6 Critical Stats for Customer Loyalty

Transcription

1 6 Critical Stats for Customer Loyalty Six benchmark stats and insights for restaurants and retailers looking to best understand customer behavior and improve marketing ROI.

2 2 SUMMARY Customers new and old walk into restaurants and retailers every single day. But do they come back? It s the single most important question affecting brick-and-mortar merchants. Each repeat customer visit represents the most cost-effective way to increase revenue and improve satisfaction. However, the majority of businesses have no clue whether customers return or not. Merchants suffer from customer blindness, unable to answer common questions such as: How many customers who visit my store actually come back? Are my previously loyal customers still loyal? What percent of my revenue is tied to my top 25% of customers? Most Important What actions should I take in light of this information? And that s why you re reading this ebook to have answers to these critical questions so that you can understand how to focus your marketing efforts whether restaurant, retailer, or otherwise.

3 3 DATASET ANALYZED 10.3 million Customers 18.3 million Transactions 54 Businesses 16 Industries The 2014 edition of 6 Critical Stats for Customer Loyalty analyzes a random sampling of 2014 aggregated and anonymized data from merchants to whom Thanx has delivered loyalty and insights. The data spans more than 10.3M customers and 18.3M transactions locations across 16 industries, including: Fine Dining Jewelry 6 month Timeframe 877 Locations Merchandise Hardware Fast Casual QSR Furniture Parking Entertainment

4 4 INSIGHT #1 TOP CUSTOMERS REVENUE CONTRIBUTION BY QUARTILE The 80/20 Rule lives So, maybe not exactly 80/20, but certainly an enormous percentage of revenue is tied up in just a small percent of customers. Understanding which customers contribute what amount of revenue is crucial toward sustaining long-term success. 19% 2ND Retailers depend even more on top customers 11% 3RD 64% TOP Retailers see this effect to a greater extent than restaurants, with the top 25% of customers contributing 72% of revenue. 6% BOTTOM TOP 2ND 59% 21% TOP 2ND 72% 16% 3RD 13% 3RD 8% BTM 7% BTM 4% 64% of revenue is contributed by the top 25% of customers. Proactively identify VIPs and create targeted engagement 80% of a business s revenue comes from half of its customers. That s a huge number. Segment out VIPs and develop targeted programs to make sure these loyalists never churn out of your business. DEVELOP TARGETED PROGRAMS

5 5 INSIGHT #2 AT-RISK CUSTOMERS SUPER LOYAL REGULARS Customers are cheating on you Whereas 3% of customers are SUPER LOYAL, meaning that they shop monthly, 70% of customers are AT-RISK, meaning that they were loyal at one time, but haven t returned in the last four months. They re still eating and shopping of course they re just going somewhere else. Retail percentage fatter at both ends Compared to restaurants, retailers have a higher percentage of both SUPER LOYAL and AT-RISK customers. The percentage of AT-RISK customers represents the overwhelming majority for both types of businesses. 3% 29% 68% 4% 25% 71% AT RISK 70% of customers have not returned in the last 4 months. Huge revenue opportunity Communicating with customers who were once loyal is much more cost effective than acquiring brand new business. Target AT-RISK customers with content churning out of your business. By converting even just 5% of AT-RISK customers to REGULARS PREVENT THEM FROM CHURNING OUT OF YOUR BUSINESS

6 6 INSIGHT #3 REPEAT CUSTOMERS BY DAY Customers wallets love the weekends No crazy surprise here, but the majority of customers only eat and shop on the weekend. Retail again has its work cut out Retailers experience the weekend effect to an even larger degree than restaurants % of customers only shop on weekends, vs % of customers who eat only on Saturday and Sunday. 12% 42% 46% 10% 35% 55% 12% MON FRI 39% BOTH 49% WEEKEND Target weekenders with weekday incentives Changing overall customer behavior starts with already loyal customers. Target 49% those who only come on weekends with a weekday incentive to stop in for a visit. Time-shifting will draw more business during slow days, and also extend your brand s top-of-mind awareness. of customers make purchases only on weekends. TIME-SHIFTING

7 7 INSIGHT #4 REPEAT CUSTOMERS BY LOCATION Even loyal customers aren t necessarily loyal Even if someone visits a business every day, they may be doing so out of convenience. What happens when they change jobs or move houses? Will a merchant still be top of mind? Customers who visit multiple locations aren t just looking for a place to shop, they re looking for your business. Customers are less willing to travel for a meal Restaurants are more affected by the convenience factor. As a result, it s all the more important to extend customer brand awareness about other business locations. 23% MULTIPLE LOCATIONS 77% SINGLE 20% 80% 29% 71% 77% of customers only make purchases at one brand location. Drive traffic to under-utilized locations Have customers who visit only one location? Send them a promotion to visit a SEE OVERALL PROFITS INCREASE

8 8 INSIGHT #5 CUSTOMER FREQUENCY Revenue walks out the door every day 72% of customers have only visited once in six months. Flipped around, only 13% of customers have stopped by more than twice. Think of it this way a 10-location, $20 average check business that converts a single one-time customer into a monthly customer every day immediately earns $770K in annual revenue. 6 Months 1x 2x 3x 4x 5x 6+ Restaurants and retailers in same boat No real difference between restaurants and retail here. Visit frequency is a huge opportunity for both. RETURN VISITS OPPORTUNITY 72% 15% 6% 3% 1% 72% 14% 5% 3% 1% 3% 5% 72% of customers visited only once in the past 6 months. Flip this 1X-6X graph on its side Treat every customer visit as an opportunity to get that customer to come back again. Implement a loyalty program. Tweak incentives. Launch bring-a-friend days. Make sure employees communicate these initiatives to customers. Choose the tactic that makes the most sense, test, and iterate. A 5% movement from left to right will have an immediate (and dramatic) positive impact on revenue. MAKE SURE EMPLOYEES COMMUNICATE

9 9 INSIGHT #6 AVERAGE CHECK BY LOCATION +156% Location, location, location! Not all locations are made equal the variance between a brand s highest and lowest performing location is dramatic. The average customer at the best location spends 156% more than the average customer at the lowest performing location. Every. Time. They. Visit. Can all retail customers be created equal? an average check size variance of +265%, versus +93% for restaurants. AVERAGE CHECK SIZE INCREASE +265% AVERAGE NUMBER OF LOCATIONS ACROSS BUSINESSES ANALYZED % % difference between the average check at the highest performing location vs. the lowest. Identify, learn, and communicate All multi-location businesses should graph the performance of their locations and manage a responsive customer feedback program. Have high performing locations share best practices with others to increase the amount customers spend when they come in store no matter what store that might be. MANAGE A RESPONSIVE CUSTOMER FEEDBACK PROGRAM

10 10 METHODOLOGY INSIGHT #1 TOP CUSTOMERS This pie chart segments customers into quartiles based on revenue contribution to demonstrate how much more valuable top customers are to a business. Each segment of the chart has the same number of unique customers in it. Thanx for reading. INSIGHT #2 AT-RISK CUSTOMERS This visualization represents an estimate for at-risk customers who may have churned out of the business (or will soon) and consistently loyal customers who return every month. months of our data set but did not make a purchase in the subsequent four months. Consistently loyal customers represents the percentage of customers who shopped at least once in each month of data. INSIGHTS 3&4 REPEAT CUSTOMERS BY DAY & LOCATION This focuses exclusively on customers who have made more than one purchase in the last 6 multi-location customers. To learn more about customer behavior and how to address these six loyalty stats, please visit blog.thanx.com or [email protected]. INSIGHT #5 CUSTOMER FREQUENCY This visualization represents the distribution of all customers based on repeat visit frequency over six months of data. INSIGHT #6 AVERAGE CHECK BY LOCATION This visualization illustrates the variance in average check across all locations. DATA ANALYSIS Data analyzed is only viewed by Thanx, Inc. and the authorized representatives of the merchants. Thanx only receives anonymized consumer transaction data, and all Thanx Reports present such anonymized data. Thanx, Inc. 180 Redwood Street, Suite 200 San Francisco CA [email protected] 6 Critical Stats for Customer Loyalty Version 1 January 2015 Thanx, Inc. All rights reserved.