Welcome to the final installment of our 2019 Holiday Shopping Series. In part one, we discussed first-time shoppers and their long-lasting importance to retailers. In part two, we looked at statistics on why it makes sense for retailers to focus more on customer retention in their customer journey strategy and some tips for doing so.
Here in part three, we'll be delving into what may be the single most important item needed to maximize retention efforts today: customer data. So let's take a look at the important role customer data plays in customer retention.
Create personalized customer experiences using customer data
Today's shoppers interact with brands across more channels than ever before, and with these interactions comes heaps of valuable, actionable data that can be used to better understand customers -- regardless of whether or not they've even made a purchase. Data is the backbone of any organization looking to succeed in today's ultra-competitive business landscape, and customer data is an invaluable piece of the puzzle.
Using customer data, retailers can uncover insights into a variety of customer behavior areas (such as shopping and purchasing habits) that allow them to make more informed business decisions such as what products are marketed to a particular customer and how. This allows retailers to engage with customers on a much more personal level and provide things like product recommendations or promotions based on previous interactions.
Personalized interactions create lasting connections with customers, and these are connections that they want. Research by Accenture found that 91% of consumers are more likely to shop with brands that recognize them, remember them, and provide them with relevant offers and recommendations. This means that any outreach used to support customer retention efforts must include personalized messaging to be impactful. And without information on past customer-business interactions to reference back to, truly personalized messages wouldn’t be possible.
Companies aren’t using customer data to its potential – and missing out on profits
Given the overwhelmingly positive sentiment around personalization, it’s safe to say that companies not using customer data to carry out personalized marketing campaigns as part of their customer retention efforts are putting themselves at a serious disadvantage. The issue is that research indicates that the majority of companies are, in fact, putting themselves at said disadvantage.
A report from Harvard Business Review found that only 42% of surveyed business leaders believed their companies were using customer data to provide personalized customer experiences. This disconnect between consumer and company is quite concerning, especially considering companies are losing out on potential profits because of it. Research from Boston Consulting Group found a direct correlation between the level of personalization retail customers experienced, the number of items they purchased, and the average order value of those purchases.
In other words: better personalization leads to greater profits. Retailers who don't prioritize personalization risk losing potential returning customers to their competitors, and, as we discussed in part two of this series, returning customers spend nearly three-times more than brand new ones.
Customer data is at the heart of customer retention
Customers desire personalized interactions with the companies they shop with and prefer to do repeat business with the ones that can provide them. This personal touch demonstrates that their business is valuable and provides them with a positive customer experience, which is a huge factor when it comes time for their next purchase. And the only way to truly understand today's consumers and provide them with the level of personalization they desire is via customer data analysis.
As noted, many companies struggle to turn their customer data into actionable intel, or simply struggle managing the heaps of data they have. Salesforce research found that the average number of customer data sources has increased in the last three years, and there's no sign of this trend slowing down as brands strive to be visible in all areas of consumers' lives. Retailers can either choose embrace the flood of customer data or succumb to it like many businesses have in recent years.