Retention: the key to success in uncertain times
Oct 16, 2022 | By PYMNTS.com
To succeed in these challenging times, eCommerce marketers need to leverage data intelligence to fight churn, Vindicia Chief Strategy Officer Trace Galloway writes in the new PYMNTS eBook, “What’s Your Plan? Payments Strategies for a Strong 2022 Finish.”
Consumers today have discovered the magic of subscriptions. Out of necessity during the pandemic, consumers were buying just about everything online and getting it all delivered. As we officially exit the pandemic, consumers still expect satisfying eCommerce experiences that don’t just offer value for money, but help them feel safe, appreciated and heard. Consumers want digital transactions to be seamless, smooth and trustworthy.
However, rising inflation, higher interest rates, political uncertainty and the war in Ukraine have taken their toll on consumer confidence. There’s no getting around it; consumers today are tightening their belts and spending less. How can eCommerce companies respond?
Customer Retention Is the New Growth
Acquisition is only the first step in a successful subscription journey. Real revenue potential happens when customers renew again and again, increasing customer lifetime value (CLV). Surprisingly, only 42% of companies value retention enough to measure the lifetime value of their customers.
Why is retention more effective than acquisition in these times of reduced spending? Research reveals 60-70% more opportunities and successes when upselling to an existing customer, compared to a paltry 5% to 20% when trying to upsell a newly acquired customer.
By delighting customers with amazing subscription experiences, eCommerce providers can upsell their services and build stronger customer loyalty. Customer loyalty and continuous experience improvement are baked into the subscription model.
The Scourge of Failed Payments
Subscription payment transactions fail for many reasons, some of them accidental. When failed payments lead to passive churn, it unnecessarily gobbles up potential revenue. Shockingly, up to 70% of all passive churn happens because of failed payments.
Failed payments are not only a revenue problem but also a branding problem. Customer experience is at the core of brand loyalty. Imagine suddenly getting disconnected from YouTube Live because of a single, accidental failed payment and being unable to watch NBA star Stephen Curry make his famous three-pointer in real time. Customers who want hassle-free subscriptions don’t want to think about payments especially failed ones that cause disconnection and headaches.
Some marketers are still not convinced of the importance of creating great experiences and recapturing potential revenue by resolving failed transactions. It’s time to boost retention more creatively.
Data Intelligence to the Rescue
Data is the key to fighting churn and increasing customer engagement and spending. The subscription model delivers first-party data for marketers to analyze and make smarter decisions based on consumer behavior, preferences, and needs. Insights derived from data can be used to recover failed payments, improve the subscriber experience, drive user engagement and optimize the subscriber journey toward growth KPIs.
To succeed in these challenging times, eCommerce marketers need to leverage data intelligence to spot trends, test and optimize offers, fight churn, and make smarter decisions overall. That will lead to better customer connections, more sales and ultimately, growth.