How to Retain Your Holiday Customers
The challenge for retailers is to get first-time holiday customers, most acquired in the month between Black Friday and Christmas Eve, to become repeat customers.
– [Joe] Hello, and welcome to the live Total Retail webinar How to Retain Your Holiday Customers. Today’s webinar is being sponsored by Optimove, a company that combines marketing and data science to empower marketers with the emotional intelligence required to communicate with their customers most effectively at all times via all available channels. Optimove’s goal is to help companies grow their businesses by more successfully engaging and pleasing their existing customers. I’m Joe Keenan, Executive Editor of Total Retail and the host of today’s event. Before we get started, let me take a second to point out the Tips for Attendees widget on your console. It’s the blue one with the wrench on it. If you missed the tech tips video we played leading up to the webinar, you can always click this widget for more information. Here today to discuss how retailers can get their holiday customers to come back and buy from them again in the new year, we have Amit Bivas, Chief Marketing Officer at Optimove, as well as Gannon Hall, Chief Product Officer at Spring, a digital shopping destination where people can discover amazing products and buy them directly from their favorite brands in a single card experience. So with that, I’d like to pass it over to Amit to get us started.
– [Amit] Thanks, Joe. Thank you, everyone, for joining us today. You know, it’s that time of the year, so today we’ll be talking about how to retain your holiday customers. We’ll be speaking about ramping up with strategy before the holidays, which I’m sure you’ve all already started doing, and then we’ll talk also a bit about what happens the day after all this mess is behind us. So once again, thank you for joining us. Today… I’ll give the mic to you, Gannon, to present yourself.
– [Gannon] Hey, everybody. I’m Gannon Hall. I run products over at Spring and we’re a multi-brand marketplace destination focused primarily on women’s fashion, we carry men’s fashion and other items as well, and I’m excited to be here. It looks to be an interesting conversation on a very timely topic.
– That’s for sure. So I’m Amit, as Joe present me, I’m the Chief Officer at Optimove. Optimove, just to give you a bit of a gist of what we do, we’re a science-first relationship marketing hub. We help brands foster longer relationships, long-lasting relationships, with their customers. We work with over 250 brands today, including 1-800 Flowers, Glossier, Stitch Fix, Domino’s Pizza, eBags, Adore Me and tons of others. What we do is our, you know, unique thing is that we use AI to help impact each and every customer with the most relevant communication. That’s pretty much it. Since we’re the sponsor side, you know, I gave myself the privilege of giving the spiel, but you’re not going to hear any more of that from now on. Let’s jump into things. Always good to start with general throwing numbers in the air to get people on the same page. So in 2016, holiday sales represented nearly 20% of total retail industry sales, that’s 2.5 times more than in an average month. It’s money time, we all know that, and hence we’re all, you know, ramping up towards the season and, you know, its peak by all means. Retail sales for November and December of this year are expected to reach $678.75 billion in the U.S. That’s an increase of around 6% in comparison to last year. And, you know, this money is out there, so we’re at a place where we’re all fighting over the wallet share. The average budget of a consumer in the United States for this season is $592, that’s the holiday budget. And, you know, the fixed budget, pretty much, given these averages, and we all want a bite at that budget. And the better marketing we’re going to do, the better acquisition we’re going to do, we’re going to get a better bite at that share. So, Gannon, you know, since I’m from the vendor side and I can just generate stats from across the board, do you want to share how you guys at Spring are preparing for the holiday season?
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– Absolutely. As I’m sure every retailer is, you know, there’s quite a frenzy in preparation, both in terms of getting ready for the scale of shoppers and getting all the various offers and promotions and, you know, elements in place that will be the most engaging and interesting to consumers. You know, we are a relatively new entrant into the space, so we really view holiday as a opportunity to expose the brand and kind of our unique value proposition to users. You know, as you well know, at this time of year folks are primarily shopping with value in mind, kind of high intense shopping looking for the best deal. I think, you know, for a lot of retailers that’s the primary focus, is driving kind of top of the funnel and making sure that GMV is as high as possible. But I think that that’s really kind of only part of the story and somewhat short-sided. In order to win in the longer term, we’re really focused on retention and, I think, kind of the three elements that make for building that user loyalty, and those being convenience, value, and service, and exposing that to users so that… They may come in through PLA or some reason. But once they’re there, we want to drive them to an experience that will engender repeat usage and ultimately loyalty. So we see it really as an opportunity to win new users primarily.
– That’s, I think, the ideal segue to the next slide. So we’re all focusing on, you know, on ramping up for the holiday season and, you know, spending money on user acquisition and doing all that stuff. The thing is that we all need to ask ourselves about the quality of customers that we’re acquiring during the season given, as Gannon said, that everyone is looking for the best deal that they can get, and we won’t necessarily be able to create, you know, long-lasting relationships with these customers. So let’s dive into the numbers again. Twelve percent of one-timers originate during the holiday season. That’s one-eighth of all of customers that we see for once and then they disappear, never come back again, are generated in the holiday season. Customers are 23% more likely to make a second purchase if they don’t buy during the holiday season for the first time. So let me explain this, because it’s a bit of a complex statement here. So customers are 23% more likely to buy again given that they haven’t placed their first purchase during holiday season. So what I’m trying to say here is that off-holiday customers have a much higher chance, significantly, to experience repeat business with us.
– We concur.
– Thanks, Gannon. So customers acquired during the holiday season are more likely to become one-timers. Now, the question we need to ask ourselves is, “Do we give up on acquisition during this period?” Obviously not. But what happens is that usually we slash prices, right? To be competitive. And then again, acquisition costs are skyrocketing. It’s much more expensive to acquire new customers during the season. So what do we even do? Where do we even start? Back to the numbers. First-time shoppers complete 50% more transactions during the holiday season compared to the rest of the year. What this means is that it’s not worth not acquiring new customers. But I think that the silver bullet that we’re looking for is balancing between our acquisition and retention efforts here. So, yes, first-time shoppers place much more transactions during this period. That said…
– Do you mind if I interject something quickly?
– Yeah, for sure, Gannon.
– The one thing I would just say to that is I think, you know, one of the problems here is this kind of innate bifurcation between user acquisition and retention, and almost thinking of them as these two separate things, when really they’re just parts of the kind of user journey and the user life cycle or one can frame them as such. And I think in doing so, I mean, thinking about it through that lens, offers up a lot more kind of opportunity to be thinking about how to convert those users from just deal seekers or those maybe lower quality users, from an LTV perspective, into high value customers. And one of the ways that we’re certainly focused on that is driving users to mobile, you know. Which, as I’m sure you all know, has peaked or really rather recently exceeded desktop as the primary driver of commerce across several different sectors.
And in our sector, which is apparel, which is a relatively expensive item that’s just now reaching parity with desktop, but what we’re seeing is a much higher engagement, much higher loyalty, retention, and conversion rate. So that’s one thing that we’re doing among many to really use that as an opportunity of not just conversions, and not just GMV, but in converting these users into actually loyal users. And, you know, we incentivize them in certain ways. There’s multiple touch points that we have around transactional email, you know, drip campaign, etc., on the marketing side. And the other thing that we also try to do is remember that, you know, during the holiday season not to forget about our VIP’s, right? Our loyal customers.
So, you know, we actually make an extra effort during this time to give them special attention, which I think is often overlooked, right? In this mad rush to extract as much revenues possible during this unique part of the year. And in so doing, you could lose customers, too, because this is the time when everyone likes comparing and kind of going to sites they’ve never been too or trying out they’ve never used. So one needs to be cognizant of that fact, that there’s…suddenly your customers are shopping around, so to speak. And so it’s, at least from our perspective, important to acknowledge that and take steps towards ensuring that we retain the customers we already have.
– Yeah, that’s also, as before, a great segue to the next few slides and next few points. Just a quick question, Gannon, about what you mentioned about mobile. So would you think that perhaps for retailers it would be a good tip during the holiday season they focused most of their acquisitions spent on mobile?
– Not necessarily. So, you know, I think that there are… You know, desktop is very well suited for high intense shopping, you know, search-based shopping, which is primarily what you see during the holiday season. Whereas mobile is better suited for discovery-based shopping, which has not been realized as much in the market. I mean I don’t think there’s as many, you know, players that are really making the best use of that opportunity of the window shopper and kind of creating the experience that more closely aligns with how people actually shop. You don’t walk into a boutique and do a search query.
– No, not really.
– You know, you kind of go through the rack and look for things that you like. And that is certainly an area where, you know, we released our first kind of highly personalized app experience a few months ago, and I’ve already seen incredible results from that. In order to create a personalized experience, there’s a bit of onboarding. We’ve made that as lightweight as possible. But we’re now at the point of, you know, over half of the users that are using our mobile app are going through that process. And we’re seeing, you know, 10% higher LTV on those users, and that’s a 50% increase in 30-day GMV, which is not insignificant. Twenty-five percent higher retention rates in the seven-day window, that’s big. And just in terms of NGS, that’s gone up considerably as well within that context for those users. But I don’t think it’s a matter of mobile spend, like app installs and Facebook, and, you know, you may have more insight into this than me as this is your kind of area of expertise.
But for us, knowing that people are primarily going to be coming through the web, it’s about making them aware of the mobile experience and kind of driving them towards that without getting in the way of the conversion, which is also a big risk, right? You know, you want to make these users aware of your unique value, but you don’t want to do it at the expense of a conversion, right? So it’s certainly an area we’ve spent a lot of time thinking about it and testing and working through. And a lot of that can be accomplished, for instance, through, you know, let’s get out of their way, let’s make these transactions as seamless and, you know, as easy as possible for the user. And then in the transactional emails we send, that’s a great opportunity to reengage them both around, “Hey, this is what we do, this is more of what you might like,” and market our mobile experience, right? So, we’re certainly seeing this holiday period as an opportunity to create more exposure for that mobile experience. But to be clear, I’m not of the mind of kind of desktop is dead and everything should be mobile, by any stretch of the imagination.
– By the way, so we see from our standpoint, from looking at many retailers out there, so it’s very interesting to look at RFM by cross device. When you look at RFM by cross device, what you see is that customers that most of their shopping is done via web, so they would have a higher…they have longer session, they have less…the frequency is much lower, but per each transaction it’s much higher. And then with mobile, you see that the frequency is higher on a monetary level.
– You’re seeing higher AOV on desktop?
– Sorry. Can you say that again?
– I’m sorry. I said that quickly. You’re seeing a higher average order volume on desktop?
– No, we’re seeing pretty much the same order value, but we see that with desktop customers, so they do less purchases, but each one is a higher order value versus mobile, that do more purchases, more frequent purchases, but at lower value.
– At a lower value.
– That’s very interesting.
– Yeah. No, that would make sense also in terms of the overall trend, so… I think it was 2015 when mobile surpassed desktop in terms of transaction volume globally. Everyone was, “Wow, mobile has won the commerce platform thing.” But when you dig into it, at the time it was primarily low-cost items, right? It was video games and digital media. And as you look at different category, if you go higher up the kind of the value chain, from consumer electronics, apparel, cars, homes, that trended heavily towards desktop, right? So apparel, which is where we operate, is kind of in the middle. It’s certainly not a video game, but we carry $2,000 purses, and so it’s not a nontrivial purchase either. But we are now seeing, I think for the first time, an equilibrium between the two. And we really see it as different modalities of shopping, right? And I don’t think that there is one platform that’s for one persona or one platform that’s for one, you know, kind of price point. What we’re seeing is a lot of cross platform behavior based on the mode that the user is in. So if I need to buy a gift for my son, I’m going to go to desktop, right? Because I want to price compare and I want to do a little research and so forth and so on. If I’m waiting for the subway and I’m kind of bored, my mode is going to be more mobile native, you know, open up one of my favorite apps, Spring of course, and start browsing, right? Looking at what the recommendations are and what’s out there from the brands I like that have been released, what sales are going on. And that’s a bit more of a lean-back kind of shopping experience.
But for those modes, when you get the right thing in front of the right person at the right time, it’s quite remarkable in that they will buy these things. At least add them to their wish list and buy them later or maybe fill up their cart and do the purchase come payday or something like that. But it is certainly a means of longer term engagement, right? So we don’t just focus on GMV and we don’t just focus on LTV and impact ratios. We also look at pure engagement, like a consumer app, you know, how often are people opening this app irrespective of whether they’re making a purchase. And what we’re finding is that if you create an experience that engenders that type of usage, ultimately that results in a much higher LTV.
– Right. What’s also interesting is that we’ve seen the most loyal shoppers and the shoppers with the highest LTV are always multi-platform. They don’t prefer one platform over the other, but you’ll see a distribution between all platforms. But back to our slide. So as we said, you know, during the holiday period, usually the quality of acquisition tends to deteriorate. And first-time shoppers, as we said, complete 50% more transactions during the holiday. So we can’t ditch acquisition at all, so we need to find that moderation between acquisition and retention. We see that first-time holiday customers are 90% less likely to complete an additional transaction. Meaning for customers acquired during the holiday season versus the customer that was acquired any time of the year, the holiday season one is 19% less likely to come back for repeat business. And this leads us to the notion that retailers must have a post-holiday retention strategy in place. And, Gammon, maybe back to you, if you can share with us a bit of your plan for January and what happens after the peak of holiday season with Spring.
– Yeah. You know, we’ve certainly touched on some of these topics during this discussion. But specifically around post-holiday strategy, there’s several things that we’re doing, one of which I mentioned, which is, you know, we are, as we talked about, completely focused on acquiring users across different platforms based on who they are and what their mode of shopping they happen to be in. But in terms of post-holiday, we’re incentivizing customers to download the app after they make a purchase on the web. There’s multiple touch points that we’re hitting. Obviously, the order confirmation, transactional emails.
For new users, we have a whole new user drip campaign that acquaints them with who we are, the value that we offer, and how we can be used in the most optimal way. And we emphasize the core value of our experience and particularly our app, you know, exclusive sales, better personalized experience. I mean, what we essentially have as a company, our unique asset really, is this vast catalog of over 3,000 of the top fashion brands, and this is inclusive of kind of mass market brands and luxury brands. And we really focus on quality, but we have a tremendous breadth to address that, you know. That’s a great thing to have, right? But from a user perspective, it can be overwhelming and difficult to find things.
So we have a system of computer vision for bringing in new merchandise and creating a taxonomy and classification around that new merchandise that touches on styles quotients that tie into a user’s page profile. So we’re able to create what feels like a much more intimate and relevant experience to the user. Where behind the scenes there’s thousands of products, but it doesn’t feel like that to the end user. For us, I mean, really emphasizing that value proposition through the experience itself is a key part of this. And as I mentioned before, you know, we think of our users, you know, to kind of simplify it. It’s much more involved and I’m sure our marketing folks would chastise me for dumbing down the work that they’re doing. But we kind of think of it as you’ve got your high intense shoppers and that’s what we mostly see during the holidays.
This is very utilitarian. They’re looking for the best prices. They’re doing comparison shopping. There’s not a lot of loyalty there. Most of them start with search. They’ve done this in the past. This is why Amazon has been able to capture such a large share of the market. And those are the high intense shoppers. And we don’t discount their value by any stretch of the imagination. And there is a lot that we’ve tried to do even for those users with personalization, and we’re continuing to do so. You know, you see this even with Amazon. If you search for a vacuum cleaner, you get thousands of results and you have the paradox of choice problem there. And what we’re trying to do for a high intense shopper is get to understand who they are and what will resonate with them, and not limit their choice but rank their choice, right?
So we want them to see those first nine results as being, “Oh, yeah, that’s me. That’s the stuff I like,” for focus on them. Value shoppers is another category which is, you know, related to high intense shoppers, but we separate and they have a lot of the same attributes of the high intense shopper. A lot of them are coming, you know, from outside of the United States looking for authentic, high quality U.S. Products, and they’re looking for sales. And we’ve invested a lot in creating a sales experience that’s very easy to navigate, that’s very easy to, you know, either whether you’re looking by brand or by style, where you can kind of see all of those sales in engaging user experience.
And then, you know, the third are those that are most, I would say, that fit the retention profile the best to a large degree. And that this is an area, obviously, where we’re the most excited and certainly a huge focus for us around the features that we’re building. But it’s also, you know, retention is not just about the product experience, right? It’s about the service experience as much or more so. So we invest a lot in the quality of our customer service and the proactive nature of how they engage with these customers, and giving them exclusive access to things and making them feel like we’re investing in them in the same that they’re investing in us. When we think about kind of post-holiday, we think about, “Okay. We’ve exposed ourselves and now there’s all these people who have experience Spring for the first. And we’ve made a lot of GMV and that’s great, but now is really the time to get to work, frankly, which is, “What are the things that we’re going to do to make those users loyal, longtime fans of the brand, fans of the service that we’re offering, that can recognize the value there.”
– Right. So I’ll try to represent here from the perspective of, you know, trying to make a business case here on convincing everyone that, you know, retailers must have a post-holiday retention strategy in place. But we’re seeing new acquired customers during the holiday are 90% less likely to return for repeat business. Now, we already spent the dollars on acquiring them. And we also have data plus intent, because they’ve been with our brand, they’ve bought with us and they also left their breadcrumb track of data. So not tapping into that would be, you know, a huge shame and money down the drain. So a few tips that we see across the board, you know, from clients that we work with is, first and foremost, collect data. As I read that, it’s like, you know, “Duh.” But it’s not only collecting data, it’s collecting the right data. So make sure that you have the right trackers place, make sure that you’re able to identify customers across different platforms and unify all the different transactions and all the different sessions across multiple devices. Make sure you’re able to understand…
– Yeah, attribution for instance. I mean, it’s surprising, you know, how often that’s overlooked, right? Like so where did this customer come from? Even something as simple as that is often overlooked, to your point.
– Right, right, right. Attribution, definitely. And you can even gauge LTV based on source of acquisition. So even that, you know, is a good start. And once you have that data, it’s much easier for you to tailor promotions. You know, do not spray and pray. We all know that that doesn’t work anymore. So even basic segmentation, RSM segmentation, you know, device date segmentation, product preference. Start with that and make sure that you’re more relevant than your competition. Because you already have that data, those customers have already purchased with you. Promote the brand.
As you said, Gannon, you know, these consumers, they’re content-based shopping. So they come in, they’re not necessarily aware of the brand. So when you communicate the second and third time, make sure you promote the brand so they know who you are, they know the name, and then exceed expectation. So everyone is doing a holiday acquisition, everyone is, you know, promising big promises, make sure that post-holiday you deliver on the promises, you give an extraordinary promotion or a good reason for those customers, that will probably be over bombarded after the holiday, to come back and shop with you and not the competition. And last, and most probably important, is engendering loyalty. You know, incentivize consumers to be loyal to you. So that could be done, like you said, Gannon, with a mobile app or, you know, trying to fit things and give prizes based on different purchase activities. But once you’re able to incentivize based on loyalty, you’re already halfway there. You give a reason for them to come back.
– Yeah, just one point to emphasize there is, you know, and something that I didn’t recognize was of such value when I started in this industry, is the post-purchase experience. The customer service, the delivery, the accuracy of the delivery especially during holidays. And you touched on what I consider to be a paramount product principle, which is never make a promise you can’t deliver on, right? What keep us awake at night is ensuring that we had everything in place and that we’ve done everything that we possibly can to make sure that, you know, for every dollar spent and every customer acquired, that that experience that they have, from first touch all the way until that package is at the door, is as pleasurable and it meets and exceeds their expectations. I mean, that is the goal right there. Because if you can do that, that’s how you’re going to win them. They may never have heard of you before and they found you through a PLA or something like that, and you’ve got a good deal on something that maybe they want for themselves or their husbands or kids or whatever. But once they do that transactions, that’s just the beginning. It’s everything that happens after that that really matter. And that…
– I agree. Is there anything worse than not getting your holiday gift on time?
– There isn’t, actually. You know, you’re disappointing your kids or something. That’s a big deal for a lot of people, as it should be. I think that that’s something that is often overlooked in this space, is the notion that ecommerce is really about setting up an app and a website and taking credit cards. That’s not what it’s about. What it’s about is getting things to people. And that, you know, the app and the experience is really a conduit for doing that. And, you know, we invest heavily in that experience because that creates a delightful shopping experience. But, man, if you don’t have your act together on what happens after they hit “buy,” they’re never coming back and you’ve lost them for good. You can spend as much money as you want on marketing to these people, but they’re not coming back. Because their core expectation, largely set by Amazon, is high quality delivery service and high-quality customer service. So if you want to burn a dollar to gain a dollar, you can do that. But it’s kind of a zero-sum game at the end of the day, right? If you’re going to spend a dollar and you want that be $50 over a course of a couple years.
– A hundred percent. And we always say that, you know, the first step in doing retention marketing is having a good product, and even before that having a better service. So I definitely agree that before you even start, you must make sure that you have a good product and you’re able to deliver on what you promised. And your base plan should be managing expectations, delivering on expectations, and obviously as you can exceed, you have your customer that appreciate you more and would be likely to come back for more. So moving to the next phase of this webinar, and you touched on this, Gannon. Marketers must not forget their existing customers during the holidays. You guys at Spring are doing this really good, but what we see is sometimes, all of these holiday frenzy, you know, retailers forget about their probably biggest asset, which is their existing customer base. If you remember, I mentioned at the beginning of the presentation that the average budget of a U.S. shopper during the holiday is $592. But what we’ve seen is, and here I’m jumping to the next slide, is that the average transaction during holiday season is 30% higher for repeat customers than new customers. With that being said, we still see that if I compare the holiday shopping transactions of an existing customer to their non-holiday shopping average transaction, there’s no significant difference. Meaning that during the holiday, and off holiday, the existing customers, the loyal customers, are spending pretty much the same. Now what this means is, de facto, is that they’re not probably…
– They’re spending money elsewhere.
– Exactly. They’re spending their holiday budgets elsewhere.
– That was my point earlier is it’s something to be very cognitive of, is that this is a great time of revenue generation. It’s also a vulnerable time for any retailer because this is, you know, just as your data showed, this is when folks are discovering other brands, right? Because that’s where that money is going. It’s going to, you know… Maybe you’re a fashion retailer, like we are. And they need to buy something for the kids so they’re on Toys R Us. And so forth and so on. And maybe they do some searches and they find another retailer that they like better. So you’re at risk for losing those customers.
– Exactly. That type of exploration phase is definitely a risk for brands to lose a portion of their existing customers, 100%. So even to emphasize the case on why brands shouldn’t neglect their customers during this phase, average transaction amount during holiday season is 30% higher for repeat customers. So it’s not always that you’re not investing the acquisition dollars for a new customer, but also the transactions amounts are much higher. Average number of items per order during the holiday season is 40% higher for repeat customers. So they’re also buying more not only spending more. And more than that, and most important, that repeat customer survival rate is 2.6 times higher than of new customers. Meaning that if my times zero is holiday season and I compare a new customer to existing customer, the chances of me seeing the existing customer come back for repeat business is 2.6 times higher than of seeing a new customer come back. So I mean, if I’m putting all the numbers on the table here, it just makes sense to invest into our existing customer base. And I mean… What were you saying, Gannon?
– I said I could not agree more. I think that you’re hitting on an extremely important point.
– And just a few tips that we’ve seen with retailers that do it right during the season. So once again, leverage the data. You have data, your existing customers, your loyal customers, you know almost everything about them. What’s their intent? What are they doing? What are they looking? What are they shopping for? And possible cross-sell opportunities here. So, you know, just use that data. And today everybody is bombarded at this time of the year. The way to climb above that clutter, that noise, that marketing noise during the season, is to be relevant. If you’re relevant, if you’ve got data and you’re on the spot with your customer, that’s the only way to get their attention. And by the way, also your brand name, to your existing customers, is already higher than new brands that are approaching them. But using the data, it’s so easy, it’s so relevant, and it’s just a winning point.
– Yeah. I mean, of the things… Sorry. Go head. Go ahead.
– And also, just touching another point that you raised, Gannon, was the VIPs. Don’t forget your VIP customers. It’s always the pareto, right? It’s 20% of your customer base that generate over 80% of the revenues. Make sure to give those guys crazy offers, expose them to your holiday deals a week or two before hand. Let them feel special so they’ll spend their money with you and not your competition.
– Yeah. To your point, one of the things that we’re doing for our VIPs is reaching to them via phone, via email, picking out exclusive gifts for them, giving them a personal heads-up on special promotions of their favorite brands. And this is exactly to your point. And I would challenge any retailer to really think about, “What can we do?” Because you’re in this frenzy, you’re looking at your marketing dollars and you’re moving these dials and moving your spend from here to there and everything, and that’s good and there’s people that should be doing that, but who’s thinking about, “What can we do that’s really special for our VIPs that’s above and beyond what they would expect from us?” And that may mean, you know, making a phone call. That may mean sending them a gift. That may mean giving them these special heads-ups on exclusive promotions that maybe you even fund yourself for their favorite brand. But do something so that you are top of mind.
– We’ve seen retailers that invite their customers to an event. We’ve seen retailers invite their customers to an event, you know. Treating them so special just because who doesn’t want to feel special, right? And if your VIPs are loyal to you, you know, return on the same way.
– Yeah, and don’t take it for granted. I mean, you know, and I think that’s a mistake that folks often make is, “Okay, great. We’ve got this cohort of highly retained customers, so let’s forget about them and go get some more.” But it doesn’t work that way. You need to nurture those. And frankly, those are people that have put trust in you and have invested in your brand. And you have an obligation I think as well to reciprocate that, right?
– A hundred percent. It’s not only that. Building trust is so hard, but ruining it all could happen in a second. So if you already have that trust, make sure to be attentive and to be thoughtful and to be generous enough to keep them there.
– Yep. Yep. I think, I mean, if there’s more to take away here, I would say that’s it right there. That is the one thing that I think is probably the most important.
– I second you on that. I think there are two main takeaways from today. Just kidding. So we’re almost out of time here. So if I need to, you know, wrap things up before the Q&A. So I’d say two main takeouts here is, first and foremost, as Gannon said, don’t forget your existing customer. Share the love, like them, holiday frenzy, it’s all right. Do acquisition but do not forget your CRM and retention. And second, plan properly for post-holiday. Everyone’s uncertain of the holiday frenzy, everyone is planning and preparing, and crazy acquisition budgets. Just make sure that the day after, you make the most out of those customer as you acquired during the holiday season. Because you have the data, you already spent the money, just taking advantage of those and, you know, bring them back for more and more. I’d like to thank you all. And, Joe, I think that we have some time for some Q&A. So giving the mic to you.
– Thank you, Amit. And thank you, Gannon, as well. Yeah. So as Amit mentioned, we have some time now for questions of our two speakers. You can still submit your questions to Amit and Gannon via the Q&A box on your console, so please feel free to send them in. We have a couple here to get started, but we’ll still have time if you want to add a new question. So my first question is, and I’ll adjust to I think Gannon and Amit, you probably both might have some thoughts on this. The attendee says that their company is running on a strict budget. What advice would you have on how to work around that during the holiday season in term of customer engagement and trying to acquire customers? And then, again, having a retention process in place post-holiday season?
– Amit, do you want to take that first or?
– Yeah, yeah. So I think that, you know, it’s probably all about striking a balance. So if your budgets are lower, try to promote what you have. And probably during this season, try to find those channels, those acquisition channels, that their cost is low, but their retention rates are higher. So don’t throw your money on channels that you know your customers that you’re going to acquire from them won’t return. Try to focus that limited budget that you have on the channels from which you know that you’ll get new customers that have a higher likelihood to come for repeat business. That and also leave a significant portion of that limited budget to your existing customer base. So you’re slashing prices, you’re paying more for acquisition, make sure that you also have a portion there and you also invest in your existing client base. And find that balance between existing and new customers. And I’m saying, you know, it’s not easy to strike that balance. But once you’re able to understand, you know, set your goals and understand what you want to get, you have this limited budget, make sure that you don’t forget, again, your existing clients and give them more. But the best tip acquisition wise that I have is, based on your historical data, find those channels that you know that create loyal customers and try to invest into them, rather those other channels that could bring higher transaction during the season, but one-time customers.
– Yeah. I concur. I mean, I don’t see personally a lot of value in spending a dollar to make a dollar, and in some cases spending a dollar to make 80 cents. Or having the average purchase volume be one item and that’s it, a year, at best. With a limited budget, I would focus on…we’re saying high-value customers. Well, what is a high-value customer? I think for us, at least in the fashion industry, there are influencers, right? There are early adopters who drive a lot of other people in terms of where they shop and what they shop for. And identifying who those people are and aligning with them and doing partnerships with them, can have tremendous value in establishing your brand and kind of getting the word on the street. I mean, at the end of the day, I think what we all want is word-of-mouth based retention, right? You want people to have this experience and tell their friends what a great experience it was and how unique the offer. And kind of a great place to start with that is in content marketing and with influencer marketing, from my perspective. And that may mean less kind of traditional gross marketing but, you know, and it’s a longer game. I would much rather have one loyal brand ambassador customer than thousands of one-off customers, Because if you’re in this to build a sustainable business, those transactions, they’re not users, they’re not customers. They’re transactions, right? And they cost money. So you’re buying a transaction. Where one should be thinking really is, “Okay, how do I acquire users? How do I acquire brand ambassadors? How do I turn this transaction into a user?” And I think when you think in those ways, you’re much better positioned to make wiser spending choices and think of creative ways to leverage. Whatever industry you’re in, who are the innovators? Who are the influencers? And that’s step one. And then step two is, “How do I engage with them? How do I get them to support my brand? What I can learn from them about what I should be doing differently to appeal to this market?” So it’s a very advantageous, for several reasons, advantageous to focused on that aspect, I believe.
– I have another question here from an attendee. Again, I’ll open this up to both you, Amit, and Gannon. The attendee asks does offering customers ongoing monetary benefits and advantages, and they give the examples of coupons and rebates, does that creates customer loyalty in your eyes? Do you guys have any thoughts around that?
– I certainly have strong opinions about that. Which is that, yes. I think one would be foolish at this day and age to think that, you know, we talk about value shoppers, but guess what? Everybody is a value shopper today, right? So for me it’s really about trifecta of convenience, value, and service. And to think that you can offer something that is not value-oriented, you’re going to create a lot of challenges for yourself. The trick, I think, is not to get into that mode of promotional spend, right? Where you train users to never buyer from you until there is a sale, for instance. And they know when the sales happen, and you don’t see a lot of conversions, you don’t see a lot of traffic until you do your Tuesday afternoon sale. And then, boom, a bunch of people come in and they buy a bunch of stuff and your margins are much lower.
There are ways through loyalty programs that are both symbolic and monetary to engage users to come back. And that could be rebates based, and those rebates could be applied as credits or as cash back. Some combination of both. You could do subscriptions. There’s a whole host of things that you can do in that area that does engender loyalty and does engender repeat usage. It’s not the silver bullet, you can’t do that and then not have a great service experience, because they just won’t come back. Especially in fashion where, for women especially, a lot of what they purchase they anticipate returning, because they’re not trying the stuff on. They get the box, they try stuff on, and they’re going to return some items. And if you make that difficult for them to do, for many women that’s the deal breaker. So I think it’s understanding your user. Who’s your user? What is important to them? And developing a product that meets their needs and exceeds the expectations that they have for those needs, and ideally even uncovers latency, things they don’t even know that they want. But once you give it to them, they say, “Oh, my goodness, I can’t even remember life before I had this.” You couple that with smart marketing and you’ve got a recipe for success.
– I’d also like to add on here about, you know, what’s known as perceived value. If you take your promotions and you lower the price to a certain place where people would buy, then what’s your perceived value? That’s also a point to take under consideration. You know, make sure that your perceived value given your brand, your brand empathy, remains at a place that you’re happy with. Because sometimes, and we’ve seen this in the past, you take down prices too low to a place where people won’t respect you anymore, people won’t perceive your brand where it’s supposed to be. So that’s just another, you know, a short point. Yeah. So, Joe, feel free to go to the next question.
– Yep. So I’m going to probably wrap up with this one. So I’ll address this one to Gannon. But, Amit, feel free, after Gannon’s done, if you have any quick thoughts that you want to add as well. The attendee asked about how AI is going to change the way Spring is operating and what are you doing in terms of preparing for that, you know, increased revolution in…increased use, rather, in terms of technologies like AI?
– That’s a great question and something that’s very near and dear to my hearth. You know, I’d say in the last 10 years a huge focus for me has been on leveraging data science and deep-learning, machine learning, computer vision, you know, all these various techniques that I guess one calls AI. And they’re applied in a myriad of ways. I think the most obvious that one sees most often as a consumer is around personalization and recommendation. You see this with Spotify, you see this with Netflix, you see this increasingly with ecommerce. And for us, that is the answer to the paradox of choice problem. You know, ideally you want to create an experience where a user can make a decision very quickly. And the answer to that is not giving them thousands of reviews to read. The answer is to understand what their needs are and to deliver something as close as possible to what they’re looking for. So that’s kind ofa current application of machine learning that we’re employing on the consumer side.
Now take that experience and fast forward a couple of years and there are assistive technologies that are being led by Amazon, Google, and Apple, Siri… Okay, Google, Alexa. And this notion of the assistant is largely a precursor to almost the science fiction notion of AI, right? Of a sentient computing device that you can interact with that has this vast amount of knowledge and can help you throughout your day in various means. You know, that’s certainly where I think we are heading. I think one of the challenges with mobile is just the ecosystem of apps and app fatigue. The average American only uses three to five apps on a regular basis. An assistive interface, where one interacts with various computing devices by voice and through touch, this to a large degree will make the notion of platforms even far less important, and it will be much more about those interaction models.
You know, we think internally about having moved from almost a warehouse in your pocket to having a digital shopping assistant in your pocket. And as technology progresses, that will become more and more reality. If you’ve seen the movie “Her,” that’s kind of where we’re heading, to put it simply. Now that’s just one application of machine learning and AI. On the other side, on the back-end side, you know, there is quite a bit around trend forecasting, around logistics forecasting, inventory modeling, that makes the business of commerce, removes a lot of friction and introduces far more efficiency. To use a very simple example of inventory, one of the biggest problems in fashion is running inventory. You buy a bunch of stuff, you don’t sell it all, and you keep marketing it down and marketing it down and marketing it down. Well, that is due entirely because you ordered too much stuff or the stuff that your ordered was not geographically correctly dispersed.
Now, these are all problems than can be solved with data science and are being solved with data science. So, I mean, to me as a technologist, as an engineer, and a product manager, we have reached the point where data science machine learning is ubiquitous, or should be ubiquitous, to any type of product one is building that involves people and things. Whether that’s ecommerce or services business like Uber, Airbnb, or local search, which is what I did at Google, which is about finding places to go. It just has to be central to how you think about technology, how you think about the product, how you think about the user. Not unlike what cloud computing was like 10 years ago, right? Where, “Well, maybe we will use the cloud for some of this.” And today…I just got a new compute the other day and there’s nothing on my compute really. It’s just all in the cloud and we take it for granted. It’s become ambiguous. We are now entering that phase with machine learning, I don’t know if you would call it AI, AI is a bit of a nebulous term terms of how it’s defined and where the boundaries are. But it is core to everything that we do at Spring and I think it’s core to what most people are doing these days.
– Amit, I can give you the final words, 10, 20 seconds on anything that you wanted to touch on other than what Gannon mention there?
– So generally speaking about AI, so how we use that with Optimove, is pretty much looking at the customer journey. So customer journey, generally, is a term that came from B2B where there’s a limited amount of journey. But from B2C in the world of consumers, there are an endless amount of journeys. So AI, in terms of how we use it to help retail marketers do their job better, is helping, you know, find the unique different journeys of each and every customer. Finding the unique way because there are so many factors that a human person just can’t crunch all of that data. So helping the marketer focus on being, you know, the dog draper and not the Albert Einstein and, you know, getting all the recommendations and getting all the full picture of what their customer base looks like, what is the best offer for each and every different customer persona, and helping the marketer be more on the creative side and AI leveraging that gap of data insights and all of that stuff. So that’s pretty much from our standpoint. And I agree with Gannon, you know, that the stuff, all the AI machinery and deep learning is definitely the future and where things are going to. Because at the end of the day, the human brain could perceive only a certain amount when crunching data and looking trying to identify patterns. There’s only a certain amount of things, you know, that we as human beings can understand. And machines and the computers and then all that deep learning will help us take that extra, that next step. So I think from our context, it’s definitely helping marketers do their job better. But, you know, this is going to change the world.
– Yeah. So I think that’s great insights. Unfortunately, we are just about out of time. So I want to take this opportunity on behalf of Total Retail and Optimove, the sponsor of today’s webinar, to thank you for attending. Be sure to check out our webinar page to get information on all of our archives and upcoming webinars. If you would take just a minute to fill out the brief feedback survey that will appear on your screen next, we would very much appreciate it. You feedback will influence the webinars we bring to you in the future. Thanks, everyone, and I hope to see you on the next Total Retail webinar. Have a good day.
– Thank you. Bye-bye.
– Thanks, Joe. Thanks, Amit.