Adding value to the retail customer experience
Photo by iStock.com
By Nick Godfrey, EVP, co-founder, Customer Portfolios
The ease of comparison shopping has made customers more fickle about their brand loyalty, so marketers need to think outside the box to retain customers in the long term. Luckily, the proliferation of marketing channels has given retail marketers access to more data about their customer's behavior. Retail marketers have the ability to use this data to provide richer value exchanges that encourage customers to stay loyal and grow their relationship with the brand. To make this happen, it all starts with a targeted, relevant offer.
When you hear the word offer, you may think about discounts or lower prices, but it's much more than that. With an offer, there should be a value exchange between brand and customer that leaves both sides satisfied with a mutually profitable experience and result; the customer receives something extra, while the brand gets the revenue from a purchase or action the customer may not have otherwise made.
For retailers to pull off a cost-effective value exchange that is relevant and drives incremental revenue, they need to understand the full customer journey. To accurately script a customer experience that is profitable, you need to have insight into where they are on the journey and how customers interact with your brand.
Focus on the journey
Customers have slid into the driver's seat of their customer journeys, and it is more important than ever for marketers to understand where customers stand in the buying lifecycle. With all the data customers create centralized in a well-structured single view, it is possible to analyze, generate insight and strategically encourage each step of that journey in order to generate a higher future value, while still maintaining a level of profitability.
Here are some illustrated example lifecycle views that employ a profitable and meaningful value exchange:
- For a PROSPECT
o Insight – When a prospect spends over $100 on their first purchase, their future value spend over the next 12 months increases by $70.
o Suggested Offer to Drive Behavior –20 percent off on first purchase when the purchase is greater than $125.
- For a first time BUYER
o Insight - When a first time buyer makes a second purchase within 30 days, their future value is 60 percent higher than if they buy again later.
o Suggested Offer to Drive Behavior – As part of a welcome/repurchase lifecycle series that introduces the customer to the brand, offer customer a 15 percent discount to incentivize them to make an additional purchase within the month post first purchase.
- For a 2+ BUYER
o Insight – When a two-plus buyer purchases cross-channel, their retention doubles, and their future value increases by $100-plus over the next year.
o Suggested Offer to Drive Behavior – Send targeted cross-channel product recommendations with a unique offer to incentivize online purchasing (free shipping) for a store customer, and a different unique offer to incentivize in-store purchase ($15 in-store) for a direct customer.
- For a BEST CUSTOMER
o Insight – When a best customer buys again in less than three months, their future value increases by 30 percent while increasing their cross-category purchasing by 60 percent, delivering $200-plus incremental revenue.
o Suggested Offer to Drive Behavior – $50 gift card for their next purchase, valid for three months.
The correct value exchange lies in the insights pulled from your customer data. By analyzing customer behavior and where they are in the lifecycle, marketers can create the right value exchange to maximize future value, while avoiding breaking the bank.
Equally as important is making sure these offers are delivered seamlessly across all channels. Far too often, though, a broken customer experience is unintendedly delivered, a disconnect that emanates from a siloed uncoordinated customer strategy.
Many brands launch strategic initiatives to engage customers through siloed channels like digital, social, web, and store — with the hope that the channels are in sync with each other. Unfortunately, this does not always happen. In that same way, marketers pulling customer data that is siloed by channel will produce an incomplete, inaccurate understanding of the customer. Drop the walls, combine all that data with an insight generated strategy and you have the capability to produce targeted messages that resonate with customer desires.
Fixing the broken experience
Siloed data inadvertently creates a broken experience for the customer. The broken customer experience is perhaps the largest barrier to brands delivering a meaningful or relevant value exchange that attracts prospects, grows customers and keeps best customers. A poor experience can range from no personalization to a multitude of different, disconnected offers and features that are non-coordinated, with the risk of even contradicting.
Given that there are many touch points through which a customer may interact with a brand, this is an easy trap for the retail marketer to fall into. But from a customer's perspective, it's all one brand and therefore should be speaking from a single voice. It's that simple to them and that challenging for the retail marketer.
How can you measure and fix a broken experience? You can't measure it; the broken experience exists in an uncoordinated, un-measurable world.
You can fix a bad experience with targeted lifecycle communications. A customer often will come to you, ready to buy. You provide them with a targeted offer, that is based on modeled insight per their past behavior and their future value. The offer can be delivered through any or all relevant channels based on what is right for the individual customer. With this approach, each customer is recognized, appropriately communicated with and thereby satisfied — on their own terms, via all relevant touchpoints.
Realizing the true value
There is no escaping the need for retailers to identify and provide value to their customer relationships, from the offer to the experience, from engaging prospects to retaining best customers. But none of this can happen reliably or effectively without an analytically-driven, singular customer view to shed light on actionable insights about specific behaviors and revenue opportunities across the buying lifecycle. That's the real trick to adding value to the retail customer experience.