E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
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Lapsed customer. It is important to be able to identify when your customer relationships are failing and address them through a series of reactive campaigns. These campaigns may be based upon a certain time since a customer’s last purchase or a drop in the value of the purchases she was making. A marketer should design these campaigns as a series that will prompt the customer initiatives necessary to bring the customer back on track.
Driving up conversions
As customers continue to take the initiative through e-mail, web sites, search and other rapidly growing channels, the percentage of customers and prospects qualifying for a reactive campaign will increase. Since reactive campaigns should deliver a higher response and conversion, overall revenue should increase. As total revenue increases, marketers will be able to reduce less profitable marketing efforts, resulting in a more profitable and customer-friendly program.
As a simplified example (see table, page 76), let’s say a retailer has a customer and prospect file of 1 million consumers. The retailer contacts this file once a week and generates $100 per thousand contacts through traditional proactive mailings. Now let’s argue that reactive campaigns could achieve a conservative revenue level of $300 per thousand. If the retailer can qualify just 5% of its file to a reactive campaign instead of a proactive campaign, it will see a 10% increase in total revenue. At the other extreme, if it can qualify 20% of its file for one of several reactive campaigns instead of a proactive campaign, this could produce a 40% lift in total revenue.
The table on this page demonstrates the potential growth in sales as a company qualifies a higher percentage of its customers for an increasing number of reactive campaigns. Though this is a simplified example, it makes the point about marketing efficiencies. In fact, when you consider there are additional improvements available by selecting the right channels for the right campaigns, the opportunity may be greater.
The challenge in reaching this audience of customers initiating contact every day is to identify them in a timely fashion. For web visitors, it is necessary to match them back to an e-mail or other customer ID; for call centers a phone number match should be sufficient. Tracking customers’ web visits is a vastly improving technology, and call centers are doing a great job of capturing who’s calling, when and why. It’s difficult, though, to identify when consumers are shopping in bricks-and-mortar stores.
These bricks-and-mortar shoppers pose the greatest challenge. Retailers often can match in-store buyers with information provided during the transaction. Identifying non-buyers requires an incentive to get them to provide necessary information like an e-mail address for follow-up marketing.
The ability to identify offline shoppers is a key component of any multi-channel strategy. Improvements in kiosks, which are becoming cheaper and easier to deploy, combined with customer incentives may offer the answer to engaging in-store visitors. Many smart marketers will begin driving retail customers to a kiosk in store.
Tapping the market of customers taking the initiative will require some resources. But for a market that’s highly qualified and twice the size of the television audience, the return will be significant.
Keith Wardell is CEO of marketing services firm Marketing 1by1 LLC. He can be reached at firstname.lastname@example.org.