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Customer loyalty
Customer loyalty

Five ways retailers are driving customer retention

30th Mar 2016
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In today’s highly competitive retail market, the benefits of attracting and retaining loyal customers don’t need too much explaining. Industry analysts agree that acquiring a customer costs 5-10 times more than retaining a customer.

There are a couple of key reasons for this:

  • Lower cost of converting an existing customer to a sale versus a new customer – not only are marketing costs much lower, but existing customers are much more likely to make a purchase than new prospects are. They are familiar with the brand, they know the service and quality and ultimately know what to expect from the experience.
  • Spend typically increases over the course of a customer’s lifecycle – there are reams and reams of research studies that have showed a strong, positive correlation between the number of purchases and AOV in recent years. And it makes sense – as a consumer’s confidence in the retailer or brand grows, so too does their inclination to spend more and channel more of their purchases toward that one favoured name. Not only to they spend more, but retained customers also spend more frequently.

The lesson is simple – retailers must retain customers. But in a highly competitive market, this is easier said than done. There are hundreds of reasons why a customer might not return to make that second purchase.

So how do retailers and brands ensure they retain this core, loyal group of spenders? It’s easy refine your customer retention strategy, and get customers coming back for more, if you know how!

1. Retarget customers with personalised communications

If you haven’t already, introduce an eCRM programme that targets all omni-channel customers. Using explicit and implicit behaviours, backed by consumer understanding, you can create tailored messages to encourage loyalty and repeat purchase.

These activities can also be wrapped up into a loyalty programme, as long as the personalised element doesn’t become lost in a one-size-fits-all loyalty points scheme.

2. Deliver on your promises

This is the most difficult, but most important thing to ensure.

A small hiccup in delivery on promise can have a major impact on a customer throughout their purchasing lifetime. For instance, a customer of a retailer that has a 98% delivery on promise rate has a 10% chance of having experienced a late or incomplete delivery before the sixth purchase. In contrast, by the same time, a customer of a retailer with a 90% delivery on promise rate already has a 4 in 10 chance of having had a poor customer experience.

Service importance


There are three key processes you need to have in place to ensure maximum delivery on promise, which make up the final three tips on improving your customer retention strategy.

3. Establish and regularly monitor customer service KPIs

In order to better understand your levels of customer service and identify opportunities for improvement, KPIs should be measured and reviewed on a weekly basis. Some KPIs you should be monitoring include:


  • Delivery on promise rate (on time and in full).
  • % of orders prepared within correct timelines.
  • % of orders delivered within correct timelines.
  • Cancelled order value.
  • Failed order value.
  • Late to ship order value.

Call centre:

  • Abandoned calls %.
  • % calls answered within 60 seconds.


  • Proportion of reserve & collect items prepared within correct timelines.
  • Proportion of ship from store orders prepared within correct timelines.
  • Proportion of ship from store orders delivered within correct timelines.

4. Implement a single view of stock (if you don’t already have one)

Many retailers are still operating in silos. The scenario of a customer arriving at a store - high-street or online - to find a product isn’t in stock there and then being told to check or travel to proximal stores is still too frequent. That’s a bad experience and that customer is just as likely to go to a competitor as they are to make it to another one of your stores. That’s why high-street and omni-channel retailers alike are looking to achieve a single view of stock.

Implementing a real-time, single view of inventory will place you ahead of the curve and prepare your organisation to save every sale. Because that sale could be the one that puts that customer into the ‘loyalty’ box as opposed to the ‘lapsed’.

5. Invest in a single view of the order

Similarly, a single end-to-end view of the order is an imperative. Don’t send your customers to your delivery partner’s website; it breaks the experience chain. You should own the end-to-end experience to build loyalty and trust – not pass your customers off to a third party whom they have not chosen to engage with.

There are many steps you can take to improve your customer retention strategy and get more loyal customers, but if you follow these five basic rules, you’ll be on track to secure far greater customer retention and build a successful future for your business.

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