From enticing loss leader offers to discounted purchases, the economic model of every online retailer is predicated on capturing customer details, creating engagement and maximising Lifetime Value (LTV). In contrast, high street retailers live hand to mouth, attempting to make margin on every sale and failing to build any relationship that could entice the customer back into store again and again. Is it any surprise that online businesses continue to win at the expense of traditional retail operations? Jacyn Heavens, CEO, EPOS Now explains why the LTV approach is essential to breathe life back into the high street.
Short term retail is broken
Every customer interaction should be viewed as the start of a relationship, a chance to engage and build long term value that drives repeatable revenue. The success of ecommerce has been built upon this extended customer relationship, with companies leveraging VC funds to play the long game. With no need to make a profit on every single sale, the online business can deploy sophisticated techniques to win customers’ trust, gain their data and leverage that knowledge to create highly tailored offers that drive significant long term profit.
This approach is not only making money, it offers an experience that continues to draw the customers away from traditional retail outlets. So why are high street retailers, companies that are struggling with the rent, business rates and staffing costs, apparently still committed to an economic model that makes little attempt to drive repeat business?
Rather than nurturing every customer, in the majority of high street stores, customers arrive, browse, buy – or not – and leave with little or no engagement. Where is the loyalty scheme? The invitation to join the social media ecosystem? The experience that actively entices customers to return again and again? Where, essentially, is the strategy to capture customer data and build LTV?
Three steps to achieving customer LTV
Every successful business has a loyalty scheme. But they have more than that. They recognise that a customer sale is not just a quick margin win; it is a chance to entice the customer with an offer to become part of a community, an ecosystem. From mobile apps to loyalty and discount cards, the goal is not only to capture the customer’s data quickly and effectively but also offer the customer a reason to come back. Innovative mobile payment options, for example, that enable individuals to scan, pay and leave without the need to queue; or apps that let a customer scan product labels in store and immediately see the Look Book or Instagram posts from influencers wearing the same items. For retailers this is a win: win – customers enjoy the experience and share their essential data in return.
Capturing the customer data is just the start; it is the way the retailer then interacts with the customer that will determine LTV. Ensuring the EPOS system is integrated with the CRM will ensure all customer in-store transactions are recorded; while combining the website and offline experience is essential to create the complete picture of customer activity. Building on that knowledge with relevant offers and activities that personalise the multi-channel experience is just part of the engagement – social media is a fundamental component of this experience, bringing customers into the ecosystem, answering their questions and showing them a lifestyle they want.
With the continual evolution in customer behaviour and expectations, data analytics is the third fundamental component of the LTV solution. With deep customer data, retailers can gain essential insight into the most valuable customers, those that will repay a great experience instore and online. These are the customers that can be enticed with thank you notes, birthday cards, special offers – whatever appeals to that buyer persona. Retailers can understand quickly which activities drive engagement and sales, why customers are buying products, and build on this to maximise the LTV.
Making margin on the high street is tough; insisting on a business strategy that demands margin to be made on every single transaction is not only impossible – it is unnecessary. Combining loyalty with engagement and knowledge will enable retailers to build LTV and deliver an enhanced customer experience in the process.