High customer retention can be very beneficial for direct-to-consumer brands. It can dramatically boost their customer acquisition and sales. However, a company can gain a high revenue or sales with a smaller customer base too. So, they don’t necessarily have to expand their client base. Direct to consumer brands can have a relatively smaller audience base, but they may have dedicated customers who frequently purchase goods and services from them. You may have come across the fact that reaching out to existing customers is way easier and cost-effective than acquiring new ones. Well, client acquisition is a costly process that requires a lavish amount of marketing spend.
On the other hand, having repeat customers can allow your brand to earn more, get more customers via word of mouth, increase the credibility of its products, and much more. DTC businesses are known for their personalized services, and consumers love that! According to a study, 77% of the customers choose brands that offer a personalized experience or service. Another study highlighted how 75% of the customers trust purchase recommendations when those suggestions are personalized as per their needs.
The American multinational corporation “Nike” followed a strategy to increase their personalization within their offerings. They wanted to strengthen their customer relationship and wanted to make better-localized inventory/demand predictions. According to their annual report of 2019, their direct sales were increased by 35%. The direct business channel had outperformed all the other channels; it contributed 32% to Nike’s total annual revenue.
Thus, DTC sales were quite critical for Nike’s future growth. However, this was not possible without effective CRM tactics and client retention strategies. As a DTC brand, your business should be aware of such techniques as they help you grow your business massively. Let’s look into the essential tips to help your DTC brand boost its customer retention and CRM.
Tips For DTC Businesses To Improve Their Customer Retention And CRM
1. Direct To Consumer Brands Should Measure Some Key Metrics
To improve your customer relations and client retention, you need to measure your metrics. To analyze your metrics, you need to collect an ample amount of consumer data. It will help you in understanding the true impact of your business. There are a few standard metrics that you should analyze, like your brand’s repeat purchase rate.
What is the retention rate on your bring-back campaigns? What is the return rate on your email campaigns, discount offers, etc.? Has your Average Order Value or AOV increased? Are there any specific months where your sales rise? Are you tracking your profitability?
What kind of CLV or average customer lifecycle does your brand have? You must evaluate these figures to know the present state of your business. These figures will help your team fine-tune its customer retention tactics.
2. Ensure A Consistent And Custom User Engagement
Not all first-time purchasers return to a DTC store; the reason might be a lack of trust, interest, or relevance. Hence, when a new customer places an order, your company should present a post-sales campaign to encourage repeat sales. In this way, the customer will interact with your brand more than once.
It will induce credibility, trust, and relevance. If you can customize these campaigns according to various customer personas, then you can maximize your sales. We have mentioned some campaigns that you can tailor according to consumer persona.
User data-based campaigns
One of the most effective ways to send personalized messages to your consumers is by using consumer data. You can develop targeted campaigns based on their activities that trigger their purchase decisions. For instance, to reduce cart abandonment rates, you can send personalized email campaigns that offer a 5-10% discount on the same day.
Consumer history-based campaigns
A great way to use consumer data to boost customer retention is by using their data from previous purchase history. For example, if a consumer buys a gaming PC, you can target them with a game controller that enables them to elevate their gaming experience. You can advertise the gaming controller via re-engagement email or push notification.
Use other channels to uplift customer retention
Today, consumers are always on the internet and access the internet through various mediums. They don’t like to wait and repel irrelevant messages. Thus, a DTC brand needs to engage its customers on the most active channels. Once they do that, they can ease out communication and reduce any form of delay. So look for active channels through which you can boost engagement.
3. DTC Businesses Should Explore New Digital Channels
One area where several DTC brands fail to impress their audiences is real-life customer experiences. If your brand offers cosmetics, sportswear, eyewear, tea, etc., you might struggle to deliver a real-life customer experience. However, many DTC businesses are generating more revenues via online platforms than their brick-and-mortar retail stores nowadays. With O2O commerce, offline, physical stores can allow their consumers to shop directly from their homes.
Another great marketing strategy for the DTC brand is conversational commerce. Today, businesses use Whatsapp, Facebook messenger, etc., to interact with their consumers. The cross-platform instant messaging app “Whatsapp” has 2 billion monthly active users, which offers features like “Whatsapp for business.” Therefore, direct-to-consumer companies can use these apps for interaction where their customers spend most of their time.
4. Encourage Customers To Place Reorders
Your business can leverage omnichannel marketing strategies to encourage customers to make repeat orders. You must use omnichannel marketing strategies if your products are perishable. Perishable products include coffee beans, tea leaves, food items, sport or health supplements, etc.
These products have a limited shelf life, due to which you get the opportunity to encourage them to buy from your brand if they want to restock their supply. All proactive DTC brands use customized campaigns to trigger purchase emotions among their customers. You may have seen DTC brands sending a 15-day reminder or a one-week reminder to remind their customers to refill their supplies before it ends.
5. Be Data-Driven, Test Your Campaigns!
While doubling your efforts on various types of marketing campaigns, you must not ignore the effectiveness of these campaigns. To judge that, you need to evaluate them through a testing process. When you incorporate a testing phase, you will eliminate intuition-led tactics and derive data-driven strategies. Even if you want to enhance your repeat purchase rate via email marketing or push notification, you need to test them to get the best results.
Successful DTC businesses a/b test their campaigns to analyze which type of campaign is most appealing to their customers. During the testing phase, you can add customer funnels to figure out areas that act as a point of friction. You can then eliminate those areas to get your desired results. For instance, a low CTR rate in an email campaign may signify that a customer isn’t satisfied with your content or email design.
To deduce customer retention to its simplest form, we can say that it’s all about making a customer’s shopping experience more engaging or enjoyable. All Direct to Consumer brands should focus on making their clients feel valued. The strategies mentioned above can help your brand achieve a high customer retention rate and a better customer relationship. If you are a DTC brand looking to uplift its growth, ROI, customer retention, or client acquisition, get in touch with our experts to know more!