The Gift That Keeps on Giving: How D-to-C Brands Can Keep New Holiday Customers Coming Back for More
Direct-to-consumer (D-to-C) retailers are officially gearing up for the most profitable time of the year. D-to-C has historically referred to just digitally native brands, but it now applies to every brand that's directly marketing to consumers to drive online revenue. While creative gift-giving campaigns geared toward customer acquisition tend to take center stage, D-to-C retailers should be working just as hard behind the scenes to convert their new holiday customers into repeat buyers.
There are a couple of reasons why. Second-time buyers are 130 percent more valuable than one-time buyers, considering that once a customer has made a second purchase, they're 95 percent more likely to buy again. Yet one-time buyers continue to account for approximately 80 percent of retailers’ customer bases.
It’s also important to note that the primary levers of acquisition are changing dramatically. Digital ad costs are rising while access to third-party audience data is decreasing. Once tried-and-tested acquisition tactics are therefore becoming more expensive while also yielding a lower return.
Knowing that retention should be a critical part of your holiday strategy, what should you be doing this season to convert new holiday shoppers into loyal, long-time customers? The answer is easy: Communicate with every single one of them directly on a highly personalized level. The execution isn't so easy.
Bluecore recently released it 2019 Mid-Year Retail Email Benchmark Report to provide retailers with new insights into how different types of personalized email campaigns stack up when it comes to converting first-time shoppers into repeat customers. The report analyzes the performance of more than 3.26 billion emails sent by nearly 400 retailers over the past year.
Here are three ways that leading D-to-C retailers are using a mix of personalized email communications to transform one-time holiday buyers into repeat customers, year after year:
1. Solidify the relationships you create over the holidays quickly.
Because retailers tend to be disproportionately focused on gift giving during the holiday shopping season, they see a heightened level of new customer acquisition in November and December. Nearly 25 percent of their total first-time purchases occur in these two months alone. While there’s no lack of opportunity to begin engaging new customers over the holidays, many retailers don’t have a retention strategy in place. Those that use individualized messaging in the emails directly following a customer’s first-time purchase can expect to see more than 50 percent of these customers make a second purchase within the next four months (November - March). For example, when Perry Ellis targets returning customers, it leverages each customer's discount affinity to show them the appropriate offer necessary for them to convert. This individual-level communication has produced a 2.4x conversation rate over nonpersonalized messages.
2. Show that you understand — and are paying attention to — customers’ behaviors.
Every customer has a unique relationship with a retailer, and this translates into how they engage with email communications. However, there are noticeable trends across spender types that apply to all retail verticals.
For instance, high-spenders have the highest average open rate (41 percent), click rate (9 percent) and conversion rate (0.69 percent). Compare this to low-spenders’ average open rate of 26 percent, click rate of 4 percent and conversion rate of 0.22 percent. The more shoppers spend, the stronger the connection they're likely to feel towards a specific brand. To create lifelong customers that continue to engage with a retailer, marketers must understand customers’ individual profiles, behaviors, and the products they interact with, then differentiate communications based on those unique characteristics. For instance, Teleflora uses category affinity filtering to determine which customers would be interested in specific products. With this strategy, Teleflora ended up with the highest-performing Valentine's Day promotion in 2018.
3. Play the long game.
While it’s important to move quickly, retailers should think of their immediate efforts as first steps toward developing a long-term relationship. Avoid one-off or short-term efforts such as random blast emails to push products. Instead, focus on what you know about the customer on a more holistic level: What products have they engaged with and/or purchased? What product categories are they looking at? Were the products they bought replenishable? Are they a high-spender or low-spender? All of these data points will give the right email system knowledge it needs to recommend the next course of action — i.e., a message and promotion to serve to an individual customer.
While large batch promotions might result in email signups, they also significantly shrink margins and don’t always kick-start long-term relationships. Case in point: Shoppers unsubscribe from welcome emails at a disproportionately higher rate than other emails. Welcome emails see a 132 percent higher unsubscribe rate compared to the average of a wide sampling of triggered emails (e.g., post-purchase, search abandonment) and one-time sends. They use the discount and they’re gone.
This is highly prevalent during the holidays when retailers are looking to capture new customers who are looking for discounts to help them stay in budget. However, offering discounts isn’t the only way to incentivize shoppers to engage with your brand. Instead, for example, you can offer product recommendations based on individual affinities.
Focusing on customer acquisition will always be important, but with more and more retailers competing for a finite set of customers, it’s important to begin creating personalized interactions will customers the moment you meet them. And according to the calendar, that's now.
Sherene Hilal is the vice president of product marketing and business operations at Bluecore, the personalization solution of choice for the world's fastest-growing retailers.
Sherene Hilal is the vice president of product marketing and business operations at Bluecore, the personalization solution of choice for the world's fastest growing retailers.
In this role, Sherene leads the commercialization of products and business operations, with a focus on enterprise readiness, pricing, packaging, and the market. Previously, Sherene was the vice president of product marketing at Curalate, a content intelligence platform that makes images shoppable. Prior to Curalate, she served as the senior director of outbound product management for BlueKai (and later Oracle, following the company’s acquisition), where she defined and developed the “Data as a Service” category. Sherene holds a Master’s Degree in Applied Math and Systems from Columbia University and a B.S. in Applied Math from Cornell University.