February 11, 2021

How to build a stable business for the 2020s

Why acting now to acquire the insights needed to deliver exceptional customer experiences will pay dividends in long-term loyalty.

9 minute read

2020 saw shopping habits rapidly shift. Established brand loyalty was wiped out when consumers found themselves unable to access their usual goods and services. Ongoing national and local lockdowns forced many businesses to close, and consumers began to re-evaluate their priorities and values.

As expected, lockdown encouraged increasing numbers of consumers to shop online. The majority of online purchases fell into the fashion, home and consumer electronics catagories. Polling conducted by YouGov revealed that ‘convenience’ became a bigger priority for consumers when making purchasing decisions, when much of the UK’s workforce was required to work from home wherever possible. Over a third of people reported a desire to continue supporting smaller, independent retailers after the lockdowns had lifted.

Many businesses now have new customers on their database, creating a real opportunity for retailers to identify value in their data. This can inform retention strategies, as well as direct product and proposition choices.

Barry Smith, Business Development Manager at Ikano Insight, shares his knowledge on how to exploit this opportunity.

Why is it important to nurture relationships with existing customers, rather than only pursue new ones?

On average, a full two-thirds of a company’s business comes from existing customers. And yet over twice as many companies choose to focus on customer acquisition over retention. Fantastic introductory offers, like 20% off the first order, may hook new customers in – but at what cost? Leaving a sour taste in their existing customers’ mouths, many will choose to jump ship and find themselves a better deal elsewhere.

Acquiring new customers costs time, money and effort – up to 25 times more than retaining an existing one. And don’t overlook the fact that if you can increase your customer retention rate by just 5%, it can increase your profit by between 25% – 95%.

So why wouldn’t you want to thank – and retain – your loyal customers?
The focus must always be on what really matters: connecting with customers (whether new or existing) to deliver the best possible value to them now and in the future.

Of course, we all love a good deal, but money isn’t everything. According to Gartner, 65% of businesses believe customer experience is more important than price because it drives greater loyalty and retention.

And the best way to deliver a great experience? Make your customers feel like they’re listened to, rewarded and understood. Not only will this excite and delight your customer, it also puts you in a far more competitive position – loyal customers are five times more likely to purchase again and four times more likely to refer a friend to the company.

So, forget about just sending out marketing assets or creating a slick new deal. The best way to deliver an unbeatable customer experience is to get to know your customers better than ever before. Armed with that insight, you’ll know how to personalise every interaction.

What are the best channels to use to communicate with customers?

The simple answer is the channels they’re already on. The real question is this: how do you determine where and how your customers are engaging?
The challenge you face is that even with a customer persona there will be nuances to account for, such as generational differences, conscious and unconscious bias and changing consumer mindsets.

Taking a data-driven approach, you can better understand your audience, identify the critical touchpoints within their journey and deliver the right message every time they connect with you. Follow the data and you can determine the most effective channels from a cost versus response, versus purchases made, perspective.

However, in the current climate, as well as communicating with your customers, it’s equally important to consider how you deliver your goods and services to them.

Clearly, digital channels have exploded in recent months as people choose to shop more online. But it’s important to understand if this has given your business an advantage over competitors, and how to capitalise on it. For example, to reduce pressure on your logistics you could add new layers of information about products to reduce the likelihood of returns, or partner with local companies to scale your home delivery capability.

Finally, one of the most painful lessons the pandemic has taught us is the importance of leveraging technology to keep ahead of the market. We are in an age of experiential marketing, which means any channel used needs to deliver innovative and creative experiences that are supported by data-driven, engaging marketing campaigns, so that we can take the learnings and adapt accordingly.

How can you identify a business’s most valuable customers?

Many companies make the mistake of looking at sales to determine value. The most common question we hear is: “Who spends the most?”

But imagine you have two customers, and each spends £100 with you – are they both worth the same?

What if one of those customers spent £10 a month for 10 months, while the other made a single purchase – are they still worth the same?

To determine value, you need to think about context and engagement.

Now imagine the customer making a single purchase may have been forced to buy from you out of necessity – perhaps because they were having difficulty getting hold of a product through their usual supplier – and have no intention of continuing to spend with you. But for the customer making several smaller purchases, they’re returning again and again. They’re engaged and loyal, which means they’re probably telling their network about you and leaving valuable reviews about their experience.

Retaining loyal customers is vital to organisations from both a predictable revenue and reputational point of view. But if your business is fortunate to have experienced an influx of new customers over the last year, it’s equally important to determine where their loyalties lie. When you know their motivations, you know how best to engage with them to convert them into loyal customers too. It’s only through monitoring customer engagement that you gain the insight to continually meet customer needs, predict future behaviours and grow your most valuable relationships.

How can a business know which products to recommend to which customers?

Your data has the power to tell you everything: which products people are buying, why they are buying them and if they will continue to be popular.
Combine this insight with what you know about your customer segments – including their purchase history – and you can start to take advantage of a ‘recommendation engine’. Powered by insights, now you know your customers, know your offerings, know the purchase context and can deliver a truly personalised experience.

According to industry research, when subject to a personalised experience, 44% of customers say they are likely to become repeat buyers and 40% admit to purchasing something that was more expensive than they originally intended.

Create your recommendation engine using a customer data platform that retains all your customer data from multiple and disparate data sources. Through this single view of the customer, you can make sense of your data to understand the right message to push with each product, based on the customers’ history and what you know drives the relevant behaviours.

What’s the best way to segment customers so as to target them with personalised messaging?

Again, it all starts with understanding how your customers are engaging with you, and how you can use this information to drive the relevant behaviours – for example, do you want your customers to spend more in a single purchase? Or do you want them to buy little and often?

Combined with other data sources, such as purchase history and browsing data, you can understand the specific goods and services they’re interested in.

But you shouldn’t overlook the insights that can be gleaned from the wider world of social media. According to research from eMarketer, 90% of Millennials, 78% of Generation X and 48% of Baby Boomers are active social media users. This provides you with a superb opportunity to access huge amounts of rich data that will tell you everything you need to know about their likes, dislikes and influencers, allowing you to target them with laser precision. All you need to do is listen.

During the pandemic, 51% of worldwide marketers have turned to social listening to understand consumers’ changing preferences. Monitoring key metrics, such as brand mentions, relevant hashtags, and industry trends, they’ve acquired deeper insights behind the data to discover the individual’s mood and sentiment.

How can a business know which channels are bringing in the newest customers?

As we discussed previously, the channels you use should be driven by what the data is telling you. You should then consider:

 

  • Why that particular channel?
    While the data will show you changes in your customers’ behaviours, you need to question why they are choosing to engage with a specific channel. For example, if it has been forced out of necessity – like ecommerce during lockdown – will your new customers go back to their existing channels after the pandemic ends?

 

 

  • Create a cross-channel strategy
    Typically, you’ll be executing an integrated campaign across multiple channels, which means that you cannot consider each channel in isolation. For example, when a customer needs support or has an issue, you need to think about how you can make their experience as frictionless as possible. This could be eliminating their frustrations of having to repeat issues multiple times to different representatives or allowing them to purchase online and pick-up/return in-store.

How did the family loyalty (CRM) campaigns work for Ikano Insight’s client IKEA Russia?

We shape our clients’ CRM campaigns and strategies based on their customers’ changing needs and behaviours. Because it can be very dynamic, we need to be agile.

For example, once lockdown started, Ikano Insight worked with IKEA Russia to pivot their email communication strategy from driving in-store traffic to driving online sales. By inspiring IKEA Russia’s customers to see their home differently, the campaign delivered outstanding results – encouraging thousands of customers to shop online, which resulted in millions of pounds of incremental sales.

We delivered success by applying Ikano Insight’s advanced analytics to assess historical data on customer buying behaviour, campaign data, online sales performance by product and the key customer segments. With this level of insight, we could send a highly personalised email to each individual, containing relevant IKEA product suggestions to help adapt their homes for work and play.

“Ikano Insight worked with us on our family loyalty CRM campaigns. Their valuable input included targeted strategic planning, data and campaign analysis as well as predictive modelling with continuously improved results.” IKEA Russia.

How can Ikano Insight help?

With the vaccination roll out we finally have a glimmer of hope for the pandemic. As we emerge it’s essential that you are in the best possible position to secure more loyal customers through the exceptional experiences you can deliver.

Partnering with Ikano Insight will help you to identify how you can best enhance your customer experience using insights, data analytics and intelligence. The more you can learn about your customers, the quicker you can adapt, the faster you can make decisions, the better you can serve your customers, and – ultimately – the stronger and more competitive you will emerge from the current crisis.

Posted by Pinar Dost

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How to build a stable business for the 2020s

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