On a recent InternetRetailing webinar, Sam Kellett, head of content at Exponea, Nicola Fox, head of CRM at Missguided, and Andy Culligan, VP of marketing at Exponea joined for a look at retail maths
• Which key metrics are driving online retail conversion?
• Online retail formula:Customer acquisition cost/cost per visit and conversion rate
POLL Which KPI do you think is weakest in your company: Costs per visit 28%; conversion rate 31%; average order value 3%; purchase frequency 34%; gross margin 3%.
• Metrics behind success: compared average conversion rate, average order value, average purchase frequency, average gross margin between best in class retailers and the average.
• Gap between winners and average is widening – why?
• Maths beyond the concept: cheaper to retain customers than to acquire them – but what does that mean in the real world?
Strategies for customer acquisition costs
- How much it costs for visits to your page
- Customer experience drives conversion rate: figure out where customer experience issues are on site, funnel and flow report – aims to boost the conversion rate.
- Why a top-down approach is important
- How to read the funnels: in the example, the site loses customers between adding to cart and getting personal details. “It’s about where on your site you should improve to get the biggest impact”.
Step outside of your comfort zone
• How to identify major customer experience issues: Net Promoter Score and online surveys post-purchase
• Net promoter score: how to calculate it and what the results mean.
• Learn from customer behaviour, tracking data around size and price filters, category visits etc.
Don’t underestimate lookalike audiences
- How to find new ready to purchase and potentially loyal customers
- Use your current database to select star customers and create a look alike audience
- Or, match data to behaviour or similar customers: “driving people to the website who are more likely to convert”
Picking the right time to talk to customers
- “It’s about using customer data to understand when the best time to talk to our customers is.”
- By boosting likelihood of conversion, lowers cost of conversion/per visit.
- Nicola Fox, Missguided: We have a couple of campaigns that can suffer from lack of cut through. We’ve taken steps to organise that using personalisation and also ideal send time. Win back profile – triggering based on last order date.Follow-up reminder
- Run a bounce back email straight after order to encourage repeat order: ideal send time, run soon after placing an order. Can get lost. We’ve found that using ideal send time has really helped.
Customer lifetime value
• Calcuated by breaking down into average order value/purchase frequency/gross margin
POLL Have you been able to calculate your company’s average customer lifetime value? Yes 33% No 66%
• Stop thinking in terms of first purchase: if you tie this to first purchase you’ll underestimate lifetime value.
• Use single customer view to get to know and target customers (with examples)
Nicola Fox, Missguided on email personalisation
• One size doesn’t fit all:
• Had lots of data but weren’t tapping into it.
• Started to focus efforts on strengthening behaviour tracking across sites.
• Important to blend major campaigns with understanding/reflection of customer.
• Aiming to get second order.
• “We’ve been able to repurpose our marketing to target customers who haven’t shopped but have shown intent, visiting the site and looking at different categories.”
• Personalisation at all levels: starting to think about what makes the receipt of that email personal to that customers, whether using personal data, browse session or ideal send time.
• Example approaches: retargeting after abandoned cart; communication through the optimal channel; ideal send time.
Understand the habits of your customers
• Understanding customers’ purchasing patterns, analyse their behaviour to boost frequency. Example suggestions around Black Friday: eg make an offer that reflects the specific customer: at what discount will they convert?
• Nicola Fox, Missguided: how the site targets customers that haven’t bought for a while. How it analyses if that’s regular for them.
• Focus on the silent problem: drop off from first to second purchase.
Motivate customers to buy more
- Make it work in their favour to buy, eg through a bundle of offers.
Don’t be deceived by revenue
- Recommend products you want to sell
Have basics covered
- Customer lifecycle management
- How planning by customer works for Missguided: what’s the next best action
The webinar ended with a Q&A session. View the video from this and other past webinars on the InternetRetailing webinars page.