Numbers Talk: On Mother’s Day, Existing Customers Are Worth 3X New Customers
We analyzed hundreds of thousands of individual Mother's Day shoppers across multiple retail companies to see how they behave in the year following their holiday-related activity and compared existing vs new customers. The result? Well, it's another knockout that Retention Marketing gives Acquisition
If there’s one thing we love to use our data for, is to help steer marketers away from outdated tactics, and towards modern pathways that yield better results through improved personalization.
For example, think “batch and blast” – when marketers send the same message to their entire client base. You might think it’s a thing of the past. You’ll be surprised. Instead, a modern marketer, especially in the more sophisticated realm of Retention Marketing (as opposed to Acquisition), will use tens of different customer segments and will let AI match the right message or campaign to the right micro-segment.
Just recently we shared a post on LinkedIn that talked about “Control Groups” (another method modern marketers are adopting more and more), and one of our CRM Associates here at Optimove chimed in with this insight: “As a CRM Associate, I work closely with clients on their campaigns and implementing journeys for them.
“Clients are oftentimes surprised to find out how each segment can be broken down into 10+ more segments to create the most personalized experience,” wrote Michal Liberman, adding that “the best part is that you can set it up to run forever and don’t have to worry about hitting the right people with the right campaign.”
Compare that to “batch and blast,” and you’ll start getting why some brands do 10X better in retention than others.
How to Prioritize Customer Segments During Peak Times?
Another example of where modern marketers are ahead of the curve has a lot to do with how they treat what we call “peak times.” Think, Black Friday/Cyber Monday, or other holidays. Or, for gaming and gambling operators, events like the FIFA World Cup.
What most traditional marketing strategies focus on during “peak times” is acquiring new customers. Which, for a second there, can make sense – there’s an elevated interest on the part of consumers, and every brand should do its best to grab as big a chunk of that cake as possible.
But the simple truth is that these new customers – the kind that lands on your brand during peak times – oftentimes just look for the best deal and nothing more. That’s why they make for the worst kind of customers. They are occasional bargain hunters with very low affinity for your brand, have basically zero brand loyalty, and the numbers are insanely clear about it: the average Lifetime Value of “peak times” new customers is the lowest among basically every other cohort.
So, what are we saying? Don’t do any acquisition campaigns before and during peak times? Of course not. Nothing Optimove preaches for is an all-or-nothing proposition. Instead, we recommend tweaking your prioritization and putting your existing customers on a pedestal.
Simply because the ROI on investing in getting an existing customer to buy with you again is SO MUCH higher than that of trying to get someone to buy with you in the first place.
And now, a couple of weeks since the latest Mother’s Day, we have new data that – what do you know – strongly supports that entire idea that even/especially during peak times you should focus on existing customers.
New vs Existing Customers: Which Has More Value?
We looked into the data of a few major retail clients of ours – with a total of hundreds of thousands of unique customers who made a purchase during the week before and/or the weekend of Mother’s Day 2021.
Then, we split them into “new customers” (meaning, their Mother’s Day-related purchase was their first one with the brand) and “existing customers” (meaning, they have made a purchase with those brands before the 2021-Mother’s Day week/weekend).
Finally, we compared their behavior in the following 3, 6, and 12 months. And here’s what we’ve found.
For all the clients we looked into, the percentage of “existing customers” (who made a purchase during the week/weekend of Mother’s Day 2021) that also made another purchase in the following 3 months was between 29% and 47%. The range for “new customers”? 9-14%.
When looking at the 6 months following the 2021 Mother’s Day, the range for existing customers who made another purchase goes to 39-55%. It’s only 12-20% for new customers.
And, for the 12 months period (which ended on that recent Mother’s Day a couple of weeks ago) – 55-69% of existing customers came back to buy with those brands again, and only 15-28% of new ones have.
These numbers show that consistently, the chances of existing customers who bought with you during the peak time of Mother’s Day to buy with you again is about 3X higher than new customers whose first purchase with you came during that same peak week.
Now, throw into the mix the fact that retention marketing channels are 5-10X less costly than acquisition marketing ones, and we’re certain that the only conclusion that makes sense here is that even (or, again – especially) during peak times, brands should prioritize their existing customers with smart, segmented, AI-led, personalized CRM Marketing strategies, over fighting the entire industry just to pay rising CAC prices, that acquire you new, flimsy customers that rarely return the investment you made in getting them to buy with you.