Michael Ross, chief scientist and co-founder of DynamicAction, offers insight to Retail Touch Point readers addressing customer profitability, a common pain point among retail executives that are faced with disjointed data and siloed organizations. Often these CEOs, CFOs and CMOs are not asking the right questions to understand how their merchandising, marketing, operations and finance efforts should be performing and if they are truly winning the retail battle.
Below are a few excerpts from the piece:
“How many of your new customers will become second time purchasers? What about fourth or fifth time buyers? How do you create a culture that instills customer loyalty?
The first-to-second time purchaser question is a powerful one to ask if you want a true indication of the quality of your end-to-end experience. If your answer is around 40% to 50%, you are doing well. Our benchmark suggests that the best in class predict that around 70% of their new customers will make their next purchase. At the other end of the spectrum, the worst can have a transition rate of less than 10%.
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These retailers (like LandsEnd) are intent on making sure their customers receive a product they like, on time, and that the initial CRM is sufficient to get them to come back a second time. They avoid the ineffective and wasted efforts of “buying transactions” using expensive marketing that only deliver a short term, one-off purchase.
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The key to success here is to take a joined-up approach to measuring the things that matter to consumers, and then taking action on disconnects in the customer experience. We have found that the retailers who focus on fixing these disconnects can see a 50% increase in their second time repurchase rate. And this is what creates the core platform for growth: a loyal, growing and engaged customer base.”
