Everything You Ever Wanted to Know About Keeping Holiday Customers Coming Back For More

161129_holiday_2016_575

The holidays are in full swing, with revenue up 6% from last year for the week beginning Black Friday (1). The average e-commerce business acquires almost a quarter of its new customers during the holiday season, and with new customers comes great responsibility…AKA the need for a solid retention net. Research from Bain has shown that increasing retention by 5% can increase profits by 125%. We expect that holiday shoppers are often worth less than non-holiday shoppers due to heavy promotions and gift-giving, and in fact research from RJ Metrics reveals that shoppers acquired during the holidays have a 13% lower lifetime value than the average customer.

What can we do to ensure holiday shoppers are not one and dones?

We’ve created this plan of attack for retail marketers to be sure their welcome communications are scrumptious enough to keep customers coming back for seconds, and thirds, and fourths. The process of building a super-charged one-time buyer program or welcome series can be broken down into five steps:

1.Set Goals

Before any team can create a plan, it needs to benchmark its current performance and determine short and long term goals.

We recommend tracking two important metrics: predictive customer lifetime value (P)CLV and early repeat rate (ERR). (P)CLV is a prediction of the total amount of revenue or profit a single customer will spend throughout her relationship with the brand. ERR is defined as the percentage of new shoppers who make their second purchase within 60 days of their first.

2. Segment

Now that the right benchmarks, KPIs, and goals are in place, we’ll shift gears to address the opportunity. This means we need to isolate a few unique customer segments.

The first order of business is to uncover which segments exist in the customer population. Then, create a communication plan for each. Algorithms like k-means clustering can help sift through large volumes of data to uncover hidden patterns – for example, customers who tend to purchase similar products.

Insights gleaned from quantitative and qualitative segment discovery approaches should help the marketing team define a clear communication strategy for each segment. Some dimensions on which the team should tailor its messaging include:

– Leading message/proposition
– Merchandise assortment
– Look and feel

3. Build

With segments and value propositions in place, we can start to construct our one-time buyer program, or set of emails put in place to help with 1 to 2 purchase conversion.

It’s important for these messages to stand out. Try to maintain a consistent narrative and explore ways – from subject line to the creative content – to differentiate. Consider two “welcome” touch points per week, with a 4 week total series. On days when a “welcome” series messages isn’t sent, new customers can receive the regular daily communications.

Spice things up by adding promotional and cross-sell triggers, using analytics to identify the optimal timing for each individual shopper.

4. Deploy

If only marketing was as easy as simply writing up the script. Logistics can be a real beast. There are a few things to think through as you shift into operational mode.

The first thing to consider is prioritization. One the one hand, you can view both the core series and triggers as incremental. Customers who receive those emails would receive both the standard daily email and the 1x program emails. On the other hand, if you are trying to reduce the number of emails you are sending per week, you might want to exclude the users who are receiving the welcome series from the standard daily emails.

The next step is to decide which customers belong in which segment. You may want to set up a rule in your ESP based on the first product purchased and choose a track for them based upon this category. While the simple rule-based approach is a good starting point, you’ll want to build or partner with a vendor to avoid a complex rule-based decision tree down the road. Vendors (like Custora?, Yes.) can help with advanced, predictive analytics. They can constantly monitor new customers and assign each new customer into the right bucket so you can spend more time focusing on the creative aspects of improving conversion and less time on — yes, there is a theme here — logistics.

5. Measure

The most successful marketing strategies are built on a firm test-and-learn foundation. A well known method of testing in the marketing world is A/B testing, where variables are altered between two different marketing communications or tactics, and user responses under each scenario are recorded. However, while A/B testing is excellent for testing tactical actions, the cornerstone of testing on a strategic level is the use of a Holdout Control Group. This is a randomly selected subset of customers from the same group within an experiment who are “held out”(i.e., suppressed) from receiving a particular communication.

The goal of holdout testing is to proxy how the segment in question would have responded without the marketing action. What would have been the baseline? Armed with this knowledge, the marketing team can make confident assertions about the incremental impact of different communication strategies. It can then opt for the approach that’s leading to the most significant lift in repeat purchase penetration.

Final thoughts

Solving customer challenges like the one-time buyer program is critical to sustainable growth for retailers. Putting these five steps into action can help move from a one-size-fits-all approach to a much more nuanced understanding of your most important segments — like the many flavors of customers who tend to make one purchase and never come back.

Ears perked? We wrote the book on addressing the one-time buyer problem. Download a copy here.

_____________________________________________________________________________

  1. Consumer Technology Association, http://www.networkworld.com/article/3144933/consumer-electronics/black-friday-and-cyber-monday-2016-by-the-numbers.html

 

Leave a Reply

Your email address will not be published. Required fields are marked *