Why do retailers practically ignore existing customers to go after new ones?
Through a special arrangement, presented here for discussion is a summary of a current article from the IMS Results Count blog.
Studies repeatedly show that second time buyers are more valuable and more profitable. So why do so many retailers focus heavily on sales transactions and fail to measure the KPIs of “the second sale”?
Rest assured, today’s e-commerce giants like Amazon understand the importance of leveraging second sales. Online systems track when you visit, what you view and what you purchase. AI then kicks in to repeat message first-time buyers for add-on sales and second purchases, while tracking all corresponding data from the messages, offers and future sales. Prime is the epitome of leveraging the second sale.
Unfortunately, many brick and mortar retailers’ marketing goals are rooted in historical models of reach and frequency, acquiring customers and getting them to the stores. When traditional retailers launch ecommerce, many still focus on metrics of acquiring customers, new page views, conversion and AOV (average order volume).
The second sale is often missed by many retailers because:
- Legacy systems are focused on sales transactions, not customers;
- Data resides in silos and is difficult to access;
- Metrics focus on transactions and year-over-year results, not relationships;
- Many lack integrated CRM systems to market and message to customers.
The future of retail and profitability lies in retention and optimizing relationships. In order to do that, retailers must think and analyze from a customer relationship perspective, not transaction sales. This will require CRM and customer tracking that enables retailers to analyze:
- What categories and products the customer shops;
- What category the customer makes the second purchase from;
- How long it was before they made the second purchase;
- What messages they received and what impact they had on conversion;
- How that compared to other customers purchasing similar products;
- What the “basket of core products” is that creates lifetime value for the customer.
The second sale is a critical, missing KPI in much of retail. Beyond the metrics, retailers must develop the ability to answer questions about individual customers that will create a path to retention and profitable lifetime value relationships.
- Why “the second sale” is more critical than new acquisitions – IMS Results Count
- The One-And-Done Buyer Problem – Bluecore
DISCUSSION QUESTIONS: Do you agree that retailers’ measurement and metrics remain too focused on product sales instead of customer relationships? What metrics are most important in driving retention for physical stores?