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Why are you Ignoring Current Customers to go after New Ones?

It’s not a secret that returning customers are better for your business than new customers. Studies have shown that a returning customer is less expensive to convert and has a higher average order value than a new customer. Yet, many retailers are focused on utilizing total sales and comp sales to measure company performance instead of measuring customer loyalty and retention.

According to BRP’s soon-to-be-released Digital Commerce Survey, most online retailers have key performance indicators (KPIs) for sales, average order value, comparative sales and conversion rates; however, less than 50% of retailers measure customer loyalty through customer satisfaction (net promoter score), customer retention and post-purchase customer survey results.

After a customer clicks “buy,” they enter a phase of uncertainty, where they are unsure whether their product will arrive on time or whether it will appear in one piece. Retailers who communicate regular updates and reassurances on the order and delivery status to customers can turn this period into a powerful moment of trust for the brand. Customers who shop without a sense of risk will feel more comfortable making repeat purchases in the future. This breeds customer loyalty.

According to the recent Best Practices for Enhancing the Post-Purchase Experience report your customers’ most recent experience with your company impacts the feelings they share with friends and family and the relationship they have with your brand. The satisfaction level during the post-purchase experience has a direct correlation on a customer’s decision to buy again, or not. Retailers that meet or exceed post-purchase customer experience expectations create a unique brand experience that customers will “share” with others personally and on social media. Exceptional post-purchase customer experiences inspire customers to build long-term relationship with brands.

Understanding the value of loyal customers and repeat purchases is critical to fostering higher lifetime customer values. Focus on making your current customers happy with your brand and see how that benefits your business.

As always, I am interested in your opinions on this topic.  Please share your comments below.

Jeffrey

Customer Loyalty is Critical to Retailers, Yet only 40% Currently Measure Customer Retention, According to Recent BRP Report

While Most Retailers Measure Average Order Value and Comparative Sales, Less than Half Rate their Customer Retention Strategies

Boston, MA – October 11, 2018– It’s not a secret that returning customers are better for your business than new customers. Studies have shown that a returning customer is less expensive to convert and has a higher average order value than a new shopper. However, many retailers are focused on measuring total sales and comparative sales, while customer loyalty strategies and retention are not getting the attention they deserve.

“Retailers are focusing more attention on customer acquisition than loyalty. While acquiring new customers and driving top-line sales are important, building long-term relationships with customers is imperative for healthy long-term performance,” said Jeffrey Neville, senior vice president and practice lead at BRP. “Paying more attention to the post-purchase experience and measuring its impact on sales, will increase the lifetime value of customers and maximize total revenues and profits.”

According to early results from BRP’s 2018 Digital Commerce Survey (publishing soon), most retailers have key performance indicators (KPIs) for sales, average order value, comparative sales and conversion rates; however, less than half of retailers measure customer loyalty through customer satisfaction (net promoter score), customer retention and post-purchase customer survey results.

“What retailers should really be focused on is RFM (recency of a purchase, frequency of the purchase and the monetary value of the purchase),” said Ken Morris, principal at BRP. “For many years this has been the mantra for successful omnichannel retailers, but it appears that the new economy has different metrics. Maybe we need to go back to the future.”

According to the recent Best Practices for Enhancing the Post-Purchase Experience report, your customers’ most recent experience with your company impacts the feelings they share with friends and family and the relationship they have with your brand. The satisfaction level during the post-purchase experience has a direct correlation on a customer’s decision to buy again, or not.

Retailers that meet or exceed post-purchase customer experience expectations create a unique brand experience that customers will “share” with others personally and on social media. Exceptional post-purchase customer experiences also inspire customers to build long-term relationship with brands.

To download Best Practices for Enhancing the Post-Purchase Experience, visit: https://brpconsulting.com/download/2018-post-purchase-experience-white-paper/

About BRP

BRP is an innovative retail consulting firm dedicated to providing superior service and enduring value to our clients. BRP combines its consultants’ deep retail business knowledge and cross-functional capabilities to deliver superior design and implementation of strategy, technology, and process solutions. The firm’s unique combination of industry focus, knowledge-based approach, and rapid, end-to-end solution deployment helps clients to achieve their business potential. BRP’s consulting services include:

Strategy | Business Intelligence | Business Process Optimization | Point of Sale (POS)
Mobile POS | Payment Security | E-Commerce | Store Systems and Operations | CRM
Unified Commerce | Customer Experience | Order Management | Networks
Merchandise Management | Supply Chain | Private Equity

For more information on BRP, visit http://www.brpconsulting.com.