood of selling to a new customer ranges from 5 to 20%. Yet, the success rate of selling to existing customers skyrockets to 60%-70%.
Another statistic from Harvard Business Review says that a 5% increase in customer retention can lead to a 25 to 95% increase in profits.
Despite these stats, many marketing teams focus valuable time, attention and budget on acquisition over and above retention. Both are equally important…Obviously acquiring new customers is essential however it’s a wasted effort (and you won’t see the full potential of your hard work) unless you retain them.
Creating a solid customer retention plan is essential to boost your bottom-line. In this article, we outline 5 customer retention strategies to ensure the best chance of success. Let’s dive in…
1. Obsess over your Customers
Let start at the top. What can we learn from one of the largest players in the industry? Amazon.
Amazon has many leadership principles to drive their business forward. Yet the No.1 thing that Jeff Bezos claims is the ‘secret’ to their success is their obsessive-compulsive focus on the customer. “Focusing on what the customer wants or needs has been their most profitable move to date” claim Business Insider.
What we find is:
- Customer expectations are higher than ever and are still growing.
- The internet means more choice and less brand loyalty.
- The pressure on Ecommerce and Marketing teams are greater than ever.
In the digital age, where brand loyalty is becoming scarcer by the day – it’s often tempting to focus on the competition over the customer. Our first tip is that every decision you make should, to some extent, be based on the customer.
Customers want fast websites, swift delivery and relevant content now. Any friction along the way will give your customers caused to look elsewhere for similar products or services. Luckily today’s Ecommerce and Marketing managers have more tools available and masses of data at their fingertips to provide relevant and personalised online experiences, at speed. You need to tap into this actionable insight (buying habits, demographics, sense of style) to find more ways to appeal to them.
2. Personalise, Personalise, Personalise
‘This is easier said than done’, I hear you shout. Marketing is getting more and more expensive with less usable data post-GDPR and to add to this - the challenges of unknown keywords - Facebook, Twitter and Marketplaces essentially placing a wall between you and all this insight. What’s more, a report from Internet Retailing claims that consumers received fewers emails in 2018, and made a conscious effort to sign up to less brand emails. There are many ways to overcome these hurdles by optimising web pages using product recommendations and personalisation engines such as Episerver and Adobe Experience Cloud. Platforms such as these enable you to move beyond generic marketing to hyper-personalised communications to attract and keep your customers subscribed.
One of the key tactics in your customer retention toolkit is email. According to a recent B2C Ecommerce benchmark study from Episerver, direct and email traffic represented the source that had the highest units per order (averaging 3.4 units per order). The cause for this may be the level of personalisation available both in email communications.
To deliver the experiences consumers crave, email content should be personalised to shoppers’ buying and browsing habits as well as their product or category preferences. Taking this a step further, your web experiences should be equally personalised based on email activity. Many Ecommerce platforms and email service providers don’t support this level of integration. As a result retailers only personalise 10% of their emails, on average. Our advice:
- Use data to deliver personalised online and email content based on behaviour and product categories. For example, consider triggering emails to customers who viewed items that have since dropped in price.
- Don’t discount across the board. Preserve your margins (and reputation) on full-price buyers.
- Use behavioural data to cross-sell and recommend similar accessories. E.g. when someone’s bought a dress, share complementary accessories to “complete the look”.
- For consumable goods, try subscription-based strategies, or triggered emails based on product lifecycles. For example, ‘it’s been some time since you bought ink / makeup / face-cream - are you running low?’).’
Another consideration to bear in mind is that all these automated emails can come across as faceless. It’s important to “be human”:
‘Ultimately, understanding the customer and consistently meeting or exceeding their expectations is the most important factor in retaining them. A business can have a thousand little details around the shopping experience to add value to its customer, but if it fails to deliver what the consumer is primarily trying to do, none of them matter.
‘The second most important factor is the ability to resolve issues if something does go wrong. Communication and honesty are the most fundamental parts of this. Admitting fault and coming across as human (as opposed to a “faceless corporate machine”) can often mitigate customer agitation in the event a mistake is made.’ - Gavin Masters, Industry Principal at Maginus
3. Redefine the Customer Journey
Our third tip would be to extend the notion of the customer journey beyond the purchase or last click. At the moment, most Ecommerce websites and marketing strategies are optimised for acquisition and customers can feel neglected post-purchase. Marketing attracts customers to the site, the website infrastructure funnels customers towards specific goals, and filters / search help users to find their ideal purchase. If you manage an Ecommerce operation, you’ll know this all takes heavy investment to get the customer to convert. From the website itself: UX and design, product photography, advertising, retargeting campaigns and more. The moment the user’s money is out of the account, the customer wants to know as much as possible. Has the order been placed? When will it be dispatched? What’s the estimated delivery date? Can I change my delivery time and date? The common issue is that many retailers don’t have the technology to manage relationships with logistics partners – leading to varying levels of customer service.
Tobias Buxhoidt, Founder and CEO, parcelLab: ‘We recently carried out research into the logistics services of the UK’s 100 largest online retailers and found that 27 were not communicating with shoppers at all during delivery. Only 11 communicate with their customers directly during shipping, with the remaining 89 either leaving this to the delivery carrier or the customer receives no updates at all.
‘By taking control of post-purchase communications, retailers can continue their personalised service beyond checkout through to delivery. Sending regular branded emails informing customers of the progress of their purchases not only builds brand awareness and loyalty, increasing retention, but also enables retailers to share offers and suggest complementary purchases, driving sales.’
Retailers are under growing pressure to build their delivery service around customers’ lifestyles. Providing convenient, personalised ordering, payment and delivery options is just as important as creating a frictionless online shopping experience enhanced by technology. If retailers aren’t offering flexible fulfilment to meet the needs of their modern consumers, shoppers may look elsewhere. The final mile delivery and customer support should be seen as an extension of the customer journey and an opportunity to turn the casual shopper into a loyal customer.
4. Foster Loyalty
How many brands do you actually care about? Really think about it - I bet you can count them on the palm of one hand.
Whilst customer retention is all well and good – it means you have an actively engaged group of potential buyers. To thrive you should aim to foster loyalty. What do I mean by this? Gaining a group of customers that are not only willing to return, but only shop with you for the products you provide. To do this you should create consistent, valuable and personalised customer experiences.
Two brands that spring to mind when I ask myself “who do I care about?...” are Jacksons Art and Farrow & Ball.
Over the years, I’ve become increasingly more loyal to Jackson’s Art. Now they’re my ‘go-to’ for art materials and I choose them over the competition every time. Why? Jackson’s offer expert advice, helpful resources and recommendations. For any budding-creatives out there you’ll know it can be expensive to experiment with paints, mediums and surfaces you’re unsure about. Jackson’s play to their strengths as a specialist in their sector. They have a fantastic blog, resources and materials guide that use their in-depth product knowledge and expertise to gain customer’s trust and confidence at the checkout. So far they’ve proved themselves a trustworthy retailer who’s advice I can rely on.
On social platforms, Jackson’s have informative and intelligent social media posts and responses. By becoming a regular part of a consumer’s social lifestyle, you can inspire shoppers first and play a valuable role in their research and inspiration needs over time.
Like Jackson’s, you will have deep knowledge of the products and the market, as well as a detailed understanding of your customer’s needs, this is an area that the likes of Amazon simply cannot match. Amazon doesn’t have a call centre or niche technical knowledge about the products they sell as you do. Our recommendation is to play to your strengths: Exceptional customer service.
Farrow & Ball
Farrow & Ball are one of the leading manufacturers and suppliers of premium paints and wallpapers in the UK. With a thriving B2C and B2B business, more than 60 showrooms and 1,300 stockists worldwide – it’s clear F&B are going from strength to strength. So, what’s the secret to their success? In a sentence - Farrow & Ball don’t sell paint. They sell a lifestyle.
From their instantly quirky product names such as Hague Blue, Nancy’s Blushes and Elephant’s Breath. To their inspirational blog, The Chromologist, Get the Look features and product guides - all this content helps to build confidence at the checkout. They are experts at weaving information, inspiration and user-generated content into the customer journey, rather than focusing solely on conversion alone.
According to the latest report from Episerver, “Eighty-three per cent of online shoppers intend to do something other than make a purchase when visiting a brand’s website for the first time.” This trend is unlikely to change anytime soon.
To get ahead, retailers should take a leaf out of both Jackson’s and Farrow & Ball’s book and get behind consumer’s instinct to browse now and buy later. Developing Ecommerce strategies to understand their consumer’s behaviours and preferences, rather than transactional information alone.
This combination of Ecommerce driven data, direct social engagement and meaningful consumer conversations is key to developing brand affinity that lasts a lifetime.
5. Make Delivery and Returns into an Opportunity
‘Delivery is a crucial part of the shopping experience. Customers care about shipping, perhaps even more than they care about product and price, and they are very unlikely to shop with a retailer again if they have failed to meet their delivery demands. Not receiving the product they purchased within the timeframe they expected can create a negative perception of the brand and cast a shadow over the entire buying experience – especially if the product was purchased for a special occasion. If retailers want to keep their customers coming back, they must avoid disappointing them by managing their expectations, without being tempted by the “under-promise and over-deliver” strategy – anticipating lengthy shipping times can put the customer off from buying in the first place.
‘Equally, being unable to fulfil an order due to unavailability of stock can also create disappointment. Customers will rarely go back to a retailer that wasn’t transparent about product availability and failed to complete their order.’ - Kris Taylor, Head of Customer Success EMEA, Magento, an Adobe Company
In the same vein, returns aren’t often viewed as an opportunity – an inconvenience, and additional cost, something to be avoided – sure. But this attitude can no longer prevail in the Ecommerce world.
Barclaycard has identified that returns are rising heavily, with a quarter of retailers (26%) seeing a rise in returns both in-store and online over the last couple of years. In online fashion this has been driven by ‘serial returners’ – people in Britain spend £313 on online clothes annually and end up sending back £146 worth of these clothes (a 47% return rate). There are a few easy steps retailers can take to make the most out of returns. Everything in a retailer’s power must be done to ensure that returns are convenient as well as easy to manage.
- For fashion brands, ensuring that sizing is consistent would make a mammoth amount of difference.
- A huge amount of potentially useful information is embedded in returns – and this information can both inform future business practice, and even be used to offer customers actionable insights. For example, knowing that a customer has returned product B because it was the wrong size makes it very easy to offer product C instead.
- Keep your product landing pages up-to-date with detailed descriptions so that customers know exactly what they are purchasing.
- Size and fit assistants like the one on ASOS's site are a great way to see personalised size recommendations which should improve accuracy. reduce returns and ultimately lead to a better customer experience.
- Returns management also needs to be centralised so that everyone has an accurate, unified view of stock control. Real-time analytics will also prevent a new batch of a product being ordered when a batch of the same product is about to be returned.
Whilst these 5 points cover a number of customer retention strategies. They can be broadly categorised into 2 camps: Personalisation and Communication.
Today’s consumers expect to be known and spoken to with relevant insights and product recommendations to instill confidence at the checkout. The final mile delivery, returns and customer support should be seen as an extension of the customer journey and an opportunity to turn the casual shopper into a loyal customer. In so doing, boost profits and customer lifetime value.
With a finite capability to meet the demands of today’s “I want it now” consumers, retailers need to consider what matters most - is it speed, convenience or free delivery?
Download our easy-read checklist to help you decide whether you’re ready to take your online business to the next level.