Marketers are often focused on acquiring new customers, and rightly so. That is critical to growing a brand. However, they only begin to deliver long-term value when they are able to ensure repeat business with that customer. And in the digital age, securing that all-important second purchase is no mean feat.
“When consumers have so many choices at their fingertips, customer loyalty has become a far trickier proposition,” writes ActionIQ CEO Tassos Argyos in a new article published by DigitalCommerce360.com. “That’s why forward-thinking marketers need to keep a razor-sharp focus on driving second purchases.”
There are significant rewards for brands that push the needle even a small degree in terms of second purchases. That’s because across all retail sectors, nearly 60% of customers tend to make only one purchase. By contrast, 20% of customers typically provide something like 80% of retailers’ revenue. If brands can can convert just 2-3% more of first-time buyers into loyalists, they can increase revenues by 7-10%.
Digital-first leaders like Netflix and Amazon have done this with great success. Fortunately, a new generation of enterprise customer data platforms (CDPs) is enabling traditional retailers to catch up quickly with these leaders.
To help them do so, Argyros lays out a highly data-driven, five-step strategy:
Step 1. Measure your window of opportunity.
The rule of thumb is that you have 90 days to drive a second purchase. After that, the likelihood of conversion drops precipitously. However, that window of opportunity varies widely within segments and even between individual businesses. As a result, brands need broad historical insight into the time it usual takes repeat buyers to complete their second purchase—and at what point the chances of conversion begins to ebb away.
Step 2. Empower marketers to act at speed.
Since time is of the essence driving second purchases, marketers should be able to create campaigns for first-time buyers simply based on data they have already collected during the first purchase—for example, customers’ ZIP code, product purchased and total spend, to name a few.
Step 3. Identify highly targeted, personalized second-purchase offers.
Marketers cannot simply rely on the traditional “people who bought x, also bought y” model when providing second-purchase offers. With the benefit of deep historical insight into past customer behavior, brands can search for “look-alike” customers—consumers who share a set of behavioral or demographic traits with first-time purchases—and use these insights to craft far more effective second-purchase messages.
Step 4. Fail fast, refine fast, test everything.
Even the most effective messages will not work with every single first-time purchaser. However, customer responses to these offers—even failures—can help shape more effective offers for consumers going forward. The faster brands gather these insights, the faster they can create more refined messages, even during that critical initial window.
Step 5. Use all that insight to build effective win-back campaigns.
Even if customers fail to make a purchase during the critical initial window, they have already demonstrated their clear willingness to buy from the brand. And all the steps above can provide extremely valuable insights for crafting effective winback campaigns going forward.
If you need more information about What is CDP? Be sure to read our in depth blog or read the full article at DigitalCommerce360.