Building customer loyalty is becoming more and more difficult in today’s omnichannel retail environment. Your competition is always just a simple search, click or tap away. It’s much more cost effective to retain existing customers rather than acquire new ones. So how can retailers gain customer loyalty?
In the webinar “Customer Loyalty: The Holy Grail in a Digital World,” Jen Gulley, director of e-commerce sales at WestPoint Home, and Pini Yakuel, founder and CEO of Optimove, will address the keys to identifying, targeting, acquiring and keeping a loyal customer base.
In the below Q&A, Yakuel gives a preview to this free webinar, happening Tues., March 28 at 2:00 p.m. ET.
Total Retail: Why is customer loyalty so important in today’s retail landscape?
Pini Yakuel: Existing customers are a critical driver of every company’s success. Their loyal relationship with the brand translates into more and larger transactions compared to new customers, and are responsible for a significant percentage of revenues. In an environment of extreme competition, nurturing these customers is crucial.
Gartner research has found that “companies that focus their marketing on existing customers see a 20 percent increase in revenues.” According to Bain & Co., “increasing your customer retention rate by just 5 percent can lead to an increase of 25 [percent] to 90 percent in profit.” A Marketing Metrics study states that “the probability of selling to an existing customer is 60 [percent] to 70 percent. The probability of selling to a new prospect is only 5 [percent] to 20 percent.”
According to an Optimove vertical-wide study, 60 percent to 80 percent of top companies’ revenues come from existing customers. Across all verticals, existing customers have a 13 percent higher average transaction value. They account for 3.7 times more monthly transactions than new customers. Not only that, happy existing customers are the best acquisition strategy out there: Most people choose word-of-mouth as the most important factor in purchasing from brands. The road to acquisition goes through retaining happy customers.
TR: Data is an important part of loyalty building. Why is this?
PY: Data is the primary asset that allows marketers to get to know their customers. Everything marketers need to conduct cutting-edge customer marketing is already at the tips of their fingers. Customers’ behavioral, transactional, sociographic and browsing behavior data is all stored in existing databases. Tapping into this data allows for accurate segmentation, targeting and personalization that's the bread and butter of customer marketing. This means that instead of communicating with customers through guesswork, customers are segmented into meaningful groups, allowing marketers to communicate with each group according to its members’ preferences, tendencies and wants.
TR: What advice do you have for retailers looking to create more personalized messaging?
PY: Once you have the technology that enables you to segment your customers intelligently, there’s no end to the personalized communication you can achieve. Customers come in all shapes and sizes, and for any effective retention strategy, segmentation is a must. Start by differentiating between the basic lifecycle stages — "registered only," "new," "active" and "churned" customers.
When looking at these various segments, we can understand behavior patterns, retrieve meaningful data and do a better job of communicating the right message at the right time. For "registered only" customers, for example, acquisition channel is of high importance, whereas while dealing with "new" customers we'd like to know the size of first order and whether the purchase item was on sale. When communicating with a "churned" customer, knowing the previous "quality" of the customer is crucial.
TR: Any retailers doing this well right now? And if so, how?
PY: We're thrilled with the results of our customers. 1-800-Flowers.com, Adore Me and Lucky Vitamin are a few examples.
Adore Me is an up-and-coming lingerie retailer based in New York City, and its marketing team started using Optimove to automatically send daily emails to five distinct customer personas. Using Optimove’s predictive customer modeling tools, Adore Me gradually identified numerous additional personas ripe for receiving highly targeted campaigns. In less than a year, the company was communicating with more than 60 unique customer personas on a monthly basis. This resulted in dramatic increases in the number of orders, the average order amount and campaign-generated revenue.
Before deploying Optimove, email was the only channel Adore Me used to communicate with its customers. Optimove’s multichannel capabilities have made it very easy for the Adore Me team to communicate with each customer via her preferred channel. The brand now regularly communicates with customers via email, mobile push notifications, in-app messages, Facebook Custom Audiences and the Google Display Network.
You can register for the March 28 free webinar "Customer Loyalty: The Holy Grail in a Digital World" by clicking here.