How D2C Brands Can Solve the Conversion and Retention Puzzle

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Since feedback loops come with a clutter of data and analytics tools require a steep learning curve, D2C brands often struggle to deliver better marketing and increased customer engagement.

In his masterclass at the recent Inc42 D2C Summit, Keyur Dhami, Vice President, Customer Success, at WebEngage, explained the four levels of customer engagement and how to take it to the next level.

Dhami said the right analytics tool and digital marketing strategy tailored to a brand’s level of digital maturity would remove growth bottlenecks like cart abandonment and low repeat purchases.

“Who is a loyal customer? ”Asked Keyur Dhami, Vice President (Customer Success) at WebEngage, a Mumbai-based SaaS startup specializing in customer engagement. The simple and succinct question was the first step in grasping a larger context as Dhami launched his masterclass How to solve the conversion and retention puzzle for your D2C product. He moderated the session at Inc42 recently concluded D2C Summit, 2021, helping brands understand the different phases of customer engagement and their results.

As most experts point out, customer engagement and customer experience (CX) go hand in hand and lead to retention and revenue growth. But before even developing a strategy to ensure customer satisfaction and retention, it’s critical for businesses to understand what customers want and become familiar with the mindset of customers.

The problem is trickier than it first appears. While brands have access to multiple channels of customer interaction and multiple internal / third-party tools to track website and social media data (often seen as feedback loops), a tsunami of big data doesn’t help. not to get actionable information. Businesses, especially digitally focused D2C (direct to consumer) brands, need to make sense of clutter with the right metrics and data analytics teams if they want to scale quickly.

Quoting bestselling author and customer retention expert Chip Bell, Dhami expanded on his original question and said, “Loyal customers don’t just come back; they don’t just recommend you. They insist their friends do business with you.

In other words, finding the right ways to connect and communicate with customers is the key to building a deep retention funnel.

Check out the intriguing session below or read on for a preview of this exploratory martech masterclass

Four levels of customer engagement: find out where you are

Before exploring tips, tricks, and strategies for implementing better ways to engage with customers, a brand needs to zoom out and identify where it stands in terms of marketing capabilities and the customer engagement process. Self-assessment is essential as it helps to spot gaps, implement solutions and move to the next level.

According to Dhami, companies have four levels of customer engagement. He named these levels for ease of understanding, and we’ll walk you through the egg stage (level 1), the caterpillar stage (level 2), the butterfly stage (level 3), and the nirvana stage. (level 4).

The egg stage: 0-3 years

These D2C companies are either offline brands in transition to the web, or new entrants looking for a suitable product for the market. They typically have small (digital) marketing teams, less agile processes, and use email and texting as the primary mode of customer engagement.

Although martech adoption is low at this point, these companies can improve cart abandonment rates by engaging via email, SMS, and interactive messages on the top deposit / exit pages on websites. .

Adding a simple intent to exit message by offering additional discounts on selected products or asking potential customers to complete a survey can help D2C brands increase conversions and uncover the reason for the drop. so that it can be rectified.

The caterpillar stage: 2 to 5 years

At this point, a brand has a good understanding of digital marketing and an internal marketing team is in place. The customer acquisition cost (CAC) incurred is moderate as brands leverage content and affiliate marketing.

On the analytics side, these companies are showing better efficiency in aggregating user information such as device used, geographic location, and customer type (single or repeat). These data points allow D2C brands to develop more personalized engagement strategies and take a multi-channel approach to reach customers.

The transition from egg to caterpillar

“As a D2C brand moves from the first to the second stage of maturity, understanding user behavior becomes the key to engaging with them more effectively. All data from users, gender and age group to location and more, can be leveraged to improve communication and improve retention and conversion, ”Dhami said.

For starters, businesses can use low-end technology like newsletter signups to turn anonymous visitors into familiar faces. But there is more to do.

Typically, brands use content marketing to talk about their products. However, a better way to engage is to talk about use cases related to the product and how the product can deliver value to customers. This adds another layer to the customer acquisition funnel, capturing more leads and allowing content experimentation to track what drives the highest conversion.

Brands can also generate a simple Urchin Tracking Module, or UTM, to understand the source of the traffic and the overall effectiveness of their marketing campaigns.

When a brand becomes familiar with these initial measurements, there are several advanced methods they can opt for such as funnel data tracking. Funnel metrics relate to user behavior, from the time a visitor enters a website / app to make a purchase or leaves it, including drop-off points, to the average time taken for a purchase, the pages you spend the most time on and more.

Another method is to perform A / B testing for different banner ads, landing page layouts, and notifications to determine better designs to increase conversion and retention.

The butterfly stage: 3-7 years

It typically takes 3 to 7 years for a brand to reach the third level of digital maturity, also known as the butterfly stage. This is when a business sees the first wave of effective customer engagement. Companies at this stage have typically implemented a full marketing automation system and experience a lower CAC due to referrals and word-of-mouth promotion.

Most brands at the butterfly stage integrate an omnichannel approach and build a personalized web / app experience based on in-depth data aggregation and analysis. Now is also a good time to venture into influencer marketing and assert brand visibility with every available opportunity.

Dhami suggested that a third level brand should focus on lower price campaigns. In this way, it can offload old inventory, increase conversions to minimize cart abandonment, and improve customer enjoyment in a price conscious market like India.

Finally, the Nirvana scene

This is the stage that every company intends to reach in the long term. There is no time marker available to help us understand how long a business can take to reach this phase. Some companies can take a few years to reach this type of maturity, while others can take up to a decade.

A business that has achieved ‘nirvana’ can take advantage of in-house martech solutions executed by a team of experts who ensure that marketing, engagement, and analytics work together. Or it can enlist the help of marketing automation platforms that bring speed and efficiency to marketing campaigns, pulling new users deeper into the funnel and turning new customers into repeaters.

A D2C brand is also expected to experience higher customer lifetime value (CLT / CLTV indicates the total revenue a business can expect from a customer for the duration of the business relationship, again predicted by metric). This leads to better business growth in terms of revenue (as CAC has already been engaged, the longer a customer’s lifespan, the better the CLT), increasing customer loyalty and less churn. Businesses may also see an increase in repeat purchases due to a personalized experience.

Check out all the insights and knowledge shared at D2C Summit 2021, from what Dhami passed on during his masterclass to learning sessions that hosted popular brands like FirstCry, Lenskart, boAt and more. You will find everything on The D2C Academy.

Explore the D2C Academy now

This article is part of the D2C Summit by Inc42 Plus and Shiprocket, the largest D2C and e-commerce conference in India scheduled for July 17-18, 2021. Supported by WebEngage, Shipway, PayU, Delhivery, MoEngage, Trell, Akamai, Velocity, Gupshup, GreenHonchos, Vue, Razorpay and AWS, the conference will bring together over 1,000 people at the forefront of the D2C revolution in India! Click here to find out more.

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