10 must-know facts and statistics for retail and ecommerce
The importance of offering an amazing customer experience cannot be overstated. Here are 10 facts and statistics demonstrating why your #1 focus today should be on using data to improve the customer experience you offer.
If you are like most brands and retailers, you are most likely looking for new strategies to increase your sales, boost your web traffic, and grow your email list. However, you will need to understand your online customer behavior to implement the best strategies to make your business stand out.
In today’s global, hyper-competitive market, you need to pay attention to the entire market context to help you make the best decisions for your brand. That’s why you need to learn the importance of customer experience statistics in the retail and e-commerce industry. What do customers prefer? What are the key determinants for customers choosing brands and products?
Here are some of the essential facts and statistics you need to keep in mind.
10 statistics demonstrating the importance of customer experience
1. 20% of your customers will contribute 60–80% of your sales.
While marketers try as much as possible to focus on all customers, most of a business’s sales come from only 20% of all customers. This means, if you can identify the characteristics of these top customers who generate up to 80% of your sales, you can create lookalike audiences that have a better chance of converting to grow your sales and profits. The key is to use customer segmentation tools to differentiate customers based on their relative value and shopping behaviors.
Interested in learning more? Click here to learn our 4-step process for identifying and acquiring high-value customers.
2. For most brands, more than 2/3rds of lapsed customers are opted-out of email.
Many businesses use email as their primary channel for marketing, growth, and retention. The end goal is to ensure that the customers associate with your brand and continually choose your business over others. However, this only works for prospects and customers who are opted-in to your emails. For most of the brands we’ve worked with, a large portion of their lapsed customers is opted-out of email—which means that you need to use omnichannel re-engagement strategies to reach these customers, retain them, and grow their lifetime value.
3. Customers who are subscribed to email communications often have a 20–50% greater lifetime value than those who are opted-out.
Repeat customers provide greater value to your brand at a lower cost, so you have to work towards keeping them happy. However, most of today’s customer journey takes place in a virtual space, so most brands and retailers are making efforts to ensure that many customers subscribe to their email communications. This way, customers can continually receive updates on upcoming sales, marketing messages, and more. With continued communication through email, customers have a higher chance of making repeat purchases.
4. On average, 50–80% of customers are one-time buyers.
There is nothing as satisfying as a customer making their first order with your brand. However, that could be their first and only purchase from your business if you don’t have a focused upsell and cross-sell strategy in place. Note that new customers haven’t formed any association with your brand, so you need to nurture them beyond their first purchase. Ensure that you keep these customers coming back for more by personalizing your follow-up communications.
Luckily, customer data and insight tools can help you easily convert one-time buyers into repeat shoppers. Click here to read our practical guide, “An upsell marketing strategy to convert the second sale.”
5. Two-time shoppers have a 9x chance of making repeat purchases than one-time buyers.
Even after the first purchase, the likelihood of having a returning customer is still relatively low. You still need to coax that customer to come back a second or third time to increase the chances of making another purchase. O that customer has made a second purchase, the likelihood of them making a third, fourth, and more is much greater. The trick is coming up with the best ways to entice a customer using retention tools and strategies.
For more retention tips, click here to read “The top 10 reasons for customer churn and how to battle them.”
6. More than 50% of repeat customers make their second purchase in the same product category as the first.
As a retailer, finding a way to engage with first-time customers and make them repeat customers is key to growing your business. However, gaining the trust or association with a new customer isn’t as simple as you may think. In our customer intelligence work with brands and retailers, we’ve found that the majority of new customers will make their second purchase in the same product category. Knowing this, you can contextualize your follow-up campaigns accordingly.
Understanding when and what customers are likely to purchase next is one of the key customer retention metrics you should be measuring. Click here to learn more about Lexer’s measurement tool, Track.
7. For most brands, the first 30 days following a first purchase is the most likely timeframe for a second purchase, followed by a small window of opportunity at 6 months.
Once a customer makes their first purchase, they evaluate whether they made an excellent decision to buy from your brand. The evaluation involves the product they purchased and the services provided throughout the buying process. If the purchasing journey was satisfactory, they would most likely make a second purchase within a month. However, the skeptical ones will still wait to use the product before making another order. You must impress a first-time buyer and figure out a way of keeping them happy so that they can have something to come back for.
If you’re struggling to convert the second sale, you may be experiencing the dreaded “leaky bucket” problem. Click here to learn how to fix it.
8. The probability of selling to an existing customer is 60–70%, whereas the probability of selling to a new customer is only 5–20%.
Some businesses seem to quickly shift their focus from existing customers and put all of their time and budget into acquiring new customers. Keep in mind that your best, highest-value customers are the existing ones. Since you already won over your current customers with previous product sales, they will be ready to spend more in the future. Therefore, use data to offer the best customer experience to your existing customer base. The more repeat customers you get, the greater your customer lifetime value at lower the cost.
9. Customer acquisition costs have increased 50% in the last 10 years.
The shift to online shopping has grown tremendously, and most consumers now prefer to make their purchases via digital devices. However, while this is a good move, that means that customer acquisition costs have increased. Keep in mind that potential customers can go through various online stores before deciding on a particular brand or product. Therefore, if you haven’t used the right marketing channels or have a complicated checkout procedure, you are less likely to attract new customers.
Data can help you acquire new, high-value customers more efficiently. Click here to learn 6 ways to save money using advanced audience targeting.
10. Building customer lifetime value is the #1 priority for today’s brands and retailers.
Customer lifetime value is the primary metric that businesses rely on to help them understand their customers. CLV enables you to predict what an existing customer can bring to your company. This tactic allows you to identify and target your best customers with personalized messaging. Measuring and building customer lifetime value helps increase profits without expending additional resources on the rising acquisition costs.
Even with the shift to online shopping, your customers remain a key asset in growing your business. The most effective prospecting, growth, and retention strategies all begin with connected retail data and customer insights.
Lexer is the Customer Data Platform of choice for leading brands like Igloo, Quiksilver, Rip Curl, Nine West, Supergoop!, and more. As the only CDP built for retail, we help leading brands drive incremental sales from enhanced customer engagement. Our comprehensive data enrichment, advanced segmentation and targeting tools, and measurement dashboards provide every team with the data they need to become customer-centric, revenue-generating powerhouses.
Contact us today to learn more about using customer data to improve the end-to-end customer experience, and be sure to read our playbook, “7 data-led customer journeys for every lifecycle stage,” to learn how to orchestrate omnichannel campaigns.