Editor’s note: This post has been updated to add some tips
and best practices that retailers can apply during and after the COVID-19
pandemic.
Customer acquisition can sometimes be the shiny new toy that
gets all the attention. But old reliable retention is where the money’s at:
Depending on which data you cite, customer acquisition is anywhere from five to
25 times more expensive than retention.
The question is, how can you cash in on all that customer
retention has to offer? To answer that, let’s first understand what customer
retention is and why it’s important.
What is customer retention?
Customer retention refers to a business’s ability to attract
and maintain repeat customers. You measure using your customer retention rate,
which is the rate at which your business is able to retain those existing
shoppers.
In retail, customer retention can help you understand not
only how positive the customer experience is but also how you’re able to meet
customers’ expectations. It goes beyond simply customer loyalty — retailers
have to be able to fulfill the demands of returning customers too.
The importance of customer retention in the retail sector
Customer retention is often far more effective and
profitable than customer acquisition. One report on customer loyalty from
Stitch Labs found that returning customers account for almost a quarter of
retailers’ revenue — and they make up less than 12% of the total customer base.
Plus, repeat customers spend 15% more in a single order and 120% over the
course of a year.
But customer retention is more than just profitable. It also
helps you gauge the health of your customer relationships. Not to mention,
loyal customers can turn into brand advocates, doing a lot of the heavy lifting
for customer acquisition for you. Word-of-mouth is the most influential factor
in a purchase decision for nearly three-quarters of consumers.
So, how can you drive customer retention in your retail
business?
7 customer retention strategies to implement in your retail
biz
Customer retention starts with the very first interaction a
consumer has with your brand, even if it’s not at a point-of-purchase.
Customer retention starts with the very first interaction a
consumer has with your brand, even if it’s not at a point-of-purchase.
1. Have a customer loyalty program
One way to drive customer retention is to get to know your
shoppers and provide relevant value through a customer loyalty program. These
programs provide deeper insights into your customers and also helps you stay
top of mind.
When executed properly, loyalty programs increase customer
lifetime value. Plus, basket size inevitably increases, as 66% of consumers who
belong to loyalty programs will modify spending to maximize rewards. And
they’ll return for future purchases to gain or redeem their rewards.
Outdoor gear and apparel retailer REI has an exceptional
customer loyalty program. Customers actually pay to be in it, but that’s
because it provides tons of value: 10% dividend back on all full-priced
purchases, access to members-only deals, and an invitation to members-only REI
Garage Sales — where used/returned gear is resold at steep discounts.
Those customer loyalty program perks combined drive repeat
purchases. From my own experience, I’ll almost always pay more to purchase a
product from REI and get a dividend (plus enjoy their no-questions-asked return
policy, which is another customer retention tool) than to purchase it cheaper
elsewhere.
Plus, REI does a great job at reminding its customers of
their loyalty program perks. In a recent email promoting a new product, the
brand reminded me that I have a yet-to-be-redeemed special discount as a
member. And it’s a decent amount of savings: More than $45 off in a single
purchase. Even though I’m not in the market for a new tent, I’ll be checking
out their site and store so I can take advantage of that 20%-off discount.
Having a variety of perks for the members of york loyalty
program can also inspire repeat purchases and retention. Go beyond the usual
discounts and allow your customers to redeem other perks, such as free products
and exclusive experiences.
Consider the loyalty program of Our Bralette Club (OBC), a
size inclusive lingerie brand. While OBC’s rewards program has the usual perks
like member discounts, it also lets its loyal customers redeem cool product
rewards like tote bags, lingerie accessories, and cosmetics.
OBC also rewards different behaviors (i.e., not just
purchases). Members also earn points when referring their friends and talking
up the brand on social media. We love this approach because it helps develop
customer relationships that go beyond purchases. Plus, having a variety of
rewards keeps the program more exciting, which helps with customer retention.
Vend Tip
Our Bralette Club uses Marsello, a loyalty and marketing
automation tool that makes it easy to create engaging loyalty programs that
keep customers coming back. With Marsello, you can set up a custom loyalty
program that automatically rewards loyalty points for spend, referrals, product
reviews, social media engagement and more.
2. Be proactive with customer support
Your retail employees are an integral part of your customer
retention initiatives. They’re the human extension of your brand and a pillar
of the relationship you have with your customers. As we know, strong
relationships mean more repeat purchases.
My latest retail crush is LUSH. I’ve talked about them
before, and I’m singing their praises again when it comes to the proactive
customer service they provide.
Warm and welcoming greetings, educated associates, and
thoughtful gestures (they watched my bike for me while I was shopping so it
wouldn’t get stolen), have turned me into a returning customer and a brand
advocate.
As you can see, when it comes to staff, it’s important for
them to be more than just available. They need to be proactive in the service
they provide to customers if you want to drive loyalty and repeat purchases. In
fact, almost 90% of consumers will shop with your competitors after receiving
poor customer service, according to data by RightNow.
Brands that are proactive with customer support thrive, even
during times of diversity. We saw this happening amidst the COVID-19 pandemic.
Retailers such as Trader Joe’s and Sprouts were proactive with ensuring the
safety and staff of their customers. These stores were some of the first to
sanitize carts and baskets for each customer and would implement physical
distancing in-store.
Such actions sent the message that they’re looking for their
customers and staff, and this made customers feel safer about shopping at their
stores.
3. Take a stand
It’s becoming more common for brands to take stands on
issues. There are a number of benefits to this approach, one major one being
customer retention. First, 64% of consumers base their relationships with
brands on shared values. And when brands are truly committed to those causes,
they can build meaningful relationships with customers that turns into lifelong
sales.
United By Blue is a prime example of a brand that has built
a loyal following thanks to its mission to promote sustainability. What’s more,
the retailer practices what it preaches: They sponsor the annual Blue Friday
clean-up the day after Thanksgiving. They have a strong following of brand
advocates and repeat customers.
4. Create a community
We’ve discussed before about you can build a community using
your retail store. Community builds and nurtures authentic relationships and
drives customer loyalty. Creating a community around your brand or store helps
customer retention in a couple of ways:
Gives customers a reason to return to your store. Hosting
in-store community events encourages repeat visits and, eventually,
transactions. The more a customer visits your store, the more likely they are
to make purchases.
Builds trust. Consumer trust leads to sales: 62% of
consumers consider brand trust to have a great influence on their buying
decisions. Creating a community, a safe space, establishes trust and a lasting
relationship with your customers.
The Working Artist is a community space first, retail
shopping experience second. Founded by two artists, they rent space to other
creators who can put their works for sale in the gallery/store. Regular events
— workshops, paint ’n‘ sip, yoga — keep The Working Artist’s community pulse
beating and customers returning.
Branded online communities are also on the rise, and they’re
perfect when you can’t drive too much traffic in-store. If you have a highly
engaged customer base, consider setting up an online community (like a Facebook
group) where your customers can interact with each other.
One brand that’s doing this well is the fitness company
Peloton. The brand has a private group for its members, and the community
serves as a platform where Peloton bike owners can share stories, ask
questions, and get to know each other.
5. Implement personalization (tech helps, but this doesn’t
have to be fancy!)
Today’s technology, both online and in person, is making
personalization more accessible to retailers of all kinds. Many EPOS systems
will track customers’ purchase history and sync with a loyalty program, so you
can identify trends or feed the data to a tool that will identify trends for
you. Accenture found that 65% of consumers will purchase from a brand that
knows their buying history.
Personalization doesn’t have to be fancy. At Anthropologie,
for example, they’ll write your name on the door of the fitting room. It’s a
small effort, and all you need to do to implement this in your own store is by
adding a chalkboard, dry erase board, mirror or other reusable writing surface
to your fitting rooms. It’d be a smart move, especially considering that more
than half of consumers will shop with a retailer that recognizes their name,
also according to Accenture.
Another non-fancy way to personalize the shopping
experience? Spend one-on-one time with a customer in need and make the effort
to find the best product for them.
Case in point: I was recently shopping at Sunglass Hut,
where an associate took the time to find out what I needed and what my
preferences were. She walked me through the different brands they had, and she
hand-picked pairs of sunglasses that best fit the shape of my head. She even
brought out an eyewear tray so we could easily compare different products.
6. Nurture relationships through post-purchase
communications
Treating your customers as humans rather than sales numbers
is extremely important for customer retention. A recurring theme in this
article, strong brand-customer relationships drives loyalty and repeat
purchases. One way to build on those relationships is through post-purchase
communications.
Rather than taking a customer’s money and setting your
sights on the next sale, use post-purchase communications to keep the
conversation going, provide value, and demonstrate appreciation for their
loyalty. This will make customers want to return to your store rather than a
competitor’s.
As we’ve noted, personalization is extremely effective, so
incorporate a personal touch in these tactics. Implement an EPOS systems that
can track customers’ email addresses and purchase history, so you can make
smart, relevant product recommendations and increase conversion rates.
source:https://www.vendhq.com/
