BFCM this year will undoubtedly look very different from previous years. With COVID-19 disrupting the lives of many, merchants are being forced to re-evaluate and adapt quickly. This means you should prepare extra meticulously to ensure a successful BFCM, with a particular focus on understanding your customers and the metrics around sales performance.
Following the release of their ‘Fast-track upturn’ report we catch up with Klarna’s Commercial Manager, Rob Beattie, to discuss what challenges merchants are likely to face this BFCM and what they can do to keep their customer acquisition costs low.
In the report, you mention how traditional Customer Lifetime Value (CLV) models are restricting retailers from reaching their full potential, in what way?
We wanted to look at how retailers can gain and retain more business post COVID, but there’s the age-old issue of keeping acquisition costs low whilst trying to increase customer retention and boosting propensity to buy. The traditional CLV model is a relatively simple way of gauging success, based on historical data and not necessarily taking social engagement and digital interactions into account. So we wanted to understand if there’s a more modern approach to measuring CLV. From our report, we found that an emotional connection is now one of the most significant drivers of sales according to the 2000 shoppers we surveyed and consequently, retailers need a better way of optimising acquisition costs, taking engagement into account.
What metrics should online retailers be focusing on this BFCM?
First and foremost, a true understanding of your customers’ profitability and your Customer Acquisition Costs (CAC) is essential. For startups and less established retailers & brands, it’s not uncommon for CAC to be their most sizable marketing cost, and unmanaged, it can easily inhibit growth or result in a long payback period (the time the customers needs to be retained before CAC is recovered).
With an understanding of CAC, it’s then possible to start to look at a future-focused CLV calculation, taking the digital and social world we live in into account, and including metrics such as frequency of engagement with advertising, social media interactions, click-through rates, etc. This model of CLV is more aligned with the shoppers ‘omnichannel’ journey and includes the four pillars of acquisition, conversion, retention & advocacy.
What tactics can merchants use to hack into the acquisition process during BFCM?
Here at Klarna, we’re huge advocates of collaborations and partnerships. As a retailer, or brand, think about opportunities to collaborate and leverage shared interests between brands to achieve more. Utilise partnerships to activate customers across both brands and work collaboratively on building out engagement tactics that retain shoppers and help drive loyalty.
Think about how you might be able to engage with the new demographic who are shopping online. We recently published our UK spend data highlighting Gen X 940-54) as our fastest-growing segment of customers, and the next fastest 54+. As a retailer or brand, how are you marketing and engaging with this demographic? Do they need a slightly different approach?
Could partnering with Klarna potentially help reach that audience? Our shop directory, social media channels and shopping app all provide an amazing opportunity to show your brand off to our 9.5m UK customer base. If you are working with Klarna, take the opportunity to feature in things like our organic social and targeted paid social, which will help drive traffic to your website.
Where should ecommerce business owners invest their money this BFCM?
Start with the basics. Take some time to look at the end-to-end customer journey and from there start to identify areas for improvement and quick wins. From the point they land on site, how easy is the website to use and navigate? Has the site been built mobile-first? How long does it take a web page to load?
At checkout, are you accommodating for everyone? From flexible payments to faster deliveries, it’s important to ensure a range of options are offered at checkout. Buy now pay later, Free shipping, click & collect….these are all expected by the shopper. According to a recent report, 23% of shoppers said they’d be influenced by the speed of the checkout process and 22% said they’d be encouraged by flexible payment options.
Beyond payment – how do you get the order to the customer in the most efficient and timely manner? What do returns look like? From the point you’ve got the basics right, what are you doing to enhance the customer experience? Are you sending personalised and targeted emails? Are you personalising on-site? 33% of consumers referenced personalised offers or discounts as something that would encourage them to shop with an online brand. Technology can impact and improve every step of the customer journey, so make the most of it!
Can you give some examples of brands who you feel are doing a brilliant job at finding new ways to maximise revenue and why?
Cox & Cox is a great example of a retailer who has recently implemented Klarna and consequently seen some amazing results. Cox & Cox is also a perfect example of a retailer that has been able to tap into the Klarna consumer network. Interestingly, 50% of their Klarna customers were new to Cox & Cox.
And it’s impossible not to mention Gymshark. They are an example of a brand that has done amazingly at building an emotional connection with their audience throughout the pandemic.
If you would like to watch the full interview with Rob then head over to our Youtube channel. Additionally, if you’d like to hear more about what’s been discussed in this blog or simply want to hear more about Klarna, get in touch with our team of Shopify Plus experts today! Let’s get started.
Klarna is Europe’s highest valued privately held fintech, offering products and services to over 85 million consumers and 200,000 merchants globally. Klarna’s payment methods include Pay later in 30, interest-free instalments and financing up to 36 months. Klarna gives end consumers more control and flexibility with their purchasing whilst helping brands boost their sales, average order value and conversion.