How to use your customer data (not glasses) to build an eCommerce retention program
Note: Guest Post from Anita Garimella Andrews, VP of Customer Success at RJMetrics
By Anita Garimella Andrews
Did you know that only 32% of ecommerce customers ever make a second purchase from an online store? If you’re an online retailer, yeah, you’ve probably felt the distinct pain of this reality.
RJMetrics works with hundreds of ecommerce companies that are using data to solve their retention problems. In this post I’m going to share some of those strategies and introduce a framework that will guide you in using your customer data to build a churn-busting retention program.
Remove the rose-colored glasses
The first part of this process is to remove the rose-colored glasses and recognize that not every customer who purchases from you will become a loyal buyer, and that’s OK! No really, it is. And admitting this to yourself will actually make your program more successful. We’ve analyzed the data and found that the top 10% of ecommerce customers are worth 6x more than the average customer.
You don’t need every customer to buy a second time, but you’d better be absolutely certain you don’t lose these big spenders. And when you’re thinking about designing your retention strategy, you want to keep these very different customers in mind.
Think of your customers like this:
It’s unlikely that you’ll be able to turn a C customer into an A customer, but you might be able to get them to make a second purchase. And with the right retargeting and product strategy, you’ll be able to turn some B’s into those super high-value A’s. There’s an enormous amount of value to be gained in moving customers up just one band at a time.
Let’s explore some strategies for doing that.
Turn your C’s into B’s
Your C customers only purchase once, and most likely, you have a lot of them. As I mentioned before, only 32% of customers go on to make a second purchase. This is a big opportunity, the first part of your retention program should aim to get more customers into the B bucket by making a second purchase.
We found in our research that a majority of a customer’s value is generated in their first 30 days doing business with you. These 30 days represent the ideal window to follow-up with them But, to design your own retention strategy, you’ll want to be more specific.
Here’s another example that shows just how important these first 30 days are for repeat purchasing:
In this chart we’re looking at the ideal follow-up window for holiday shoppers. While this analysis is holiday focused, you can create this exact chart looking across your customer base to find the best timeframe for following up with first-time buyers of your product.
Turn your B’s into A’s
The good news is that once you get a customer to make a second purchase, your (marketing) life gets a lot easier because 53% of customers that make a second purchase will make a third purchase.
Pay attention to timing
Avoid the tendency to rush to discounting. Too many marketers use discounts or coupons as a crutch. Remember, data is your most powerful ally here. Again, timing plays a big role here, looking at average time between orders will help you identify the ideal window to reach back out to customers, and if appropriate, offer discounting to drive to that second (or next) purchase.
Consider the buyer’s journey
The other thing to think about here is the buyer journey. This is less about quantitative analysis and more about a qualitative understanding how your products fit into the lives of your customers. If a customer has purchased socks from you several times, how do you get them to check out your t-shirt line? If a shopper purchases twice from your men’s clothing line, how could you introduce them to your men’s accessories?
Root out the obvious problems
Your customer support data is another valuable asset here. By joining support data with the SKU data from your transactional database, you can identify any colors, sizes, product lines, or clothing types causing issues. Here’s an example of how this analysis might look:
Retain your A’s
The exact definition of an A customer will depend on your business, but once a customer enters the top 10% range, they’re worth significantly more than the average. They know who you are, and they’re big fans. Now you need to concentrate on how to keep them.
Use data to proactively solve their problems
One common chart our customers build in RJMetrics CloudBI is at-risk customers with the highest lifetime value. It’s a fairly simple table that pulls customers with a lifetime value over a certain threshold who have recently filed a support ticket. That table will look something like this:
You can do several things with this list. You might want to alert your support team so they can follow-up with these customers ASAP. You could send them a special email offer. You might even want to get on the phone with them yourself to solve their problem. Whatever you do, don’t let these problems linger. These are your most valuable customers, don’t wait to resolve their problems.
Find new ways to engage them
If you’re introducing a new product line, get them involved as product testers or offer them first-access to the goods. Look for ways to turn them into your ambassadors, Chubbies Ambassador Program is an incredible example of how to turn the customers that love you most into a referral engine of their own right. Offer them special discounts. Don’t waste your discounts on customers that are only looking for the cheapest price, instead, use discounts to reward your biggest fans.
There are a so many potential strategies to try at this particular part of your retention strategy.. The main takeaway here is that any loyalty or engagement program you put into place should be designed to appeal to your A customers. Your B and C customers might never turn into A customers, and that’s ok! You want to focus your energy on keeping your most loyal customers very, very happy.
I hope this gave you some ideas on how to use data (not discounts!) to keep your customers coming back. If you’d like to get started with your data-driven retention strategy, check out RJMetrics. Helping companies use data to make smarter business decisions is what we do.
Anita Garimella Andrews, VP of Customer Success at RJMetrics — on Twitter — has analyzed the data of over 300 companies throughout the course of her career. She’s forgotten more about data than most have ever learned. Anita gets annoyed with big data hype, preferring to focus on helping companies with what matters: making better decisions with the data they have.