In my last blog, I looked at the science of attracting and retaining loyal customers. First-time customers are often the hardest to retain, with retention rates increasingly dramatically with each purchase. For any given retailer, the likelihood of a first-time customer returning for a second purchase is less than 40%. But once that customer has made their second purchase, the likelihood of them shopping with the retailer again jumps to just over 60%.
So securing that second shop is crucial for retaining customers and increasing your customer lifetime value. But how can you specifically target first-time shoppers to get them coming back for more?
One of the most important steps is to acknowledge and welcome new customers right after their first shop. Use this opportunity to remind them why they shopped on your site in the first place - whether it's free delivery or the widest product range, for example - as well as highlighting any exciting initiatives they might like to participate in. You can also use this initial welcome email to re-offer first-time customers a newsletter subscription if they haven’t already signed up. It often helps to inform the customer about subscriber benefits, such as a birthday gift, exclusive sales previews and content. Sephora also asks their US customers to fill in their online profile, which helps them to personalise the customer experience.
Another key step is to personalise your communication and customer experience. This works well as part of an overall customer retention strategy, but can be particularly effective when trying to get that second shop. Offering a personalised experience and communication before and during the second shop can make a big difference to your second purchase rate. Firstly you need to understand what kind of communication your first-time shoppers are most likely to respond to – and when. This insight can then be used to tailor your communication accordingly. Some key aspects to consider include:
- Product- and/or category-specific communications: Analyse the correlation between first and second purchases by a customer. For example, do first-time cosmetics customers usually choose a product from the same brand or category for their second shop? Identifying first-time customer segments and tailoring your communication with them accordingly can help to boost repeat purchase in newly acquired customers
- Type of content / incentive: Test different types of promotions, incentives and content, to find out which result in the best redemption and second purchase rates
- On-site experience: The same test and learn logic applies to personalising the on-site customer experience
- Timing: The time between purchases decreases with every subsequent shop. So reducing the time between the first and second shop should set the bar for subsequent shops and therefore increase the overall frequency of purchases. The aim should be to analyse when your customers are likely to return, so that you can then target them slightly earlier than when they are most likely to purchase again.