In this installment of Build vs. Buy, we’re going to take a look at the financial side of Relationship Commerce, specifically, what is your CFO going to think about all this?
Say Goodbye to the Wandering Eye
Customer retention is one of the biggest problems facing retailers today; it’s also one of their greatest opportunities. Research conducted by Bain & Company has found that increasing customer retention rates by 5% can increase profits by 25% to 95%. Those are numbers that even the most gimlet-eyed CFO can’t deny. And Salesforce has found that while customers often make their first purchase from a brand, they're likely to defect to a marketplace for subsequent items.
So how does a retailer keep a customer from straying, in a world of seemingly infinite buying options? There’s no one magic bullet to solve the customer loyalty problem. Instead, it’s a set of tools and techniques that are premised on building long-term relationships with consumers, not increasing one-and-done transactions. In other words, it’s Relationship Commerce.
When practiced effectively, SMS and email-based reorder prompts can remove temptations for consumers to simply order products from competing online-only retailers — and give them a reason to expand basket sizes. Buy Online, Pick Up In Store (or BOPUS, as we like to call it) programs drive more impulse upsells in retail locations.
When practiced effectively, SMS and email-based reorder prompts can remove temptations for consumers to simply order products from competing online-only retailers — and give them a reason to expand basket sizes.
More than simply improving customer loyalty, these strategies also build in recurring revenue streams, magical words to any CFO.
On the consumer side, Relationship Commerce is all about anticipating your customers’ needs through machine learning tools and big data analysis.
That ability to predict the future doesn’t just benefit customers — the predictability that it drives is also a boon to your internal stakeholders, allowing them to make more reliable inventory forecasts and help manage your supply chain more efficiently and effectively.
Any increase in sales volume brings with it an increase in complexity. Just consider Walmart’s latest e-commerce difficulties — as a result of their inability to predict consumer buying habits, they’re literally telling online customers products are out-of-stock rather than have to ship them out.
But an effective Relationship Commerce platform is supply-chain aware, because retailers can anticipate customers’ buying habits with far greater efficacy. And those predictive abilities have a knock-on effect throughout the management of your supply chain.
Inventory management, pricing and sales models, as well as last-mile delivery logistics are all simplified. And those kind of efficiencies lead to lower costs, greater revenue, and happier customers (and CFOs).