Much like the consumers they serve, retailers have a habit of falling in love with newness when it comes to their customer base. Adding new names to the email list, attracting new foot traffic into physical stores, drawing new eyes to the website – companies can spend a disproportionate amount of time thinking about the customer they don’t yet have, but hope to woo.
“It’s really easy to spend a lot of money on advertising on acquisition marketing, where you [are] trying to draw eyeballs to your services and products – but whether or not people are going to buy from you, or whether you are going to be able to convert that lead into a loyal customer and an advocate for your brand – that’s something really, really difficult to do. And most businesses take a really immediate approach.”
That’s Jerry Jao, founder and CEO of Retention Science – a data firm that helps firms tailor their marketing toward long-term customer retention. Jao recently chatted with PYMNTS about how his firm helps their retail partners – which include some very recognizable large, national brands – to not just entice customers, but to keep them coming back long-term.
Jao told PYMNTS that the retention business appeals to him because it fights the drive toward “immediate gratification” that overly influences a company’s marketing efforts. While it is satisfying to see something with a big, fast result – post a big sale with a splashy social media effort to draw attention to it and see lots of foot traffic stream in – Jao says, strategically, it often isn’t the best long-term play.
“Before you decide what promotion you should run, before launching an email campaign – you should really, really step back for a second and, instead of going with intuition, look at your data a little more to see what are people buying repeatedly and what keeps them coming back,” Jao advised.
An intuition toward acquisition, Jao noted, overlooks that some of those new customers aren’t really “acquired.” They are product shoppers – looking for a specific item on a specific day – sort of like the daily deal seeker. They may may not come back, which means there is some possibility that the effort spent acquiring them may have only netted one – sometimes deeply – discounted sale.
“Driving habit and actually getting a retailer to own the habit around shopping, and having your brand name be literally what pops up in someone’s head, that’s really the key to a sustainable long-term business.”
Retention Science is in the business of helping retailers zero in on those habits, by helping their partners zero in on creating what he described as the “one-to-one customer journey.” That effort works to collect various points of consumer data to build profiles unobtrusively and figure out who the repeat players shopping in store locations (online and brick-and-mortar) are and how they’re interacting while they are there.
“Retention takes time to measure and the impact of it is something that is not as apparent as acquiring a new customer. So we created a platform to create a more relevant and personalized experience for the end-to-end customer. Much of the tailored experience that was once part of the in-store shopping experience – Nordstrom’s knew when you were a repeat customer because they saw you there a lot – is sort of lost in translation as retail is moving more to digital, more online and more on mobile,” Jao explained. “Our platform is trying to recreate that one-to-one experience with a focus on retaining customers and expanding that loyal base.”
Retention Science draws its data from a variety of sources – aggregated consumer information from their retail partners, public data and proprietary information – and uses that on its platform to help their retail partners better tailor their marketing efforts toward repeat business.
“For us the most important thing is to be able to figure out what is the way best to reach out, from a customer perspective, and what is the best type of customer to reach out to. We really want to help businesses that we partner with to power life-cycle marketing campaigns that are tied to engagement – through a variety of channels, email, mobile – in ways that customers actually respond to, as opposed to Groupon-like services that just keep emailing until customers start tuning them out.”
There are a lot of ways to interact with a base, says Jao, and some are better suited to some customer profiles than others. The capability to refine their campaigns is there, notes Jao, and often requires exceptionally minor tweaks that lead to big gains over time. Retention Science acts as an intermediary between retailers and the data to help put them on the right path.
“The thing that retailers just don’t always think about is that the biggest drivers are still the most basic and the most average Joe type of purchases on a day-to-day basis for each consumer. The smallest items, like saving 50 cents on milk, can be a better driver of getting customers to come back more.”
Milk and bananas aren’t flashy, and for some of Retention Science’s retail partners they also aren’t quite as obvious. They are, however, the types of things that data show to be influential to consumer behavior in the long run, and the types of things that Jao says his company is committed to helping their partners find.