Tis the Season for CLV
Originally published here: https://retina.ai/blog/tis-the-season-for-clv/
In our recent blog, we discussed how COVID-19 has changed online shopping, possibly forever. How will these trends impact holiday shopping for 2020?
In CommerceNext’s recent webinar on “Understanding Shopper Psychology as We Get Ready for Black Friday”, panelists and attendees shared stats and projections for the upcoming holiday season.
eCommerce Wish List
As more shoppers go online for everyday purchases, so too will they turn to eCommerce sites for holiday shopping. Between 2018 and 2019, we saw a 13.6% increase in eCommerce sales, from $122 billion to $138.65 billion.
This year, analysts predict that eCommerce sales will increase by 25–35% to reach a total of $182 to $196 billion. As we continue to see COVID-19 cases increase, this number may jump even higher if states choose to close retail stores again for safety.
With such an unprecedented increase in sales, eCommerce companies may find it difficult to predict customer behavior at the individual level. Most customer models can’t handle this level of uncertainty and change. By focusing on customer-level lifetime value, you can rely on predictions per customer to tailor your marketing, sales, customer service, and even inventory strategies to your highest-value shoppers.
Festive Online Experiences
When polled, 69% of CommerceNext’s webinar attendees said it was very or fairly important for retailers to create a festive online experience. Because many shoppers won’t be visiting stores in person, they will likely be looking for online shopping to still put them in the festive mood.
During the holidays, eCommerce retailers see the following:
- 63% of visitors are new to the site
- 47% of visitors exit after the first page
- 50% of site content isn’t seen
This data further emphasizes the importance of making a good first impression for new site visitors. With so many new visitors, it’s important to make landing pages and home pages enticing and easy to navigate.
Customer lifetime value metrics can further help with personalization. Retailers can tailor copy, product layouts, and site design to favor high-value customers. In this case, since 63% of visitors are new, customer lifetime value metrics can help retailers bring in high-value lookalike audiences as well.
Season of Search and Filters
Holiday shoppers are much more active than the average shopper. Often, they know what they are looking for or can narrow down their shopping by parameters like price, size, color, item type, etc.
CommerceNext shared during the webinar that during the holiday season, eCommerce sites see:
- 48.7% increase in filter engagement
- 43% increase in search bar usage
Overall, the average click rate for holiday shoppers jumps by 50%, from 3.2% to 4.6%, when compared to average online shopping behavior.
This data illustrates the importance of tailoring the online shopping experience for holiday shoppers. Your search bar should be easily accessible and functional for all of your products. Consider expanding your filtering functionality to include more criteria.
We can see larger brands updating their sites for the holidays with sections for gifts for kids, adults, pets, home, and more. You can continue to optimize these filters and categories based on purchase behavior.
To take it one step further, you can determine the online shopping behavior of your best customers with customer lifetime value. If your highest-value customers often browse the “top holiday gifts” section of your site, make that more prominent on your home page. Draw in similar high-CLV prospects by featuring products and navigation tools that current high-value customers favor.
Ring in the New Year
When more than half of eCommerce site visitors are new, it’s important to look beyond the holiday season. How can you best retain these new customers?
The answer lies in acquisition. Focus on acquiring high-value customers in the first place. As discussed, determine the behaviors of your high-CLV customers. Run lookalike campaigns to draw in prospects with similar attributes. Update your site content and experiences to attract more high-value customers. Customer lifetime value metrics help you build a long-term strategy and focus on customer relationships, rather than just meeting holiday KPIs and losing customers in the new year.
During the webinar, attendees also shared where their companies plan to increase investment in 2021:
- 28% — customer experience
- 21% — marketing technology
- 16% — advertising
- 16% — fulfillment and logistics
- 14% — omnichannel / store technology
eCommerce brands are focused on improving customer experiences online. Remember to extend these positive experiences beyond the holidays to maintain brand equity in 2021. It follows that brands are also planning to invest in marketing technology to improve targeting, acquisition, site features like search and filters, and more.
With the holidays just around the corner, customer lifetime value can help eCommerce brands acquire high-value customers now and retain them in the new year. If you truly understand the behavioral attributes of your best customers, you can tailor online experiences, marketing strategies, product lines, and website functionality to attract new customers just like them.
Retina can help you get started now, so you’re prepared for the holiday season and for next year.
Originally published at https://retina.ai on November 13, 2020.