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The Power of Post-Purchase in Building Customer Loyalty
This is the first of a three-part series of articles written by BrainTrust member Lisa Taylor, Director of Retail Consulting at Thought Provoking Consulting, about topics discussed during her time at eTail Boston 2023.
Post-purchase experience. An often forgotten part of the shopping journey and ripe for building loyalty and customer lifetime value. Why do retailers frequently leave this critical phase out?
- It’s easy to skip over. The customer has already paid for their products or services, and retailers may assume they are happy with what they’ve bought. It’s easy to move on to the next purchase.
- It’s complicated. To do it right, the post-purchase experience requires personalization, proper timing, and authenticity in communication.
- It’s difficult to quantify the value. At this point in the journey, retailers are speaking to customers at an individual level. Sometimes there may not be an immediate impact, but it might lead to additional store trips in the future, an increase in spend, and improved customer lifetime value. This means financial impact can be difficult to quantify.
The best post-purchase experience I’ve had was when I purchased a garage storage rack in-store at a warehouse club. I am a big DIYer, but once I got it home, I realized that installation was beyond my skill set. I left it on the garage floor, frustrated. At the time, I thought, “I can’t do it, but I need it, so I don’t want to return it. How am I going to find someone who can install it?”
Approximately two weeks after my purchase, I received a letter in the mail from the rack manufacturer. “We hope you’re enjoying your new storage rack. If you haven’t had a chance to install it, we can help. Call our 1-800 number and we can schedule an installer to come to your home for $60.” I felt seen. I was excited because they solved my problem.
My hypothesis is that these racks were being returned at a high rate, approximately three weeks after purchase. Instead of discontinuing the item, this retailer worked to find a solution. They observed an issue with the data and sought to understand the problem by speaking to customers. They did three things right in providing the solution:
- Personalization: Their letter was addressed to me, mentioned my specific situation, and recognized that I may (or may not) need assistance and that they have a solution if I do.
- Timing: Had they offered installation at checkout for an additional $60, I would have said no. I was not in that space. In my mind, it seemed easy, and that would have seemed like a money grab. They allowed for time following the purchase to give the customer the opportunity to install the product or figure out that they couldn’t install it. It wasn’t too early, nor too late.
- Mail, not email: Had it come through email, I would have been concerned that they were (or planned to start) sharing my email with other groups, leading to spam.
Recently, at the eTail Boston conference, I moderated a panel regarding post-purchase experiences, and the panel experts were unanimous in the strong value that building a relationship with your customers provides. Numbers vary, but one of the most quoted ranges for the cost of customer acquisition is five to seven times higher than the cost of retaining customers. According to a study by Bain & Company in conjunction with Harvard Business School, “Increasing customer retention rates by 5% increases profits by 25% to 95%.”
In this environment of ever-increasing competition and fragmented communication channels, it has never been more important to remind customers why they chose to shop at your store over others to begin with. Start standing apart from your competition by strengthening your relationship in an area of the customer journey that not many focus on.
Discussion Questions
DISCUSSION QUESTIONS: What can retailers do to engage with customers post-purchase to drive loyalty over the long term? What is the most effective post-purchase engagement strategy you have seen?
Poll
Loading …BrainTrust
Mark Price
Adjunct Professor of AI and Analytics, University of St. Thomas
Brandon Rael
Strategy & Operations Transformation Leader
Post-purchase is a powerful and, in many cases, neglected, way of driving customer satisfaction and loyalty. Obviously, the exact mechanism used depends on the actual product purchased – but communications offering assistance, providing an incentive or an offer, suggesting add-ons, or simply saying thank you, are all generally well received. As far as possible, all of this should be personalized so that it’s relevant and not overly intrusive. Post-purchase follow-ups can also be detrimental if they’re about hard selling or become too spammy.
Post-purchase, pre-purchase, re-purchase, these are all customer moments that each retailer needs to get right—for their particular brand. Yes, metrics and analytics are the lifeblood of big retail. But you have to start with understanding the customer experience you’ve modeled and what’s happening right now in the real world. Just reaching out to understand their experience is key. I think the idea of traditional mail over email is a great idea as well. This post purchase follow up is rarely used other than a survey and it has tremendous potential. But, of course, timing is everything. That’s why you need to keep hearing the voice of the customer, ideally in real time.
You’ve heard me talk a lot about getting returns right. This means the logistics, the points at which physically returning something costs retailers more money, the reduction of returns theft, etc. What we’re talking about here has a lot to do with communication. How, when, and why you communicate during and after the sale are just as important has how you got them to the shopping cart in the first place.
There is much that can be done post-purchase to maintain customer loyalty. A thank-you note is a good start. Personalizing the message is next:, use customer’s name, mention the product the customer bought, compare this product to past products purchased and discover preferences, mention them if there are, send commensurate gift depending on value of this and past purchases, invite the customer to a future, exclusive event, or enter the customer in a drawing, connect with the customer periodically, ask if the customer was satisfied with the purchase. The first message should happen – in my opinion – a week after the purchase. These suggestions imply that the retailer is collecting the information necessary to do all these things. The ability to collect these data about customers will become table stakes going forward. And, as Ken Morris points out, the type of message and subsequent actions have to be commensurate with the type of retail business. There is a difference between purchasing close-out running shoes from a huge table at a Conway store and a bracelet from David Yurman.
Every interaction with the customer matters, from the discovery process to the actual transaction; post-purchase services, repairs, and product returns are all part of the journey. Statistically speaking, it is critical to consider that customer acquisition costs are significantly greater, ranging from five to seven times higher than retaining your most loyal and engaging consumers.
The post-purchase engagement is an interesting one for retailers. Especially while personalized offers are welcomed and appreciated, the follow-up emails and texts need to be prescriptive and offer value to consumers. It’s a delicate balance between providing support, guidance, education, and information about additional complementary products and veering too far into the spam email and text zone.
The customer journey has become quite fragmented, and retailers must stay ahead to ensure their engagement strategies will resonate with consumers. A test-and-learn approach is necessary to determine how effective these post-purchase engagements are.
The most effective post purchase strategy – one that works across all customers, not just the exceptions – is clear communication about the order process. We’ve received your order and expect to ship it within x time. We’ve shipped your order and you can expect delivery on x date. Then updates from the carrier. And if there are any delays, be super proactive about communicating them and providing the customer with options. Personalized comms are great for taking your experience to the next level, but getting the basics of well timed comms right is an essential first step. It’s what builds trust. And at the end of the day, trust drives long term loyalty and conversions.
My list got longer right after you mentioned shipping status updates. Thes is a long list of ACTIONS!
I have said for decades that a customer’s loyalty to a brand is based on their cumulative experience with that brand, and their overall perception of value. It doesn´t have to be the lowest price, but rather perceived as fair and valuable in the eyes of the customer. Certainly post-purchase service affects both. Perhaps 95% of the things customers buy work as expected and no post-purchase service is required, but if any company is getting more than about 2% (maybe 5% for some categories) of the same item returned, then there is a problem. Even if the customer cannot return the item, they are likely to talk poorly about their experience and value to others – so the cost can be huge. Building loyalty is not based on offering points in a loyalty program – it is helping customers solve their challenges. Therefore, brands must consider the Total Cost of Ownership for a customer when they buy products or services, because even if customers don´t measure this, they are usually rational/logical enough to have a feeling about whether it represents good value or poor value.
Post-purchase engagement is critical to showing customers that they are valued in and of themselves, not just for the simple transaction. If you treat customers as generics, in general, they will return the favor and treat the retailer as a generic as well. In that case, price will be the primary factor and the retailer will find themselves in a spiral downward in revenue and profitability.
To succeed, communication must be timely, relevant, and personalized. Support you can offer customers that confirms that you know what they purchased. when they purchased it and what the issues might be, will be appreciated. The best channel is not phone or email, but rather the channel of preference of the individual customer.
We all have a stable of go-to retailers we prefer online. The retailer must have free and easy returns to make that stable in our household. Free and easy returns say, “We stand behind our products and want you to be happy with your purchases.” Anything short of that is quite the opposite.
Frictionless shopping should be the goal of every transaction, but valued customers are more than transactions. Post Purchase is where community can be created & a powerful lever if used correctly to stay engaged, increasing the likelihood a customer shops with your brand again.
Post-purchase is the most important time to engage in a meaningful way with customers. Brands need to have a solid set of communiques that they can personalize based on customer, length of relationship and product. Start with thanks, order status and assistance. And absolutely don’t offer a promotion or discount for a similar product.
A strong post-purchase experience does two things. It confirms the customer made the right decision to do business with that retailer. It positions the retailer for more business in the future. More retailers (or any type of business) should focus on what happens AFTER the purchase and create an experience that gets the customer to say, “I’ll Be Back!”
Absolutely! Many retailers overlook how much a personalized shopping experience with post-purchase follow-up can turn casual browsers into repeat customers. 80% of US adults want personalization from retailers with multiple, customized touchpoints, including mobile apps and digital displays. It significantly increases business profitability and most consumers are more likely to recommend and make repeat purchases from brands that personalize.
A satisfaction survey is not the sole device or method for post purchase engagement, but it helps, assuming the buyer takes the time to respond. How often do sellers ask how satisfying was the e-commerce or in-store experience as opposed to satisfaction with the actual product that was purchased – too often is my observation/experience. A rating on your channel is not a rating for your goods and services. DMP and CDP are sold in to companies as a solution for understanding the customer at a personal level. In turn, they can crack the code on personalization. Not so fast. Start with the vision, develop a process and method for leveraging insight and determine where the gaps are to complete the picture about your customers. Determine which groups or segments of customers are the ones you need to concentrate on first and then build test/learn approaches to improve on post purchase insight. Lastly, test different channels and methods of communication. A postcard, a letter, 3rd class mail vs. 1st class mail, email that has copy which upon being read by the customer says “I know you and I care about you”. The list is long and that is why hiring an expert to do an expert job is so important in this space. Build loyalty the right way by moving boulders, not rocks!
Customer loyalty is becoming harder and harder to gain and is easy to lose – one bad experience can be a permanent loss of a customer.
The key to effective post-purchase engagement is hyper-personalization. Although consumers are used to being retargeted, ensure it’s with content relevant to them and their individual purchasing habits. If a customer purchases a product such as a couch, don’t re-target them with other couches. Instead, target them with items complimenting that couch, such as a coffee table, armchair, or throw blanket – and make sure you’re presenting items tailored to their individual preferences, such as color and brand. With all the noise generated today, hyper-personalization helps to make the content feel relevant and valuable to the consumer. A good experience will drive loyalty, even post-purchase.
Every company is built around a brand experience that defines what they aspire to be. Every company strives to address specific concerns and challenges faced by their customers, which may come as a pre-purchase or post-purchase experience. For example, a company’s brand experience might be centered around providing affordable offerings to customers or accepting returns even after 90 days.
I had a conversation with someone who was the Director of Commerce at the time at “Ministry of Supply”. She stated that they have a return policy of 100 days. ‘It all comes down to believing in your product and wanting customers to actually try it out,’ she stated while noting that all they needed was feedback. “If a customer has had your goods for 90 days and then decides to return it, wouldn’t you want to know the reason?”
However, there’s no easy sailing in retail, so simply adding a post-purchase element as a tag-along feature will not work, and retailers will encounter issues in personalizing the experience and delivering on time. The post-purchase experience should come off as a natural component of the brand experience and solution design that retailers aim to offer to their customers.