What’s the secret to boosting revenue even when markets are in flux?
According to many retail experts, it’s all about customer retention. We know that brands which prioritize customer retention are officially more successful. In fact, increasing retention rates by just 5% can increase your profits by 95%, according to research.
That makes sense when you consider that the chance of selling to an existing customer is 60-70%, but the chance of selling to a new prospect is typically just 5-20%. It might even be less, in the current circumstances…
This year, the cost-of-living crisis means around a quarter of Brits plan to spend less on festive season shopping, while a staggering 52% of Americans admit they can’t afford Christmas expenses at all. Meanwhile, business costs are rising with staggering speed and many retail brands say they are just weeks away from a cash flow disaster.
What’s your retention strategy?
So while customer retention should always be a key consideration for merchants all the time, right now it should be a top priority.
Rather than simply seeking to attract new customers, all merchants should be heading into peak season armed with a clear customer retention strategy.
After all, the likelihood of retaining a customer is directly linked to the experience they have after hitting the ‘buy’ button. If their experience is good – including prompt dispatch, good comms, fast delivery – retention is a safe bet. If their experience is bad – including errors, delays or lack of comms – retention is far less likely; 77% of 1-star reviews on Trustpilot are a direct result of a poor post-purchase experience.
With that in mind, here are five things you can do to retain customers this festive season (and beyond)…
1. Reward Loyalty
If incentives to buy are a way to delight new customers, ‘thank yous’ are the equivalent for repeat customers. This year more than any other, customers will have thought long and hard before spending their money with you – it’s important to show them you appreciate it.
There’s a number of ways to do this, including loyalty and referral programs, free gifts and personalized discounts. A retail operating system can help you easily segment your customers based on a number of factors, including biggest spenders, seasonal shoppers and customers that have been coming back year after year. Orders can then be automatically flagged so that you can add a free gift or another ‘thank you’.
If this year you’re worried about the impacts of ‘discounts’ on your bottom line, a simple, prompt thank you email, or even a personalized note, can go a long way.
2. Communicate well
Modern consumers don’t want to enter their credit card details and then be left in the dark about their order. They want real-time, regular updates including shipment emails, SMS updates and easy-to-access order tracking pages.
When things go wrong (including delays and mistakes), maintaining a customer’s loyalty depends on how well you communicate. Be proactive and upfront in your communications.
If a customer requests a refund, keep them informed about when it will happen. And be smart about opportunities to go above and beyond for existing customers in your communications – it’s worth the effort.
Thankfully, most communications can be automated within a retail operating system, which also syncs your sales channels and orders so that information provided to customers is always up-to-date and reliable. This means you can ‘set and forget’ your customer comms, which is especially handy during the busiest time of the year.
3. Pay attention to feedback
Did you know 84% of shoppers trust online reviews as much as personal recommendations from friends? But that’s not the only reason to pay attention to the feedback you get from customers.
Feedback, reviews, social media posts and even customer interviews can shine a light on ways you can boost value and experience for your customers, and how you can continue to engage with and drive revenue from repeat shoppers.
To stay a step ahead, it’s worth using a cutting-edge benchmarking tool to see how you compare to your competitors – and to take action to improve the areas where you fall short.
Ultimately, customers (especially repeat ones) want to feel like you are listening to them, and that you value their opinion. And you should – it’s key to keeping them coming back.
4. Eliminate delays and mistakes
Last year, the average American was let down four times during the holiday shopping season. Delays and mistakes are never a good thing, but they are especially unforgivable this year.
Mistakes erode trust with shoppers, which is a major issue when it comes to building retention. Brands can’t afford to lose customers due to issues which could be avoided with the right tech.
Streamlining your operations is absolutely critical to avoiding problems and being ready for last-minute spikes in demand. Brightpearl’s Automation Engine reduces errors by 65%. It also helps retail brands get order out of the door quicker and with fewer staff.
5. Maintain stock of the right items
Last year, more than a third (35%) of US consumers felt annoyed by a lack of stock and 37% of British consumers chose to shop with a new brand, simply because they had an item in stock. This proves that maintaining stock of the right items is critical to customer retention.
However, with the supply chain crisis ongoing and cash flow a concern, that’s easier said than done – at least if you’re relying on outdated manual methods, including spreadsheets.
Instead, merchants need to take an intelligent approach to planning inventory, using demand forecasting software. It’s now easy to accurately forecast demand and get hassle-free buying recommendations – even factoring in forecasts for new products and seasonal items.
It’s a tried-and-tested way to eliminate stockouts, avoid causing disappointment and boost your retention rate. This year, merchants can’t afford not to utilize it.