As capital resources contract in the face of continuous economic crises, digital marketing success will increasingly be measured by how effectively organizations make use of their existing resources to improve retention. Data from Gartner’s 2020 CMO Spend Survey show that a majority of CMOs — 79% — plan to focus on existing markets and customers to fuel growth, making investments in retention levers such as personalization and loyalty essential.
As a starting point, marketers should focus on driving improved results through personalization, sourced either from data related to customers’ browsing history or account activity. Even baseline personalization strategies can improve experiences and outcomes on digital properties. Sites with recommended or recently viewed products on the homepage had more repeat visits, longer visit duration and more pages per visit in the second quarter of 2020, for example.
Nordstrom, for instance, excels at harnessing implicit data to curate its site homepage experience for account holders and casual browsers alike. Products that consumers view frequently will show up as “Here’s what caught your eye” at the bottom of the page. Shoppers can view further recommendations and discounted products similar to their recent searches under “Great Deals.”
While these low-complexity implementations of personalization can yield higher engagement, brands that also operate loyalty programs are in a unique position to drive further gains by activating their in-depth account data. Loyalty programs can enrich engagement and produce incremental revenue by serving targeted content, offers and experiences to a brand’s most passionate customer base. For example, analyzed retail brands with loyalty programs had 20% higher direct traffic as a share of overall desktop traffic than those without programs in the second quarter of 2020, illustrating the stickiness of such programs even during times of upheaval.
Loyalty programs can also help organizations weather choppy waters on the acquisition front. For example, Ulta Beauty, which operates a highly-successful loyalty program—loyalty members were responsible for over 95% of the company’s revenue in Q3 2019—witnessed a 4% decline in Ultamate Rewards members in Q2 2020 amid store closures and lower marketing spend. Nevertheless, the brand leaned on personalization and loyalty features in its app, including rewards tracking and unique offers, to make incremental gains among its existing audience even while progress with new memberships stalled.
These more customized app features appear to have resonated with members; despite the slight dip in memberships overall, the brand saw a 68% increase in app downloads and a 25% increase in monthly active users in June 2020. By centering their platforms around customer-first features, brands like Ulta can extend the value of their existing digital audiences as customer acquisition and in-store retail remain uncertain.
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