We held an exciting and informative webinar to discuss the importance of customer retention with participation from our highly innovative retail clients Jonathan Adler and Lilly Pulitzer.
In our first blog post in this series, we will be looking at how maintaining an active and profitable customer relationship, like any relationship, comes down to three key points:
- Are you relationship material? Why do most customers abandon after their first purchase?
- Finding your true love(s). Which customers are worth focusing on?
- Love the one you're with. How do you keep them coming back for more?
Our participants in this webinar included:
Before you start a relationship you have to have a first date (or purchase). But why is it that so many first dates (or purchases) never result in a second? According to data pulled from AgilOne´s customer database, 73% of customers are one-time buyers...so what are retailers doing wrong?
73% of customers are 1X buyers
As you can see in the customer journey slide above, it´s a great feat to acquire a customer (or land that hot date) in the first place so don´t neglect them once you´ve hooked them! According to Gartner a 5% increase in customer retention can increase profits by 20-125%.
How do you know if a customer is relationship material?
Leland [Jonathan Adler]:
Retention is the first thing that we´re attacking and since working with AgilOne we finally have a very clear single view of our customer... Our goal both through automated email campaigns and through in-store clienteling is to move our huge portion of one time shoppers into two-time shoppers.
What we saw is actually a 2x customer, if you look at their lifetime spend between their 2 visits, spends 3-4x as much as a 1x shopper...so the value of taking someone who has shopped once with your brand, knows your brand, who´s familiar with it ...has major implications for your bottom line and your revenue. So as much as we´re investing in bringing new customers in, we have to make that investment last and turn them into lifetime customers.
Kristen [Lilly Pulitzer]:
Retention has been a great focus for us here at Lilly Pulitzer and with the help of AgilOne it´s been wonderful to really segment out those consumers. Over the past 55 years we´ve attracted a passionate and loyal consumer base and have had wonderful retention rates above the industry average, but with that said, we still see a great opportunity to improve and focus on it year round.
We know from our qualitative research that she (Lilly customers) loves to shop, she´s always browsing, so how do we get her not only back annually but engaging with us more frequently? We're really tackling it on all platforms with distinct strategies to retain new and top consumers alike and to reactive our lapsed consumers who sometimes just need a gentle nudge to come back to us.
Data is key to every relationship
Unlike snagging that first date, retaining a customer is easier if you have the right tools. You already have a rich profile of your customer -- what they bought, through what channel, what they browsed, how they buy (order size, etc.) -- which makes it easier to send them targeted and highly effective messaging, so don´t ignore all of the data you already have on these buyers.
I want to touch on data really quickly, because I think data are a huge component to all of this. This is one of the things that I think is most unique to AgilOne... but the value of it is more than what most people realize. So what is the key “ah-ha” insight that you got from having all this consolidated data?
We have been around for 20 years, grown to 28 stores, and we started in brick and mortar, so you can imagine how messy that data was….so there are tons of pieces of data that have lived separately but the first time that we´ve really consolidated it in a clean way has been in the past couple of months with AgilOne and it has really allowed us to have one view of a customer and the implications for marketing are profound. What was happening prior is that a customer would come in 3x and they would have 3 different profiles. So if you´re looking at high level metrics that looks like 3, 1x customers, vs. 1 customer who´s shopped 3x. There are very different implications for how you would market to a 1x customer vs. a VIP or loyal shopper.
We´re now able to get a clean view of where a customer is shopping, how frequently they´re shopping, and what they´re purchasing in a rolled up view. If we wanted to target all of our high spenders the last thing that I would want to do is go out to somebody who has purchased a lot of goods from us and reference something they bought 2 years ago when perhaps they´ve made a purchase in the last couple months but it wasn´t available for us to see because we didn´t have a single view. Now we´re able to do a lot more personalized cilenteling. We do a ton of email automation but at the end of the day when you´re making a highly considered purchase that human interaction that happens at our stores is critical in closing the sale, so my goal is to always arm our store associates with accurate information. Now we´re able to provide reports looking at lifetime purchases, consolidating multiple records for one customer, seeing total spend vs. chunks of it from different places that was never merged together in one view.
Our biggest “ah-ha” was the importance of imploring segmentation strategies to relate to our consumer and in turn increase their spend level and overall brand retention. Our business is so unique in that we´re a multigenerational brand, and we´ve really seen in the data and in the qualitative research that age and life events that naturally take place (marriage, kids, moves, jobs) play a huge role in our consumer´s relationship and purchasing power with the brand. We´ve used that understanding to really fuel our communication and guide our product development and some of our distribution strategies.
For us, it´s really important that we engage all of those lifecycles to ensure we´re not only meeting our short-term financial and consumer objectives but also long-term as well. While our younger consumers may not be spending the most with us today, they have the most lifetime value potential and are often times introducing their Mom and their peers to the brand through their social voice and influence. While we aim to communicate with everyone, through AgilOne we can decide on the platform for which to engage them depending on their spend level and preference. It´s really been game changing having this single view of our consumer.
Being able to see your data all in one place in single view is invaluable -- kind of like being able to look through all your love interests social media profiles.
Finding true love
Now that you have background on your customers, you can segment them into similar groups. For example, you can break down your customers into clusters based on purchase behavior, brand or product clusters, liklihood to buy, and then target each customer group with different messaging based on their specific characteristics.
Getting past the first date
What are the right strategies and tactics for engaging customers and increasing frequency?
Because we are a great place to come for gifting we have a high number of shoppers who come to us in Q4 and we really wanted to motivate them to 1) shop a second time and 2) to change their behavior to have them shop at a different time of year. So, the first thing that I did was look at people who shopped in ´13 and ´14 only in the months of November and December...clearly holiday shoppers, they do a lot of gifting...We wanted to incent them to come in during the months of January (in the first 2 weeks). Then I wanted to take anybody who was a new holiday shopper. As we continue to invest in acquisition, we had multiple direct mail pieces with a high population of new customers targeted in September, October and November, so I wanted to take all new shoppers who purchased for the first time in November and Decemeber of ´14 and try to drive that second purchase and do it at a time outside of the holiday. We did an email blast to both of those populations. We actually tested two different offers...a very easy email blast for us to do and had a high response rate and it brought in more dollars than we expected and now this has informed what we´re doing for everyday blasts for new customers. It´s an ongoing easy way to be re-engaging customers.
Kristen (on post-purchase messaging):
We are just starting to use more post-purchase campaign messaging here at Lilly. It´s really a tool to help us also manage returns but build greater affinity around the given purchase. For example, if you just purchased that wonderful new Lilly shift, now we´re providing you with shareable and social content that´s often time user generated to show you how to wear and to take that style to the next level --really making that consumer feel good about the big purchase that they just made and to continue the conversation which often times results in them coming back to our website and buying even more.
At QVC [where Kristen previously worked], we actually had a pretty robust post-purchase email campaign that we ran and it started out by focusing on individual items that had a layer of complexity and showed high return rates. In looking at those results we were not only able to just reduce the number of returns but showed strong sales and high engagement as indicated by our really strong open rates on email. It also benefited us for longer term retention because it built that trust level with the consumer and also showed them that we cared beyond the sale.
Annually (at Lilly) we hit the road with our Jeep tour and throw store parties along the way with mystery guests and photo opportunities with the Jeep. This experience has really strengthened the emotional connection that our girls have with the brand and really helped to drive traffic and sales for our stores within the tour. It also builds our arsenal of shareable content on our social channels...It attracts all of the age lifecycles that are engaged with Lilly Pulitzer and is a lot of fun along the way.
So this is an integrated approach?
Yeah, so of course the Jeep in rooted at our stores but we use a digital approach to communicate with our consumer about the tour and get her excited using both our social channels and email marketing and having a landing page presence on our website.
In Part 2, we´ll be discussing how Direct Mail is still effective and a popular means of customer retention and engagement! Tune in next week….