Sales Strategy
Loyal Customers: The Untapped Revenue Source for U.S. Retailers April 23, 2023 (0 comments)
San Francisco, CA--U.S. retailers are advised to prioritize existing customer loyalty, as online sales growth has stalled in the first quarter of 2023. Europe's economic recovery serves as a model, with retailers focusing on loyal customers' desires.
[Image via The 360 Blog]
An article on Salesforce.com states that digital commerce experienced mixed results in Q1 2023. Global online sales decreased 2% YoY, mainly due to a U.S. demand drop. However, several regions showed positive signs: Europe's online slowdown is waning, ANZ markets are stabilizing, and the MEA and LAM regions have seen digital commerce grow 21% and 7% YoY, respectively.
In the U.S., online sales' lack of growth mirrors what Europe faced a year ago. To tackle this challenge, U.S. retailers should focus on retaining existing customers instead of spending more on new customer acquisition.
Retail data from the Shopping Index indicates that customer retention could be a key factor for U.S. retailers in 2023. As prices increased in 2022, consumers based their brand choices on pricing and promotions instead of availability and convenience. Additionally, consumers conducted extensive research before purchasing, resulting in higher traffic volume but declining online sales and order volume.
Online visits to brands and retail websites are becoming less profitable, with the global average spent per visit at its lowest in nine quarters. Attracting new traffic is increasingly expensive, cutting into online margins.
Despite these challenges, the share of online orders from repeat buyers increased by 3% compared to Q1 2022 and 16% compared to Q1 2021. Retailers can benefit from focusing on customer experiences and personalized services for loyal customers. For example, Saks offers luxury services to its core customers, who contribute 40% of its annual revenue.
U.S. retailers should employ intelligent audience segmentation, personalization, and messaging to retain loyal customers and deliver a seamless, high-value shopping journey. Providing exceptional customer service is also crucial in maintaining long-term customer loyalty.
To read the entire article from Salesforce.com, click here.