Success in retail marketing comes down to two things: reach and addressability.
Reach refers to your ability to communicate with a mass audience. Addressability is your ability to message specific individuals, through owned channels such as email and SMS.
Your stores play an important role in increasing these capabilities. So do your digital channels. But to really boost reach and addressability – and to increase the value of your customer file – your digital channels and your in-store strategies must be working in lockstep. Both your stores and your digital channels should be creating the same brand experience. Channels should reinforce each other. That means digital channels should be encouraging people to visit stores, where they’re likely to spend more. Stores should be collecting data that fuels the digital engine. Regardless of where a customer chooses to convert, they should be recognized as the same customer across all your channels and points of sale.
At too many organizations, the in-store and digital strategies are completely siloed. The databases are separate. The inventory is separate. The strategies and metrics don’t work or play well together.
That means stores operate in a vacuum, without the ability to proactively reach out to their customers. The digital team has a view of the customer that is incomplete and often contradictory. Purchases made in stores and at wholesalers go unknown and unrecognized.
Leading retailers understand that the primary goal is not to increase the sales of every channel, but of every customer.
To do that, you need to be able to communicate with your shoppers and customers however and wherever they engage. And those customers need to be addressable.
Stores get you broad reach. They can be the ultimate acquisition and retention machines. Digital channels should message customers in response to their exhibited behaviors, signals and product interests in real time, at scale. They should even be able to communicate to reflect predicted behavior. That’s addressability. The result is an increasingly valuable customer file, which is the only path to profitable, sustainable growth.
Why reach and addressability determine success
Every engagement with a known and addressable shopper should enhance the next engagement to increase the value of that customer. Every engagement with unknown shoppers should be used to increase the likelihood of their identification and addressability.
Armed with data about customer referral source, behavior, preferences, and history with your brand, addressability allows you to send the right messages to the right people. The ability to respond to customer and product signals – such as browsing, purchasing, and changes in inventory—allows you to do so at the right time. This is how you move shoppers through the customer lifecycle more efficiently, influencing the value of customers over time. At scale, it increases the value of your customer file.
That customer file is the single best indicator of the current and future health of your business. That’s because a healthy, profitable business comes from a growing and active customer base – one that is heavy on the repeat customers who drive both profits and predictability.
The framework for analyzing that customer file, and for moving shoppers through the customer lifecycle with signal-based strategies, is customer movement. During a Customer Movement Assessment, you’ll examine both the quality and the quantity of your customer base. Quantity is determined by the number of customers you acquire, retain, and reactivate. Quality is revealed through average order value, frequency, and tenure. By looking at these indicators through a variety of lenses such as cohort and referral sources, retailers can pinpoint their challenges and learn how to scale their successes.
Customer movement works. On average, retailers who focus on channel metrics see an average three-year customer retention rate of 22%. Those who use customer movement to focus on customer-centric metrics instead see an average three-year retention rate of 59%. And repeat customers are the keys to the kingdom. Across every vertical, our research shows that repeat customers spend 69.2% more than first-time buyers.
The power of teamwork across channels
Reaching customers across channels makes a difference. Among in-store customers, repeat purchase rates, sales per customer, and long-term customer value are all higher for customers who choose to enroll in email. Our data shows that sales per customer, in particular, tend to be 30% to 50% higher for enrolled customers.
Across all channels, customers who enroll in email, SMS, and your app spend more than those that only communicate on one channel. Years of Bluecore data show that on average, a multi-channel customer spends two to five times more than a single-channel customer.
Similarly, Bluecore research consistently finds that customers who buy in more than one product category spend more than single-category shoppers. Customers who shop multiple categories are likely to be stickier, because the products they buy have different lifespans and replenishment rates. That leads them to visit you more often, either in store or online. Once there, you have the chance to help them discover additional products they might like, helping them become repeat customers much more quickly.
Cross-category buying is just one of the many instances where your ability to reach and message individual customers can positively influence their value. If you know that a customer bought organic blush, and you have permission to message them, you can suggest other organic products, such as a complementary foundation. If you can identify them but they haven’t enrolled, you can still target them with modals and banners on-site. Bluecore research shows that once a customer has made two purchases, the likelihood that they make a third goes up by 95%. Getting customers into another category is an excellent way to encourage that second purchase.
If you’re not working to identify and address customers across all channels, including in-store, you’re missing the ability to influence and retain them.
Without addressability, this game is lost. If your most valuable customers shop in-store, and you can only email or send SMS to 20% of them, then you don’t have the ability to increase their value.
You certainly can’t persuade them to shop multiple channels or categories. The same is true if you can only address a fraction of your site visitors. All of this relies on identification – without it, you don’t have addressability.
Busting up organizational silos
It’s one thing to understand how to improve reach and addressability. It’s another to do it. Unfortunately, retailers face structural barriers that make it difficult for them to coordinate their in-store strategies with their digital tools.
Channel-centric team structures and metrics
Retail marketers need to go beyond channel-focused teams to devise strategies and metrics that explain the customer experience above and beyond channels. Only customers – not channels – can drive your business forward.
Maybe your email numbers look low because your customer isn’t going from email to site – they’re going from email to store. As long as they’re buying, those ‘bad’ email metrics may actually be fine.
Often, channel-centric metrics don’t tell you anything about incremental sales. Without holdout testing, how do you know that your digital channel activities actually convinced people to buy? The widespread use of last-click attribution to measure the efficacy of your email program often confuses things further. Consider omitting shoppers with past in-store purchases from these metrics, so you don’t distort your digital performance by including known in-store buyers.
Separate databases for digital and in-store
To really understand your customers, you need to be able to observe their behavior across both digital channels and your store, and to properly attribute every bit of that activity within a single customer profile.
Data about store sales can be integrated with data about online sales to ensure a holistic view of customer movement. That store data can be included in predictive models, improving accuracy of recommendations. It also ensures more accurate audience selection for campaigns including post-purchase, winback, anniversary offers, and replenishment.
Otherwise, a customer who spends heavily in-store and rarely buys online could show up as a low-value customer in your digital files. And without a holistic view, a customer who comes into your stores for big sales, but also buys online at full-price, will look like a low-value discount shopper in your store files and a low-frequency shopper to your digital team.
Different inventory for digital and physical properties
Stores are increasingly serving as showrooms, letting shoppers confirm their size and color preferences before shipping the goods directly to them (and collecting valuable data in the process). Ideally, this allows store associates to spend more time clienteling and less time hovering.
It’s okay for stores to have fewer colors and sizes than digital store fronts, but stores shouldn’t have significantly different inventory than your digital channels. Otherwise, shoppers that see items they like online, then go to your stores to try them on, will leave frustrated.
Any inventory that isn’t physically present in stores should still be accessible through digital channels. Among other things, your digital strategies should be encouraging shoppers to visit your stores. Once there, it’s important that they find the same merchandise that appealed to them online. Because the best customer is generally one who shops across channels, that in-store visit should get them benefits they can’t get online, and in-store only customers should get special incentives when they show up to your website.
Misleading metrics
Just as last-click attribution ignores the impact of stores and other channels, same-store sales are not the only measure of your stores’ success.
If customers go to a store and then buy an item online, the store visit was a big part of that purchase – but that purchase doesn’t show up in same store sales. Similarly, if your associates collect email addresses at the store register, that’s going to improve your reach. But it won’t be visible in your store metrics.
Segmenting your file by acquisition source of email address can add clarity. You’ll be able to see which portion of your file signed up in-store, and then subsequently bought online, as well as the reverse.
The customer file as the indicator of business value
All these hurdles get in the way of what is most important: increasing the number of actively purchasing customers.
The best measure of the health of your business is not going to be found by looking at results from email or same store revenues. It’s the trailing twelve-month behavior of your customer file. Is the file growing or shrinking?
And while growing is obviously better than the alternative, let’s not stop there. Is the file growing or shrinking in sales per customer? Orders per customer? How many customers are addressable? Can you show that, by communicating with those customers, you’re able to increase their value as compared to those that are not addressable?
This is not set it and forget it. Each month, review the 12-month file size, the sales per buyer and orders per buyer. You can look at this data through in-store and online cohorts. Each week, in each cohort, look at the time from sign-up to first purchase and from first purchase to second purchase.
This analysis lends itself to testing. Split the in-store and online cohorts into test segments. Are you able to communicate effectively and encourage them to become loyal multichannel customers?
Identification and the holiday rush
During the holidays, new shoppers flood your stores – both physical and virtual. At most retailers, more people will visit their stores in the five weeks after Thanksgiving than they will in any other ten weeks of the year. It’s a massive opportunity. But it’s lost if all those people leave without being identified.
Of course, it’s complicated: While retailers get the largest number of new customers during the holidays, these also tend to be the lowest-value customers that show up all year. And in some cases, the ultimate customer is the gift recipient, not the gift buyer.
Most retailers aren’t doing enough to find the gems in that huge inflow of shoppers. They’re choosing to optimize their operations to accelerate movement through their stores and reduce the lines – thereby minimizing the best chance they’ve got to identify and enroll mass quantities of new buyers.
Make sure to ask customers for their email when they’re at the register, and give them a good reason to do so, whether that’s for a receipt, your loyalty program, or an invite to an upcoming in-store event. Ask them to download your app. Offer a small on-the-spot discount if they follow you on Instagram. In short: Do everything you can to increase your reach and addressability.
It’s not all about new customers. In the long term, there’s huge value in spurring active and lapsed customers to buy – during the holiday season and long after. At Bluecore’s 15 largest brands, which generate $9.6 billion in gross merchandise value, purchases by previously lapsed customers are up more than 12%.
Foundational tactics for improved reach and addressability
Now that you’re ready to use both your stores and your digital channels to their fullest potential, where do you start?
In a word: service. Many retailers use their e-receipts as an opt-in, but not all customers see it that way. Positioning your email as part of an enhanced service offering – and following up accordingly – helps build trust. It also helps you get cleaner data: If customers know you’re using their email to send them a receipt or return information – of anything else they find of real value – they’re less likely to give you a fake one.
Use returns to boost foot traffic
About 40% of shoppers will make a return this holiday season. So when a customer begins the returns process, make sure to let them know they can return the item in person, even if they bought it online. That gets them in your store, and gives you a chance to make an incremental sale. And for many customers, it’s easier to hand the item over than to package it up and mail it back.
Impress luxury buyers with content
Take the idea of service beyond simple returns, especially for high-ticket purchases. For luxury goods, a follow-up email can explain how to insure the item, how to take care of it, and perhaps tell the story of how it was made.
Embrace showrooming
Use digital channels to capitalize on the growing trend of stores as showrooms. If a customer’s desired color, size, or style aren’t in stock, a sales associate should be able to have the item shipped free of charge. That’s a win for everyone: The customer gets their purchase delivered quickly and for free. But the store gets much more than the sale – it gets to collect all the customer information that goes along with an online purchase, and create or enhance a profile for that customer.
Store associates can also scan items that customers considered, but didn’t buy. When added to their profiles, those items can be considered products that were browsed or are sitting in an abandoned cart. Then your digital channels can take over with the appropriate communications.
Compete with wholesalers
Digital tactics can also help you compete with wholesalers, and encourage shoppers to purchase from you directly. Include a QR code in your packaging, and ask shoppers to scan it for information about caring for their purchase, styling tips, or even a modest number of loyalty points. That will bring you better insight into customer buying behaviors and preferences, and help you improve the relevance of your communications. Once you know that a customer has purchased an item, you can offer replenishment or subscriptions through owned channels.
Final thoughts
These are just a few of the high-impact tactics that can help you coordinate your digital and in-store sales marketing strategies. By harnessing the power of identification, and combining it with relevant, timely customer-focused messaging, brands build stronger customer relationships, generating improved sales and long-term sustainable growth.
To get a more complete view of the potential for combining your in-store and digital assets for maximum reach and addressability, setup time to talk to our Retail Strategists.
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