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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?
First impressions matter in any relationship. The first date. The first job interview. The first haircut at a salon. Marketers hope to leverage momentum from the first experience towards a second purchase. The one-to-two purchase conversion is the first step in what hopefully turns into a long-lasting, repeat-buying relationship.
The numbers back it up. Two-time buyers are 9 times more likely to repeat than first-time shoppers. Granted, there is some debate around this figure. How much of the 1x-to-2x conversion is ‘nature’ (acquiring great customers) vs ‘nurture’ (an effective welcome series). It’s nearly impossible to tell, but most marketers agree it’s a combination of both.
As a result, the welcome series has become a critical component to every retention marketing game plan. The welcome series — an aptly named (and relatively easy to set up) succession of automated emails that introduce a new customer to a brand— is a great start and a clear improvement to the alternative of doing nothing.
For the retail industry, the holiday season can be a blessing and a curse. Generally, the season is seen as critical for a business – upwards of 630 billion dollars are spent during the holidays, and the two month span we refer to as “the holiday season” brings in 43% of a retailer’s new customers for the year on average. However, with this onslaught of new customers comes a challenge: the Customer Lifetime Value (CLV) of shoppers acquired during the holidays is 15% lower than other times of the year.
With so many customers new to your brand and increased spend from existing customers, the holiday season is a crucial time to solidify relationships with your customers to turn them into repeat shoppers.
Bringing customers back again and again after that first checkout is the key to building a strong e-commerce business: Custora’s research has found that a 1% increase in customer retention leads to a 5% increase in profit per customer.
The challenge? Customer retention can be achieved using a seemingly infinite array of methods. Email campaigns, referral programs, promotions — the list of ways to boost retention goes on and on, and encompasses many integral components of a well-rounded customer communication program.