Companies across the globe experienced short and long term challenges in 2020. Aside from health and safety issues, the COVID-19 lockdown also affected almost all aspects of business operations - from supply chains and workforce distribution to cash flow and overall consumer demand.
The retail industry, in particular, was immediately impacted due to the change in household consumption, customer sentiment and an overall drop in consumer spending. In some cases, many brands were even exposed to a new cohort of customers who were purchasing in new ways or with new brands.
While traditional non-discretionary retail items like groceries were able to flourish, non-discretionary retail was hit the hardest. 2020 saw many brands struggle to sustain customer engagement and sales. However, some brands were also able to discover new customers, keep their existing customers engaged, and keep their business afloat.
In the next section, we take a look at five success stories of retail brands that implemented effective strategies enabling them to increase their customer retention and profitability.
GOAT (Greatest of All Times)
GOAT is an online marketplace for sneakers where sellers can list their high-value, limited-edition items. With over 7 million buyers and around 400,000 SKUs, it has created a global network cluster and serves as a “one-stop shop” for both sellers and buyers.
In 2020, GOAT further expanded its reach by tapping into China’s growing sneakerhead culture. The company built a localised version of their app with a local team and a program targeting Chinese consumers in WeChat - the nation’s largest social platform.
By understanding the uniqueness of its Chinese market, GOAT was able to provide its customers with a better and more personalised experience.
Bombas
Bombas is a comfort-focused apparel brand that heavily focuses on its brand culture and mission of helping those in need. For every item purchased, the company donates an item to a homeless shelter or homelessness-related charity.
In 2020, Bombas showed how brands with a purpose can become more successful than those without. Internally, its thriving brand culture helped its employees become true believers and advocates of its brand’s purpose. Enabling them to engage customers in truly authentic ways.
On the other hand, Bombas’ focus on its brand culture also helped sustain its customer engagement. For at least three weeks, the company avoided sending out any product-driven emails. Instead, they connected with their audience to share their partnerships with groups and other companies who are taking steps to make a positive impact. Their emails saw an open rate of 60% to 80% and also boosted Bombas’ sales by as much as 40% during some weeks of the pandemic.
Gap Inc
The American worldwide clothing and accessories retailer launched a new program to bring more value to its customers. In September 2020, the company announced a new loyalty program allowing its customers to earn and redeem rewards across its core brands - Old Navy, Gap, Banana Republic and Athleta.
Customers earn 2 points for every dollar spent on in-store or online purchases. They also earn a 5-dollar reward towards a future purchase for every 500 points earned. This focus on enhancing its rewards program enables Gap Inc. to attract new customers, establish stronger customer relationships and turn one-time buyers into lifelong advocates.
M.J. Bale
MJ Bale is a multi-channel Australian menswear and fashion label using personalisation to create a seamless shopping experience for its customers. The company gives its customers the ability to access their sizes and purchase history from all channels on their own devices using the mobile-optimised Profile Portal.
This personalisation capability allowed MJ Bale to extend their in-store customer experiences from pre-pandemic years and ensure that their new-to-online customers could still buy with confidence by leveraging details from their in-store purchase history.
Glue Store is another retailer that continued to deliver superior customer experiences even at the time of the pandemic. It was able to quickly pivot from legacy eCommerce and email communication platforms to more modern and cost-effective tools to address immediate customer needs and prepare for the future.
And despite this shift, Glue Store maintained its over a decade of data on purchase history and customer preferences as they were in Omneo and not locked away in the legacy platforms. This meant customers were still able to pick up where they left off as Glue Store continued to optimise its CX.
Now that we have the inspiration from some of the retail industry’s 2020 success stories, let’s look at some of the steps you can take to further increase your customers’ AAV. Below are four strategies you can maximise to help you enhance your customer retention and build stronger customer experiences in 2021 and beyond.
A big part of customer spending has shifted online. In fact, IBM’s 2020 US Retail Index report states that the pandemic has accelerated the move to digital shopping by almost five years.
Reach new customers and retain existing ones by improving your brand’s digital experience. Whether it’s through your eCommerce site, native app or social media channels, you can increase your customer engagement by providing convenience and almost indistinguishable shopping and brand interactions.
Do you have an app? Give your customers the ability to:
Cultivate brand culture
As we’ve seen from Bombas, defining and cultivating a unique brand culture enables you to produce outcomes that will help differentiate your company from the competition.
Further, if your brand culture is aligned with your brand identity (i.e. how you want your brand to be perceived or experienced by your customers), you’ll empower your employees to take actions that deliver on your brand promise. Leading to staff efficiency, superior customer experience and revenue opportunities.
Develop a personalised incentive program
Personalised incentive programs are a great way to drive engagement, advocacy and long-term retention. They remove the need for blanket discounts which can devalue your brand’s proposition.
At Omneo, we break down incentives into two categories:
It's important to note, however, that creating incentive programs is not just about identifying the tiered point structure you need to put in place. More importantly, it’s about defining what an ongoing mutually beneficial relationship with your best customers looks like.
Focus on customers' AAV
Increase your customer retention by maximising the value of your customer base.
Your customers’ AAV is the net average revenue each of your known customers contributes to your company over a full 12-month period. It does not only quantify how much a customer is worth to your brand but also predicts their value over the long term.
Focusing on your customers’ AAV means understanding your customer lifecycle stages and building customer experience strategies around them. As mentioned above, you can create meaningful incentive programs as well as provide personalised recommendations based on your customers’ behaviours, likes and dislikes. This will allow you to increase their purchase frequency and transaction value.
Want to learn more about how you can increase the AAV of your customers? Download our FREE eBook today.
The retail industry will most likely continue to see the effects of the pandemic in the coming months and perhaps even long after the crisis ends. This means you have to adjust now to continue meeting the needs of your customers and capitalise on the trends that have accelerated in the last year.
