Play-by-Play: Prepare Your Post-Pandemic Marketing Plan Now
Optimove’s strategic services team provides customer insights from the past few months, detailing how to adjust your marketing plan as we enter the next phase
In recent months, we’ve talked a lot about your current marketing strategies and how to overcome common-day CRM challenges during the pandemic. However, brands need to start thinking about what’s in store for the future (if they haven’t already).
Today, we’ll take an in-depth look at your newly acquired customers, identify their real churn factor, normalize discounts, and when all is said and done – provide you with a proper post-coronavirus rollout plan.
Newly acquired customers
As the pandemic spread and people faced economic uncertainty, many brands chose to provide substantial discounts to retain customers and acquire new ones. As in the holiday shopping season, there has been a rise in the ratio of newly acquired customers (to existing ones) during these past few months, while the influx of additional new customers has driven down order values.
Corona times have created a new type of “holiday season” in terms of discounting, though – which will affect customers’ loyalty, survivability, and lifetime value. We also saw in the second half of March, new customers were on average 49% more likely to purchase with a discount than existing customers in the following verticals.
On a day like Black Friday, for instance, most brands probably see spikes in one-time purchases due to massive discounts. Therefore, we typically recommend creating a dedicated marketing strategy for these customers as they are harder to retain and have lower lifetime value.
But how are your newly acquired customers different right now? Your new customers should be treated very similarly to the Black Friday ones.
You might never have “marketed post-pandemic” as this territory is new, but by noting these similarities, you can create a rough guide on how to treat these customers in the long term.
Identifying your churned customers
The pandemic changed the way customers shop, for better or worse. While there has been an apparent uptick in customer acquisition, the ratio also reflects fewer existing customers returning during this time. So, the real question is how to define churn given these new circumstances.
It’s important to differentiate whether a customer has churned at this time or whether it’s more of a circumstantial churn that can quickly be recovered when things settle down. This will be crucial in mitigating promotional costs.
Calculating a customer’s individual Churn Factor can flag risk-of-churn customers based on their purchase frequency. This is a proactive approach in which we look at each customer’s activity frequency. The higher the churn factor, the more likely the customer will – or already – has churned.
So, let’s take this customer, for example – we’ll call her Suzy. Let’s start by calculating her activity frequency. We do this by calculating the elapsed time between the first and last activities, divided by the number of activity days (minus 1). To calculate her churn factor, we’ll divide her time since the last activity, 90 days, by her activity frequency. In this case, we end up with an activity frequency of 37.7, and that gives us a churn factor of 2.4.
Typically, we’d say that Suzy is at risk of churn. But what if her fifth activity would have taken place during COVID-19 and due to the circumstances, she chose not to purchase at this time? She may return to her typical activity frequency once the pandemic is over. In that case, we wouldn’t want to send Suzy churn-prevention communications, which usually consist of substantial discounts. Instead, we’d recommend sending the churn-prevention messages to customers with a higher churn factor, for example, 2.8 or 3.
While purchasing is a critical factor in predicting churn and understanding the customer rhythm, purchasing is not a frequent activity. Other elements can help us predict or cross out a high propensity to churn:
Email Engagement: Our recommendation here is to add email engagement metrics to purchase history to determine a customer’s level of risk. It may help to predict which of your customers are truly at risk of churn.
Site Visits: We saw that this metric is somewhat tied with future purchases. In other words, staying active in that sense means the customer is more likely to purchase again with you.
Normalizing discounts…
Discounts are highly appreciated at this time – they’re appreciated all the time – but now even more so. And so, you should be treating your legacy customers differently than your new customers going forward. Your loyal customers will continue to appreciate your discounts, and they’re less likely to leave your brand once the cuts are removed or lowered.
For customers who missed expected visits, loosen your definition of churn, and let them return more organically if it was circumstantial churn.
On the other hand, your newly acquired customers will probably expect these discounts to last beyond the pandemic and may churn once the prices return to their normal range.
This situation could inevitably create ‘Cherry Pickers’ – customers who only purchase when there are hefty discounts. Since acquiring new customers is so hard – we don’t want to miss out on the opportunity of keeping them, so we came up with a way to normalize these discounts while winning your new customers’ loyalty.
…by Segmenting your new audience
By segmenting your new audience into three tiers, you can still offer these customers a discount but gradually lower their expectations. We recommend segmenting this new audience to three groups, based on the discount claimed when they made their purchase – low, mid, and high:
For the first tier, customers who requested a small cut of up to 10%, use a personalization tag to offer the same discount that the customer claimed with their first purchase.
For the medium tier, those who claimed a discount between 11% and 30%, multiply the discount claimed during COVID-19 by 50%, using personalization tags. This will provide each customer with a discount between 5% and 15%, based on the initial discount.
Lastly, the high discount tier, of over 30%, offers 70% of the discount claimed during COVID-19, so each customer in this tier will get a personal discount starting at approximately 20%.
You can repeat this process as the customer makes additional purchases to bring the average discount value down. This will help you avoid creating those Cherry Pickers mentioned.
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Good luck! For further advice, don’t hesitate to reach out.
Scott, a Davidson College alumni with a Bachelor of Science in Mathematics, is a Strategic Services Team Lead at Optimove New York, where he started as a Data Insights Consultant back in early 2018. Prior to joining Optimove, he was a baseball analytics manager at Excel Sports Group. So you can only imagine the attention he's getting when the fantasy draft is around the corner.
