Author’s note: While the content of this article identifies optimization opportunities for e-commerce retail, customer attrition is omnichannel and not unique to any specific business model or industry. Many of the best practices shared below can be applied to physical stores as well as the e-commerce market. Blog cross-posted on our national sales and promotions site, SKUlocal.com.
Increasing customer retention by 5% can increase profits from online sales by 25% to 95%. That’s powerful. So much so, that e-commerce companies / online retailers cannot afford to ignore high customer attrition (or churn) rates. So how do you turn those free trialers and one-and-doners into loyal brand ambassadors for your online business? Start with these opportunities to lower turnover:
1. Data Hygiene
44% of CRM users / stakeholders estimate annual revenue loses of over 10% due to poor quality data. That’s undesirable and, for the most part, preventable. While you’ll never be able to put a full stop to data decay – people move, change phone numbers, and yes, sadly even die – you can implement processes and tools that mitigate decay and its associated risks. Risks like data breaches, loss of brand integrity, reduced employee productivity and customer churn.
Data hygiene starts with prioritizing data quality. You need to understand how bad your data is before you can fix it. A data audit is a great first step to help you visualize how many incomplete, inaccurate or duplicate records you have in your system. Is the information you’re capturing relevant? Do you have standardization rules for how you input data? Does your CRM help or hinder customer relationships?
Data hygiene ensures that you’re building clean lists and nurturing customers appropriately based on where they are in the life cycle. Clean data enables e-commerce stores to make smarter business decisions that drive retention, basket size, repeat purchasing and total sales. Online shopping retailers with subscription models can be more confident in preventing active attrition, putting triggers in place prior to contract or service end dates. While passive attrition is much harder to predict, accurate data can be analyzed to identify churn signals and incentivize customers to stay.
2. Retargeting
Now that you have your data cleaned up, you can use it for retargeting. Retargeting (or remarketing) is targeting your advertising to consumers who have shown some sort of interest in your product(s) or online store. That interest could include visiting your website, downloading your app or signing up to receive emails about new products or special promotions. Retargeting isn’t limited to current customers either; it spans the sales cycle from lead gen and acquisition to retention and reactivation. And it’s completely dependent on the data you capture.
With the phasing out of third-party cookies and the prevalence of privacy-conscious consumers utilizing browser extensions to block tracking tools, online retail marketers must renew their focus on first-party data sourcing for retargeting efforts. But getting consumers to cough up that personal data can be tricky. In a Cisco Consumer Privacy Study, respondents indicated a desire for transparency and control in how businesses access and use their data. Nearly half (47%) have even switched companies or providers over data privacy concerns. In fact, only 17% of U.S. adults are willing to sacrifice “some” privacy for exposure to more relevant advertising.
First-party data is the new black. By capturing an email address via a lead form or transaction, you can retarget with email nurturing campaigns or sponsored posts on social media platforms like Facebook and Instagram. Digital retargeting keeps your brand top of mind and increase the likelihood of new and repeat purchases. With a consumer’s physical address, you can also retarget using direct mail, a traditional, less-crowded marketing channel that continues to produce a strong ROI for e-commerce retailers. Whichever retargeting methods you implement, gather as much first-party data as possible. In this case, more is more.
3. Audience Personas
There are literally BILLIONS of records (aggregated public, survey, behavioral, transactional and proprietary data sources) for U.S. retailers to identify and target their ideal audiences. Creating robust audience personas from data goes beyond conventional audience targeting to reach your core customer. When you have accurate customer data too, you can marry it with demographic, consumer behavior, purchase power and geographic data to cross- or upsell current customers or to create look-a-like consumers within an audience of any advertising channel you choose.
For a Hulu streamer, that audience persona could be a college-educated, tech savvy married person without kids between the ages of 25 and 44 who lives in the inner suburbs with an average household income of $70,000 or more who also shops at HomeGoods. Compare that to a potential Sling TV streamer, with an audience persona of a married person with kids living in the ’burbs who has some college education and good tech use. They’re 55 years old or older with an average household income of $69,000 or more and they eat at Sonic. While average income is similar and tech use is high for both audiences, there are significant differences in audience personas for these streaming services in this example.
When creating audience personas to drive retail e-commerce sales, focus on the customer segments most likely to purchase from e-commerce platforms, spend more at checkout and transition to repeat then loyal customers. That starts with identifying your optimum audiences, creating customer profiles and applying those profiles to geographies. The more personalized the experience you provide, the higher probability of a positive return.
4. Personalization
In an Epsilon survey, 80% of respondents were more likely to do business with companies that offer personalized experiences. Consumers who want personalization are also 10x more likely to display brand loyalty (and they make 15+ transactions per year). Personalization is more than customizing a subject line to include a first name or rolling out a loyalty rewards program. It’s curated content like product recommendations and other value-adds that elevate your brand, empower your customers and foster longstanding relationships.
For e-commerce businesses in particular, consumers crave variety, flexibility and convenience for online shopping. Exclusive products not available anywhere else. If they’re limited edition, even better. Share sneak peeks or unboxings videos of what’s to come to drum up interest and engagement. Once they’ve committed to purchasing, customers want options. Options to pick up or remove items from autoship orders. Options to reschedule or delay shipments. Options to gift purchases in select months. Hate this month’s product? Here’s an alternative and so on. Most importantly, accessing accounts, shopping online and editing / tracking orders must be seamless, personalized experiences regardless of channel or device.
Personalization for major life events – like buying a home or celebrating a birthday – is also increasing in popularity for e-commerce retail. According to a Valpak survey, 64% of consumers change all or some service providers after moving or purchasing a home. 87% would likely redeem a personalized birthday offer too. Get in early and give them a reason to celebrate and shop your site.
5. Brand Values
Personalization can only get you so far. 82% of shoppers also want to buy from brands that align with their values. Brand values are the fundamental ideology that drives your business – what you believe and stand for. For example, diversity, equity and inclusion (DEI). According to a survey by Amazon Ads with Environics Research, 7 in 10 consumers say it’s important that the brands they buy from take action to promote DEI. Lip service no longer cuts it either. A brand can’t simply change their logo to a rainbow for Pride Month and expect to drive sales. Consumers want to see DEI in all aspects of the business, from hiring to advertising, year-round.
Sustainability is another brand value (and buzzword) that isn’t going away. E-tailers must consider ESG (environmental, social, governance) factors in addition to finances to identify risk and growth opportunities. 62% of consumers actively seek out brands that are sustainable in their business practices. And they want you to prioritize sustainability because “it’s the right thing to do.” Responsible material sourcing, supply chain and operational efficiencies and proper waste management and recycling are areas of focus to lower energy consumption and reduce carbon footprints.
Customer service has its own unique challenges for retailers without brick & mortar stores but is nevertheless a priority brand value for online shoppers. 44% of U.S. adults make a point to shop where salespeople are helpful or friendly. How do you convey that helpful, friendly customer experience in a virtual setting? You make it easy for customers to contact you. Yes, chatbots and FAQ can help filter customer inquiries but they are a distant second to connecting with a real person. Questions and feedback can be handled much faster (and less painfully) with customer support than waiting to address poor reviews and negative comments on search engines and social sites.
Where to Next?
Your data is squeaky clean, you’re reaching your core customers and you’re resonating with the oh-so-right message. Now what? Continue to measure your customer attrition rate to ensure your efforts are keeping it within an acceptable range. Then set aside some of your marketing budget for testing – you never know what could work if you rinse and repeat your ad spend. Finally, move beyond traditional e-commerce audience targeting to audience personas with a custom customer profile report from Valpak.
