Ramin: So tell me, why do e-commerce merchants need to make loyalty and retention a priority in their business?
Jack: There are so many reasons. Loyalty and retention are often overlooked in this landscape by necessity when you start an e-commerce business acquisition. But in all the e-commerce businesses that I’ve worked in, acquisition can be challenging.
And at times, it can be unreliable. So we have seen that recently in the form of iOS updates, in the A/B testability of campaigns. And also, the fact that you are often using paid spend at amounts which can fluctuate pretty crazily in contrast to all of that retention marketing which is relatively affordable.
On average, it’s five times less expensive to retain an existing customer than to engage a new customer, and often it’s overlooked. So there are many different brands in a huge variety of industries and sectors who have mailing lists and personal contact information for many clients or many potential customers, and they’re just not leveraging them.
So, the reason for me and why I am so fascinated by loyalty, and I recommend it to every single brand out there, is that there’s so much potential. And ultimately, the trigger that I want to focus on as a business owner is acquisition and customer LTV (lifetime value), which is so important.
Ramin: That’s great. And you lead right into my next question, but before we get to customer lifetime value: one of the stats you sent me, which I thought was fascinating, is that the top 20% of customers generate over 53% of total revenue for stores of all sizes. I mean, that’s a huge number.
Jack: When we’re talking about that 20%, there are a few key things there. Firstly, you need to be able to identify who they are.
That’s part of the puzzle, but also you want to be able to market to them uniquely. And the way that you do that is through segmentation, and that’s loyalty data. So on the backend of LoyaltyLion, for example, we have tons of data that you can leverage, and you can also push that data into your email marketing tools or your SMS marketing tools.
We always recommend having a completely unique way that you are marketing and communicating with that top 20% in contrast to everyone else that you’re emailing. So that’s just a little bit of the functionality we can do.