Retail CMOs are in a unique position, steering a ship that’s being asked to innovate, iterate, and produce at the drop of a hat. So, what’s the main goal of all this innovation? Revenue. How do you create more revenue? Sell to more people or sell more to your existing customers. Depending on the tools your marketing team has at its disposal, you might be more inclined to focus on acquisition leaving the retention question for another day, or maybe you focus 90% of your efforts on retention and hope your website is ranked high enough to draw in new customers. Regardless of the bucket that you may fall into, the most effective way to create a sustainable and profitable stream of revenue is to create a balance between acquisition and retention. You can’t have one without the other. If you focus solely on acquisition, what happens to all of those new customers? How many actually come back to make a second purchase?
This is your company with an acquisition only strategy :
If you focus solely on retention, how are you planning to grow your customer base? Chances are you’re seeing stagnation or a decline in engaged subscribers.
This is your company with a retention only strategy:
So the question becomes, what is a healthy balance between acquisition and retention? This isn’t a new, or even novel, question. Harvard Business Review tackled the same question in 1996; however, progress in technology has made finding this balance easier and warrants a second look.
This is your company with a data-backed acquisition and retention strategy.
LET DATA DO THE WORK
The conversation ultimately turns to data - getting data to work for you and your team. Not surprisingly, using data to help you hone your acquisition and retention strategy is a key way to cut down on costs, time, and failed campaigns. More importantly, data tells the story of a consumer’s behavior, which is anything but linear. Between multiple devices, online, in-store, advertising, etc. consumers can interact with your brand across a number of different channels and the if/then logic that may have worked in the old days just won’t cut it. Contingency plans based on if they do X, show them Y have a time and place, but need to be updated to embrace AI.
The great news is that you already have all of this data - it’s sitting in your eCommerce platform, your CRM, or POS system. The bad news is that it can be a bear to get a hold of in an actionable way. Pair this with the need to incorporate predictive algorithms to help you create 1:1 experiences based on consumer patterns, and many retailers and brands throw up their hands. However, once you get past these hurdles, your team has the tools necessary to dig into the data and understand who your customers are. What do your best customers look like? What age range? What do your biggest spenders look like? Etc. Once you know this information, you can create an acquisition strategy targeting the correct group of potential buyers. Obviously, your team is probably already working under certain assumptions about your consumer base, such as, age range, interests, etc., but it’s important to double check - are there any surprises? How does this demographic data change from segment to segment?
Consumers have come to expect a personalized experience when shopping online, so being able to embrace this desire, will help you build brand affinity. This may seem foundational, but if you’re not using predictive data in your automated campaigns - first purchase, replenishment, best customer, product recommendations, category repurchase, predictive win-back etc. you’re not doing enough to keep your customers and chances are you may need to look at your retention numbers. This isn’t to say that you need to completely overhaul your marketing program - you don’t - but creating a task force on your marketing team to tweak and update your existing automation to incorporate, predictive data sets, such as predicted order date, predicted gender (great for segmenting promotions), and dynamic product recommendations, should be at the top of your list.
To create a strategy that will flourish, you need to be able to meld your acquisition and your retention strategies together as part of the larger strategy for driving new and recurring business, which ultimately leads to increased revenue and a happy marketing team (and CEO).