Spending across multiple channels may be the new norm for shoppers, but retailers can build success by focusing their efforts on existing customers instead of scrambling to acquire new ones.
According to a recent IRI report, “The Omnichannel Journey: Translating Big Data into a Prescription for Growth,” it can cost five to 25 times more to gain a new customer than it does to keep a current one.
“Retailers really need a clear 360-degree view of shopper spending to grow,” said Susan Viamari, vice president of thought leadership at IRI. “Those retailers that can personalize the shopping experience move their customers up the loyalty ladder, increasing the lifetime value of those customers and supporting growth along the way.”
To maximize customer loyalty and value, IRE suggest retailers follow four steps, which include rewarding current customers, growing current customers, activating new shoppers and reactivating ones that have disappeared.
Considering that the top 10 percent of loyal customers spend 50 cents for every dollar at retailers and the top 30 percent generate 75 to 80 percent of total store sales, it is critical for retailers to prioritize frequent shoppers first and shift to a customer management perspective to lock in the bottom 70 percent that don’t spend so much at their locations.
Personalization is key for retaining current customers. Loyalty programs provide retailers the opportunity to understand their customers’ needs, offer products that resonate with their lifestyles and create positive social media content that fosters shopper activation. Retailers may offer current customers rewards, discounts and also invites to exclusive in-store events to keep them connected beyond purchases.
Understanding behavior could be challenging, but integrated shopper data may be a solution for retailers. For example, if retailers have access to loyal card member transaction data, they would be able to understand how often shoppers visit their stores and utilize their rewards program.
“Retailers need to harness the vast sea of big data around shopper attitudes and behaviors and bring it together in integrated and real-time fashion,” Viamari said. “Only then will they understand what is moving the needle today, and predict and prepare for what tomorrow will bring, so that they can consistently serve their customers in a highly personalized and engaging fashion.”