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If you don’t look after your customers, someone else will
By Jamie Challis, director, Findologic
Once, customers had no choice, either they bought what they needed from your shop, or they went without, if anyone can remember that far back.
T
oday, it has never been more competitive for retailers and brands,
not simply in terms of other rivals, but in terms of the number of channels that customers can buy through. Social commerce is now a reality and the likes of Facebook are pouring millions in to making it happen. Or marketplaces, where retailers give up 30 per cent of sale price just to get access to new markets, because it is quicker or cheaper than building local web or store assets.
And so, brands spend big on acquiring new customers through their existing store and web channels as well as all the emerging ones. That cost is rising, partly because of the need to reach consumers through so many channels, but also because brands selling direct are driving up the costs and saturating the digital airwaves. That’s only going to get worse, and customer acquisition costs (CAC) have been rising every year for more than 10 years. And right now, as stores reopen and retail gets back to ‘normal,’ the investment to shift a huge backlog of inventory will rocket, which is bound to eat into margins.
If customer lifetime value was keeping pace with CAC then
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all well and good. It is well known that it costs at least five times as much to acquire a new customer as to keep one you’ve got already. But it isn’t. CAC just keeps going up and holding onto customers gets harder and harder.
Retailers are embracing a range of solutions that all work – remarketing, added value content, personalisation of communications, offers and so on, but almost all these techniques are what we call push rather than pull. They do not really take account of what the customers is doing right now or trying to do on your website.
So, while all this marketing outreach is flying around, most of which is ignored or unseen, the customer themselves may well be on your website, unrecorded and unloved. If this sounds a bit dramatic, the fact is that at the initial stages of search for new potential customers, it is the customer who is doing most of the work. And you may know actually know that they are struggling and not finding what they want.
The problem is all down to the limitations of on-site search, the famous button that is so often hidden away. The
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