It's not a secret that returning customers are better for your business than new customers. Studies have shown that a returning customer is less expensive to convert and has a higher average order value than a new shopper. However, many retailers are focused on measuring total sales and comparative sales, while customer loyalty strategies and retention are not getting the attention they deserve.
"Retailers are focusing more attention on customer acquisition than loyalty. While acquiring new customers and driving top-line sales are important, building long-term relationships with customers is imperative for healthy long-term performance," said Jeffrey Neville, senior vice president and practice lead at BRP. "Paying more attention to the post-purchase experience and measuring its impact on sales, will increase the lifetime value of customers and maximize total revenues and profits."
According to early results from BRP's 2018 Digital Commerce Survey (publishing soon), most retailers have key performance indicators (KPIs) for sales, average order value, comparative sales and conversion rates; however, less than half of retailers measure customer loyalty through customer satisfaction (net promoter score), customer retention and post-purchase customer survey results.
"What retailers should really be focused on is RFM (recency of a purchase, frequency of the purchase and the monetary value of the purchase)," said Ken Morris, principal at BRP. "For many years this has been the mantra for successful omnichannel retailers, but it appears that the new economy has different metrics. Maybe we need to go back to the future."
According to the recent Best Practices for Enhancing the Post-Purchase Experience report, your customers' most recent experience with your company impacts the feelings they share with friends and family and the relationship they have with your brand. The satisfaction level during the post-purchase experience has a direct correlation on a customer's decision to buy again, or not.
Retailers that meet or exceed post-purchase customer experience expectations create a unique brand experience that customers will "share" with others personally and on social media. Exceptional post-purchase customer experiences also inspire customers to build long-term relationship with brands.
BRP is an innovative retail management consulting firm.