I’d like to start off by saying this guide is designed as a Do-It-Yourself guide. While it’s possible to follow the steps mentioned here manually and get good results, I would strongly advice you to go for an automated solution that enables you to do all this but with better efficiency. Without further ado, let’s get into it.
Your existing customers are your biggest & easiest source of revenue. Retailers who don’t focus on customer retention and loyalty are losing tons of money without even realizing it.
For the past 3 years, we’ve worked with hundreds of retailers to help them improve their customer retention and loyalty. The journey has been one of learning for us and we got the opportunity to learn and figure out where retailers face the biggest hurdles when it comes to improving customer experience and loyalty. This guide is the result of years of observation- we’ve observed where retailers went wrong and built our software to solve these problems. From our observations, we’ve come across a few common problems almost all of our clients faced. We’ve created this guide as a step by step process to help you find and fix these issues.
But first, here is proof that this process works. Croma electronics CIO and Head of Marketing talking about how CASA helped them improve their sales and repeat purchases in just 4 months using the 4 step process.
There are many more case studies like these where the process talked about here has helped our clients. But there is something most of our clients had in common- The problems they faced:
- They couldn’t get customer data easily- customers were unwilling to give their numbers for fear of being spammed.
2) They were unable to understand customer behavior and identify patterns with which they could personalize communications to customers.
3) They couldn’t consistently engage with customers and failed to bring them back before they dropped off.
4) They couldn’t measure critical metrics and conversion rate
5) They had a points-based loyalty platform that did not return more than single digit conversions.
6) E-commerce was eating into their business and they didn’t have a proper mechanism to respond efficiently
If you’ve faced any of these failures then you KNOW how difficult it is to get your customer’s phone number. You know that without their data, you have no control over how they spend at your store, you miss out on your chance to bring them back and keep spending.
If you can’t understand your customers, you’re messages and offers won’t resonate with them. You won’t be able to build that rapport that you need to turn them into loyal customers.
If you don’t automate tasks, you WILL lose time and resources. You WILL NOT be able to effectively engage with your customers. You will lose your opportunity to make a goood amount of money.
If you don’t measure your metrics, you’ll never know how good/bad your business is running. You will never know if what you’re spending on is giving you enough ROI to keep it going.
If you can identify yourself with any of these fears, then don’t worry. You’re not alone. Most retail businesses face these issues. it’s hard to eliminate these roadblocks but it can be done if you know how to structure your solutions.
You can achieve monumental success when it comes to customer loyalty. You can Increase your conversions by more than 200%. You can make your existing customer base, your highest source of revenue. All you need are the right process and tools to help you do it, quickly and efficiently
Now, who is this guide for?
This is for you if you’re in a retail business and you have stores at multiple locations. This is for you if you’re the CEO, CMO, CIO of a retail chain and you’re committed to improve customer engagement and loyalty. This is for you if you’re using a CRM. Because what you need is not a CRM but a customer engagement solution. CRMs are just a repository of customer data. This is for you if you’re not satisfied with your current solutions and results and you feel you could do better. Finally, this is for you if you want to innovate and lead in the retail space, if you want to do right by your customers and give them a unique experience.
What is the core concept behind our process?
The answer is something most retailers know but almost none of them put into practice.
Personalization. That’s it. This is the one concept retailers need to use to quadruple their retention rates, to increase their sales, to improve their customer engagement. We follow a 4 step process that takes personalization and makes it such a powerful tool for retailers.
The 4 step process to 10X your customer retention & loyalty
Step 1: Collect customer data by dangling a unique loyalty system. Unique being the important word here.
Step 2: Micro-segment your customers. The more segments the better
Step 3: Consistently engage with these customers. Consistency is key
Step 4: Track, Analyse and improve. Data is king.
Now let’s dive deep into each of the steps and see how we achieve them.
Step 1: Dangle a unique loyalty system to collect more data and increase repeat purchases
From working with more than 500 stores, we have learned that points-based loyalty systems just don’t work. People cannot associate loyalty to a set of points. Moreover, getting customers to sign up with their mobile number also doesn’t work. Most of them are wary about being spammed with irrelevant offers/messages.
If you are already using a points-based loyalty system or haven’t implemented one yet, then your first task is to think of a unique loyalty system. It should be something your customers can relate and it should be very personalized to every customer. Think outside the points-based system. You can either do this yourself or hire someone to do it for you.
What CASA can do:
We have a very unique loyalty system that is used by our clients. It goes beyond the traditional points-based system. Customers like Croma, Darling Retail & Jos Alukkas have seen a huge increase in repeat purchases thanks to our Loyalty system.
Step 2: Micro segment your customers
Every customer has their own behavior and must be treated differently. That is what micro-segmentation is all about. You need to identify patterns in consumer behavior and form groups of customers who exhibit a certain behavior. I have seen this working wonders for all of our clients. Micro-segmentation helps you craft messages and offers that resonate with your customers. The result- increased conversions on your marketing
The first thing you need to do is get your entire list of customers with phone numbers and their history of bills. You need to go through all their bills and group them on the basis of frequency of purchase, total amount spent, the category of products and any other group you can think of.
Here is an example of how one of our electronics customers micro-segmented their customers:
They grouped people who were on an EMI that was about to end in the next 30 days and hadn’t shopped at the store for more than 3 months.
Our AI-engine showed people on an EMI were more likely to purchase again at the store and that was the reason behind this micro-segment.
Another one of our customers grouped people into different levels based on the amount of money they’ve spent at their store so far. More the amount they’ve spent, higher the discount and so on.
Make as many micro-segments as you can so your targeting is super personalized. This is key to increasing your SMS/email marketing conversions.
What CASA can do
While you can micro segment customers manually, you will find it’s a lot easier said than done. It becomes very hard to keep manually segregating every customer who walks into your store. Making sure you’ve selected the right segments is again a huge headache.
CASA eliminates this manual work by micro-segmenting customers based on certain behavioral patterns that you define. Every customer(both past and future) who exhibit certain behavior is automatically segmented by the system.
For example, You want to segment customers who bought product A but not product B. CASA will automatically do this for you. This applies to customers who will exhibit this behavior in the future as well. If you’d like to see how this works in real time- book a demo with us.
Step 3: Consistently engage with customers:
Once you’re done segmenting customers you need to engage with them when appropriate. Apart from the type of communication that you send, the timing of your communication makes all the difference. For example, a customer just left your salon after their haircut. You send them an offer for a haircut the very next day. How would that make the customer feel? It’s completely irrelevant to him and it’s going to annoy him. Your messaging and offers might be spot on but your timing is off.
That is why consistent and appropriate engagement is important. It can bring back a customer if done right, but at the same time can push the same customer away if mistimed.
This is where it gets tricky. I’ll show you why- Suppose you want to target people who have bought at your store 2 months earlier but not since. For each customer, this 2-month gap would come at different times. For one customer it would be today, for another, it could be another month away and so on. You will need to hire a separate person whose task is to identify and select appropriate people with whom you need to engage. This person would need to do this every day.
What CASA can do
CASA can help you automate the entire engagement process. The system will identify the right people by itself based on the behavior that you define and send them the appropriate message at the right time. It doesn’t matter if each customers timing is different. CASA will take care of the timing for each customer individually. To see how it works in person, book a free demo with us.
Step 4: Track, Analyze and improve:
For most retailers, the biggest mistake they do is they don’t bother to track their critical metrics. We found it surprising that even our largest customers weren’t properly tracking their performance, or rather couldn’t.
What’s interesting is our customers knew how important these metrics were but still hadn’t done anything to track/measure them. The reason this is so important is that data is such a powerful tool to leverage. If you don’t have enough data about your own business, how will you take the right decisions? How will you know if what you are currently spending on is giving you enough ROI to keep that activity going? How will you know whether your customer retention rate is healthy or if something is wrong in your process? How will you know if your marketing is working? To answer all these, you need to analyze your business metrics, track your conversions and find out where to improve.
Here is a list of some crucial metrics you need to track and the formulas for the same:
Customer retention rate within a period:
Customer Retention Rate = ((NE-NC)/NS)*100, where:
NE – the number of customers at the end of a period
NC – the number of new customers during that period
NS – the number of customers at the start of that period
This number should give you an idea about how well you retain your customers. Any less than 20% means you’re doing something wrong. You’re losing a lot of money from existing customers.
Average bill value:
Average bill Value = Total sales in the period/number of bills in that period.
This is a good indicator of how much people spend at your store per visit. If the number is low, then you need to think about cross-selling and up-selling products. If your Average bill value is not growing year on year by 20% or more, then you’re doing something wrong.
Marketing Conversion rates:
Marketing conversion rate= (Number of people who purchased/number of people targeted)*100
This is a great indicator of whether your messages/offers are actually resonating with your target customers. If your conversion rates are low, it means customers are not happy with your messages. You either need to stop it or target them in a personalized manner to increase conversions.
ROI on marketing spends:
ROI= ((Amount of money earned-Amount of money spent)/amount of money spent)*100
This is one of the most important metrics you need to track. It’ll tell you if you should continue investing in a marketing activity or not. The activity can be anything, Advertisement, software, etc. If the ROI on your marketing solution is not greater than 300%, then you need to change to a better solution.
What CASA can do
CASA automatically calculates all your critical metrics and keeps them ready for you to see on your dashboard any time.
It helps you track your conversions and figure out if your messages/offers are resonating with your target customers.
Here are the typical metrics we produce for our customers:
- Customer retention rate- we increase customer retention rate by more than 30%
- Average bill value- We increase average bill value by more than 40-50%
- Marketing conversion rates- We can increase your existing conversion rate by more than 200-300%
- ROI- The typical ROI customers get from implementing our software is a whopping 1000% to 3000%, sometimes even more
Why should you do this?
Remember, your existing customers are your biggest source of revenue. You also spend less to convert an existing customer than a new one. By not focusing on building out a loyal customer base you are setting yourself up for failure. You are losing a lot of money by not engaging with customers who know you.
If you aren’t tracking your metrics and conversions, you are practically shooting in the dark without really knowing if what you’re doing is working or not.
If you don’t properly segment customers you’ll be sending out irrelevant communications that might irk your customers. You might end up spoiling their experience and you’ll lose them as a result.
Take a look at your business metrics now- Are you tracking them? Are your metrics greater than the industry average at least? Are you happy with your customer retention rate?
How about your ROI? These are questions you need to answer honestly if you want to improve your business.
We can help track these metrics for you and more importantly, we can help you improve these metrics for your retail stores like never before.
If you’re interested to see how much money we could potentially make for you, take this short quiz and book a call with us. We’ll try to see if and how we can help you with your customer engagement and loyalty.