Customer retention is one of the biggest challenges facing many industries including eCommerce and sports, betting and gaming (SBG).
Any industry that has built a model on heavy discounts, introductory offers and first purchase discounts are struggling.
The reason why is simple: these industries have trained their customers to consider price first and foremost. Admittedly there are wide economic factors at play. However, while high retail prices created the environment for lower online prices, it didn’t trigger the race to the bottom we’ve seen over the last few years.
The problem now is costs are rising and that’s driving prices up.
This causes another problem. Your customers go elsewhere. Because they’ve been taught to only spend when prices are cheap, they will instinctively go elsewhere when prices go up.
Essentially, if your customers only shop with you when you’re in sale, you either need to lower your prices or increase the value of shopping with you.
Demonstrable value is essential for businesses to retain customers in any industry. However, while this will help you retain customers now, you need to do more to keep them in the long term.
Keeping your customers is not entirely dissimilar from attracting new customers. Or at least the tactics are similar, just more sustained.
Attracting new customers to your site is important and with so much competition aggressive offers are the norm.
A 15% off discount code for the first order. $/€/£10 deposit when you create an account. Whatever your industry, the offers you present new customers with all follow the same theme. Discounts or discounts by proxy.
Existing customers rarely get the same kind of treatment. It’s understood that once a customer has placed their first order, that’s all they’re getting.
What’s strange about this dynamic is customers have broadly accepted this. But this is partly because they know they can find a similar offer elsewhere.
Good for them, bad for your business.
Repeat customers spend around 69% more than a new customer. They will also shop with you more frequently so keeping them happy makes a lot of sense.
The mental hurdle most businesses need to overcome is the need to. Because they’re already shopping with you, there’s no need to keep them happy.
Except there is.
Let’s bring it back to the numbers. Your repeat customers spend 69 cents/pence on the dollar/euro or pound more than a new customer.
If your average first time spend is $/€/£30, a repeat customer will spend $/€/£50. And they’ll do so regularly. Right up to the point where they don’t feel it’s worth their while.
Unless you give your customers a reason to keep shopping with you – beyond price – they will gradually move on.
Repeat business is based on how relevant your customers feel you are. That relevance is based on varying criteria of which price is just one.
If you can’t offer more than that, you’ll lose them.
Realistically you can’t offer discounts to your customers indefinitely. It’s not sustainable and does nothing to train your customers to think of value beyond price.
Rather you need to be able to offer value in a more balanced way that speaks to customers as individuals.
The expectation for a personalised shopping experience has been building for some time. And a great many factors have contributed to the collective state of exasperation customers feel.
Dozens of generic sales emails hitting inboxes (junk boxes) are a classic example. They offer little in the way of real value and make the conversation a transactional one.
Your business sends an email full of products that might be of interest because you want your customers to buy something.
There’s no value there. More to the point, your customers don’t feel valued by you and that’s when relevance starts to diminish.
An email that’s highly personalised to the customer’s shopping habits and products of interest, however, would be considerably more valuable.
Similarly, an SMS message with an exclusive discount on the products they specifically buy.
This level of added value is within the reach of any business who has customer profiles, product data and transaction data.
It’s just a case of consolidating it into one place.
It’s this level of customisation that you need to deliver to keep your best customers happy.
More importantly, it’s engaging with your customers in this way that will transition them from a repeat customer, to a loyal customer.
As we’ve established, the key to customer retention is adding value. This can be done in a number of ways but the first step is always the same.
You need to be able to understand and engage with your customers effectively.
This only comes from using the data you have available. Fortunately you’re trying to engage with customers who are already actively spending money with you.
Therefore you will have considerable data on the customer’s interests, product purchases and more. You can use this data to build a Single Customer View for each of your repeat customers.
From there you can start to build out personalised communication campaigns that speak to each of their interests and needs.
The more data you collect the greater the level of segmentation and, as a result, the more sophisticated your campaigns can become.
This is especially true for businesses that rely heavily on engaging with their customers in real time.
Whether that’s updating customers on scores, odds or flash sales, the ability to target the right people with the right message is essential.
It’s also going to be a key differentiator between you and the businesses that still send a generic catch all message.
Or who do nothing to re-engage with a customer who didn’t complete their purchase.
Beyond charging a fair price and tailored communications there are other ways to improve your customer retention.
Depending on the research you carry out there are a host of different examples out there.
The challenge for you as a business isn’t the kind of rewards you offer but making sure they actually benefit your customer.
Offering a discount on a spend of $/€/£60 when their average spend is half that amount is designed purely to drive up spend. Your customers aren’t stupid and they will see through this.
Similarly, a virtual gift voucher for a customer’s birthday on a minimum spend, isn’t really a gift voucher. You need to recognise the investment these rewards represent.
While a gift voucher for your customers’ birthdays may seem excessive, the chances of them spending the total gift voucher amount is low. The greater chance is they’ll spend twice the value because, psychologically, they’re still getting half their basket for free.
But even if your customers don’t respond in this way, they’re not likely to forget the gesture. And you can guarantee they’ll tell their social network about it, driving more business to your site.
One of the most common ways of rewarding customers, and transitioning them to loyal customers, are loyalty programmes.
They take many forms but are ultimately geared towards the same objective: keeping your customers spending with you.
It’s a simple concept but very few offer the kind of rewarding experience that keeps customers fully engaged.
Whether you reward customers with points or gift vouchers, the three most important things are:
Your loyalty programme needs to provide customers with rewards often enough that they stay engaged with your business.
Make the rewards too small or too hard to earn and they will simply disengage.
Loyalty programmes are also a great way to reward your biggest spenders. A tier system that amps up gift vouchers and other prizes gamifies shopping with you.
This not only makes the shopping experience more enjoyable but adds a competitive edge. Not to mention the social currency that comes with being a company’s best customer.
Big ticket rewards and social media exposure are all powerful motivators for customers who are already spending with you.
However you choose to approach building relationships with your customers, or building loyalty, it has to start with the data.
Robust customer data, consolidated into a Single Customer View is essential to any kind of personalised communication strategy. And integral to the success of a loyalty programme.
The more data you can leverage, the more refined your communications become. Your promotions and offers become more valuable. And your loyalty rewards become more personal and meaningful for your customers.
To learn more about how customer data and engagement platforms can consolidate your data for a more effective customer retention strategy, get in touch today and request a demo.
About Xtremepush
Xtremepush is the world’s leading customer data and engagement data platform. We work with various top brands within the eCommerce industry. Schedule a personalised demo of our platform to learn more about how we can help your brand drive repeat customers and increase revenue.