If you work in B2C marketing, you might feel like everyone is talking about customer retention right now. This isn’t surprising – during times of economic uncertainty, companies need to shift their focus from acquisition to retention to come out on top, particularly when marketing budgets are taking a hit. This is because research has shown time and time again that acquiring new customers is 5-7 times more expensive than retaining existing customers (conservatively). Not to mention, even small gains in retention rates can have a huge impact on profitability (up to 95% uplift for just a 5% increase in retention, according to one study from Bain and Company).
At odds with customer retention, however, is the reality of post-pandemic consumer behaviour. Covid-19 and the potential cost-of-living crisis have made shoppers more likely to try new brands and new ways of shopping. According to research by McKinsey, “A whopping 75 percent of consumers tried new shopping [behaviours], with many of them citing convenience and value. Fully 39 percent of them, mainly Gen Z and millennials, deserted trusted brands for new ones.” Evidently, retention has never been more important, but it’s also never been more difficult.
So, how can retailers rev up their retention strategies in the midst of all this uncertainty?
Retail Retention and First-Party Data
Before we dive in…are your eyes glazing over just thinking about data? We get it – you probably didn’t become a marketer to wrangle data from across the business or to pester analysts about getting in-depth customer insights. But without the data and insights, your eye-catching creatives and clever copy might miss the mark. That’s why it’s so important to have accessible, unified first-party data at the ready.
Analysing consumer behaviour – and acting on those insights – is at the heart of building brand loyalty, and this goes beyond what people are buying. A robust, 360-degree view of the customer is the foundation upon which all campaigns should be built.
Quick shameless plug: If you don’t have an operationalised Single Customer View, see if Unilyze can help.
Knowing which customers are showing interest in what products, when and where even if they don’t purchase is gold dust when it comes to retention. You can use that data to enable predictive models built with machine learning to uncover correlations in data you couldn’t have otherwise leveraged. From there, AI can help you identify the next best action that will help individuals convert at scale, whether that’s showing them related products, introducing them to a new product category, or sending them a personalised offer…
Personalisation + relevancy or bust.
Customer-Centricity in Loyalty Programs
If you’ve read our Customer-Centricity in Retail piece, you’ll already have a good understanding of the role customer-centricity plays in retention (TL;DR: It’s really important).
So, now that we understand the impact customer-centricity can have on campaigns, let’s look at loyalty programs through that lens. Loyalty programs that make you rack up endless points for minimal reward? Not customer-centric. Schemes that can change the rules or take rewards away at any given time? Definitely not customer-centric. The main goal of loyalty programs shouldn’t be driving purchases, it should be increasing brand loyalty (that’s why loyalty is in the name!).
Again, we’re going to go back to data here (briefly, bear with us), because how can you expect to deliver authentic value your customers will love if you don’t truly understand your customers? Knowing that not all customers are the same, are there ways to optimise segmentation within your program to deliver better results? Are there various strands of exclusive insider content that can be curated to inspire and engage your most loyal segments? Can you tailor your loyalty campaigns around nuanced customer lifecycle stages? Once you have the right data, you can create a loyalty program that goes beyond the points and really shows how much you value each customer’s unique relationship with your brand.
So, now what?
If your first-party data is already centralised, accessible and operational, it’s time to dig into it to uncover the drivers, blockers and behaviours unique to your customer segments. Then, invest in the tools and strategies that deliver personal, contextualised loyalty programs to drive retention.
If not, there’s never been a better time to get that data situation under control. If you’d like to get some outside perspective from data experts, get in touch.
