Retail apocalypse is no new concept to retail marketers. With the introduction of online convenience stores, endless assortments on Amazon and price transparency legacy retailers are slowly becoming obsolete. But this is not the end either retailers like Nike are springing the trend. E-commerce stars like Warby Parker are also not being left behind. These brands have prioritized customer understandings and made huge investments in tech in order to deliver flawless customer experiences on all fronts.
New research has unveiled some astonishing perceptions that will drive retail growth. These include:
Gaining New Customers
High-growth brands have been known to invest significantly in gaining new customers. This is a sure thing if you are looking to grow your retail business’ top-line revenue. However, it is relatively inefficient. In an example, if a customer purchases a good or service from your business every 180 days, reducing that time period by just 178 days drives revenue growth up by 3%.
Retailers have taken notice and are investing in new welcome series, subscription and models across channels and devices to improve brand engagement and discovery. This is all aimed to reduce and shorten the inter-purchase time.
The impact of increasing average order value
This translate to a large basket size. But how do retailers increase basket size? Well, there is a two-dimension plan that can help solve this issue.
- Raise the number of items per order – This is also known as cross-selling. An example that will make this easy to understand is a fashion company using prediction individual-level product affinity to suggest more goods and services that act as complements and may gain the customer’s interest.
- Raise the average item price – This is also known as upselling. A good example is a footwear retailer that uses a score of the customer’s optimal price point to increase their bucket-size.
The challenge faced is that a growing basket size is more difficult than driving repeat purchases. But here are 5 simple steps that the most successful retailers follow:
- Aggregate customer data – Bringing together engagement data creates a complete picture of each and every customer’s personal relationship with the brand.
- Set Goals – It is key to identify whether your brand’s opportunity is either to cross-sell or upsell. Increasing items per order is a great place to start for retailers with relatively low-priced goods, impulse buys or wide assortments.
- Identify relevant insights – This depends on the AOV lever you decide to focus on to analyze your customer data for your insights. These help you get more knowledge about what products are bought complimentary to each other and which customers buy your goods at a premium or budget end.
- Experiment – Retailers are advised to start slow and take a crawl-walk-run approach as they try to figure out what works and what doesn’t. retailers should measure the impact on the goals they have set for themselves as they change tactics.
- Optimize and automate – Once the best tactics are identified it is important that the insights are also updated and refreshed constantly.
Increasing AOV represents an untapped market for retail brands as they not only fight for survival but also look to grow.