Most retailers know it’s important to keep their existing customers. But looking at the numbers, you might be surprised at just how important customer retention is. According to Forbes magazine, the chances of making a sale to a new customer are only 5%-20%, while there’s an excellent 60%-70% probability of selling additional items to your current customers. To look at it another way, a study by management consulting firm Bain & Company found that improving customer retention rates by just 5% can increase a business’s profits by up to 95%!
With numbers like these, keeping existing customers returning and getting them to refer others to your store should be a major goal of any retailer’s marketing strategy. The holidays are an ideal time to implement a customer retention plan. There’s so much traffic coming through your doors that even if you turn a small percentage of these consumers into repeat shoppers, it can have a major impact on your business throughout the coming year. Here are four strategies retailers can use to leverage the holidays into merrier sales and profits in 2020.
They’ve been used successfully to draw wedding and baby shower business for years, so why not start a gift registry for pets this holiday season. You can have pet parents register for everything from staples they purchase regularly like their dog or cat’s food and favorite treats, to specialty items like a designer bed or carrying case. The registry can include information that would be helpful to gift buyers, such the pet’s clothing size in apparel brands carried by the store and the types of toys they like to play with. You can make it extra fun for customers by having them walk their pets through the store and letting their pup “sniff out” what they’d like to put in their own registry.
Use your pet gift registry to keep business coming in year-round by updating it regularly. Remove one-time items, such as pet furniture, once they’ve been purchased. The idea of a registry is to make it easy for people to buy a gift that is truly desired by the recipient. Knowing they can find a current list of registry items will keep shoppers coming back to your store on birthdays, Gotcha Days or anytime they want to buy a gift for that special pet — or pet parent.
The holidays are a terrific time to get customers to sign up for a loyalty program. Not only is store traffic at its highest, but shoppers are in a buying mindset more than at any other time of year. Offering them a discount on merchandise in exchange for enrolling in your store’s loyalty program is likely to yield double benefits: 1) convince them to do their holiday shopping at your store; and 2) create a new loyalty club member.
Don’t already have a customer loyalty program? Now’s the time to start one. But be aware that loyalty programs have changed since the days when customers simply were given a discount once they racked up a certain dollar amount of purchases. For one, today’s consumers aren’t very incentivized by the prospect of being rewarded “somewhere down the road,” but want to be able to use a loyalty program’s benefits right away. Secondly, in this era of customer engagement, a one-size-fits-all discount isn’t as appealing as it once was. Consumers are looking to build an emotional connection with the stores and brands they buy from and, in turn, want to feel they are appreciated and valued.
Many marketing experts say that Amazon has been a major factor in this change. With innovative and immediate benefits such as free two-day deliveries, video and music streaming, and free books and games, Amazon Prime became one of the first loyalty programs to offer so much perceived value that it could actually charge a membership fee ($99-$119 annually). Amazon Prime is “the gold standard among all premium loyalty programs” having unlocked “true loyalty with a balance of rational, emotional and utility-driving connections that, combined, deliver greater value and stronger brand advocacy,” according to Clarus Commerce, a developer of business loyalty programs.
Other companies have followed suit, adapting the Amazon Prime model to their own loyalty clubs. Outdoor retailer North Face’s VIPeak program aligns with its customers’ active lifestyle by rewarding members not only for purchases, but also through participation in company-sponsored expeditions. Many businesses have found that, as with Amazon Prime, their customers are willing to pay a fee to join a loyalty program if the perks are attractive enough. Home furnishings retailer Restoration Hardware charges $100 annually for its loyalty program, which offers members 25% off full-price items, along with a free interior design service, early access to clearance events and an additional 10% off all sale merchandise.
Pet product retailers have especially good opportunities to create loyalty programs that, in addition to offering price discounts, engage their customers by appealing to the fun and affection people share with their “furry babies.” Birthday gifts, special events like pet-people parties and outings, free holiday collars and bandanas, sample tastings of food and treats, and even services like a free nail-clipping day for members are just a few ideas for perks that will motivate pet parents to join the club and keep them coming back to the store.
It’s a known fact that people who are out shopping for holiday gifts for family and friends often buy something for themselves as well. Appeal to this “self-gifting instinct” by giving holiday shoppers a gift card of a lesser dollar value for themselves if they spend a certain amount at your store. Restaurants have been using this strategy successfully for years, offering, say, a $10 gift card to customers who purchase a $50 card.
Since the idea is to convert holiday shoppers into year-round customers, you might want to specify a time period in the future that the free gift card is good for such as “starting January 1.” Better yet, offer two smaller-dollar gift cards – one for now, one for the New Year. Don’t worry about giving too much away. Nearly two-thirds (65%) of gift card users spend 38% over the face value of their cards, according to the website www.GiftCards.com.
Returns are an unpleasant fact of life for any retailer, but never more so than after the holiday buying frenzy. The National Retail Federation estimates that as many as 13 percent of gifts purchased during the 2018 holiday season were returned after Christmas.
While returns can be a costly nuisance for retailers, they do have a silver lining: returns bring customers into the store at a time of year when there’s typically a sharp drop-off in traffic. By taking advantage of the opportunity to engage with these customers and provide them with stellar service, a store can create loyalty that will likely increase its profits in the long run. According to Narvar Inc., a company that offers post-purchase solutions to retailers, 96% of customers who are happy with their returns experience will shop at that store again.
Here are some things retailers can do to ensure their store provides a highly positive returns experience and take advantage of opportunities to convert a return into a new sale.
Make returns fast and easy – Don’t make the return complicated for the customer, and don’t handle it grudgingly. Instead, make the process quick and painless, and instruct your sales associates to always treat returns customers with a smile.
Listen and show empathy – Ask the customer why she is returning the item, and genuinely listen to her response. Try to understand why she was dissatisfied, but don’t interrogate her and keep the conversation brief. Show empathy by apologizing that she had to go through the inconvenience of making an extra trip to the store to handle the issue.
Suggest an alternate product — But only do this if, after listening to the customer, you feel there’s truly another product that may better suit her needs – i.e. a different color, size or brand. Consumers know when you’re pitching them a product just for the sake of trying to sell them something.
Spruce up the store – Stock gets depleted during the holidays, and a store’s sales floor often looks messy and disorganized afterward. Freshen up your displays, moving things around if necessary to create a well-stocked impression. The more attractive your merchandise looks, the greater the chance a customer will buy something while she’s in the store making a return.
Draw attention to promotions – Make sure returns customers are aware of any special post-holiday promotions your store is running. You can do this by setting up promotional displays in the traffic pattern to the service desk, highlighting special offers with bold signage and having sales associates mention them to customers returning merchandise. This can turn what started out as a nuisance errand for many shoppers into a positive experience, not only because you handled their return so promptly but also because they were able to get a great deal at your store!