Advanced Post-Purchase Communications Are Key to Driving LTV

With customer acquisition costs (CACs) increasing, brands are investing more than ever into marketing and advertising to get shoppers into stores and clicking on "buy" buttons. Yet this focus on the top of the funnel means brands are neglecting some of the most crucial moments in the customer journey. Specifically, those that happen post-purchase, when retailers have the opportunity to deepen their relationships with the loyal customers they already have with an eye on driving lifetime value (LTV).

Most solutions on the market focus on maximizing customer acquisition and conversion rather than on providing the kind of excellent post-purchase communications that drive loyalty and LTV. However, the post-purchase experience accounts for a significant proportion of skyrocketing retail expenses, including the costs of fulfillment, shipping, returns and restocking. Therefore, it stands to reason that retailers and brands should pivot their attention to this critical part of the customer experience.

American Eagle Outfitters (AEO), Saks Fifth Avenue, and Sephora are among the top retailers and brands executing exceptional post-purchase communications strategies today. These companies understand that different customers have different values and habits, and they know which of their customers tend to buy only on markdown and which return products most frequently. They also know exactly who their most loyal, highest-value customers are and whether they’re buying every week or every couple of months. By tapping into their customer data with the goal of better serving — and retaining — their most loyal shoppers, these retailers are able to effectively offset some of the cost increases associated with acquiring new customers.

Here are three ways retailers and brands can offer on-brand, post-purchase experiences that give them a competitive edge and drive loyalty and LTV:

1. Communicate clearly and proactively about order and delivery status.

A recent study conducted by Narvar found that 81 percent of consumers say receiving proactive updates on their order is critical to them repurchasing from a brand. To build customer trust and loyalty, brands should clearly communicate order tracking updates, even when there are delays or other problems, to turn one-time customers into repeat purchasers.

2. Personalize the entire customer experience.

Brands can ensure the post-purchase journey is as convenient and seamless as the transaction experience by understanding different customers’ priorities. According to another recent study, 60 percent of consumers making a return will bend the rules out of convenience or won’t bother to report a mistake in their favor. However, brands can easily deter this type of behavior by personalizing the returns experience. For example, Saks Fifth Avenue offers free returns within the first 14 days after purchase, while DSW provides elite loyalty members an extended return policy.

Brands that offer customer-friendly refund policies can also deter fraudulent behavior. AEO, for example, provides instant refunds for top-tier customers, while Levi’s offers advanced refunds on first scan for many shoppers. Personalized, flexible return and refund policies reward valued customers for their loyalty and encourage frequent repeat purchasing.

3. Use proactive, on-brand messaging in the moments that matter.

Brands benefit when they deliver personalized, highly engaging messages during each step of the shopping journey. Embedding special offers, discounts and product recommendations at key points, including post-purchase, can help drive additional sales. Reaching customers through their preferred mode of communication, and at their preferred frequency, is key to personalization that leads to increased retention and repeat purchases. Sephora’s best-in-class post-purchase communication strategy includes delivering frequent, proactive, branded messages as well as mobile app push notifications that resonate personally with customers.

Most retailers and brands zero in on driving LTV at the point of purchase, but they miss the opportunity to deepen their customer relationships at all the points that come after. By executing personalized communications strategies that focus on the post-purchase experience, retailers can take care of their most valuable customers and drive loyalty and LTV for a fraction of the cost of acquiring a brand-new customer.

Anisa Kumar is chief customer officer of Narvar, the post-purchase customer experience pioneer whose platform empowers more than 1,200 of the world’s most admired brands to deliver transparency, build trust, and grow customer lifetime value.