Can marketers successfully shift focus from acquisition to retention?
Targeting new customers with ads is getting tougher because of changes being made to protect online privacy, and a new survey says that it is compelling marketers to focus more heavily on customer retention instead of customer acquisition.
Sixty-nine percent of retail marketers surveyed by events firm CommerceNext in a study sponsored by Yotpo said that they are prioritizing customer retention, Yahoo!Life reported. This shift has brought about an increased focus on branding and storytelling, referral marketing and initiatives built around first-party data rather than on the type of third-party customer data and tracking information that is already beginning to dry up.
Digital-first brands were found to be more successful with this marketing pivot than older, larger retailers, though larger retail brands are not without their direct customer relationships in the form of marketing tools like email-based loyalty programs.
Customer acquisition has long been seen as a critical KPI, but the notion that its importance outstrips retention has changed with a growing body of data indicating that loyal customers have larger order volumes and are less expensive to convert. Still the success of many direct-to-consumer startups in recent years has depended on building awareness through ad targeting across digital platforms. Customers, after all, cannot become loyal customers of new brands if they do not know about them.
An increased focus on repeat customers was seen with the boom in subscription-based retail in the mid-2010s which sought to capitalize on a perceived ability of subscriptions to keep customers on board and generate steady month-over-month revenue after their initial acquisition. This came with its own problems, though, as subscription-based retail offerings experience churn as high as 40 percent.
Some marketers, finding digital advertising as a whole becoming prohibitively expensive, are also changing how they pursue customer acquisition, according to Vogue Business. Between Apple’s iOS update (which allows users to opt out of many forms of tracking), increased advertising costs across major platforms like Facebook, Snapchat, Pinterest and Amazon, and the looming end of the tracking cookie, marketers have begun to rethink ad spend entirely. Marketers have begun turning — and returning — to television, direct mail, podcasts and even radio to get the word out about products.
- Digital-First Retailers Miles Ahead in Customer-Centricity – CommerceNext
- Survey: Retailers Shift Focus From Acquisition to Retention – Yahoo!Life
- The fashion marketing shake-up: As Instagram, Facebook costs surge, where next? – Vogue Business
- Why do retailers practically ignore existing customers to go after new ones – RetailWire
- Can subscription retail solve its retention problem? – RetailWire
DISCUSSION QUESTIONS: Do you see investing in retention or in alternate, non-digital forms of advertising as being the key to succeeding as a retailer marketer in a post-cookie world? What will a new focus on retention mean for the customer experience?