With the cost-of-living squeezing consumers’ disposable incomes and ebbing away at customers’ loyalty propensities, retailers are facing higher levels of customer churn, the latest research from insights-led customer engagement platform, MoEngage, warns.
Original research of over 1,000 European brands, including 500 UK businesses, by MoEngage in its latest 2023 Customer Retention Benchmark report showed that over a third (36%) of retailers’ average customer retention rates are currently up to 30%, with a further two fifths (22%) saying their average retention rate falls between 31-40%. Meanwhile, just 2% of retailers say their retention rate sits at over 80%, suggesting that brands are missing out on sales opportunities from repeat purchases and loyal shoppers, and focusing on acquisition rather than retention in their current customer engagement strategies.
As the cost of living pressures put more strain on consumers’ disposable spending, three-quarters (74%) of UK shoppers have stopped buying from their favourite brands due to budgets becoming squeezed, according to Retail Insight’s research.
And, this pressure is making shopper loyalty even more hard-won, with MoEngage’s research also showing retailers are experiencing high rates of customer churn. The report shows 45% of the retail and e-commerce brands polled are now experiencing customer churn rates of 51% or higher, while 18% see 51-60% churn and 14% report a churn rate between 61-70%.
The poll showed retailers experience the highest levels of customer churn during the first seven days after sign-up (20%) and after the end of a free trial period (20%), highlighting the importance of continued customer engagement and nurturing right after the initial conversion. Two-fifths of retailers (18%) also reported experiencing high churn levels following a product being returned, highlighting the returns process as another key period for customer engagement and enhancing customer experience.
Jason Smith, VP UK & Europe at MoEngage, commented:
“By putting data to work, retailers can turn the tide on customer churn. By leveraging insights, brands can generate the personal, meaningful, and compelling customer engagement experiences that don’t just save the sale, but also drive loyalty, even in the context of increased cost-of-living brand switching.”
And, leveraging insights doesn’t just improve CX, MoEngage’s data also shows it can build out ROI on marketing spend. By using machine learning and AI capabilities to transform past data into future insights to accurately forecast customer actions and create highly relevant campaigns that lead customers towards desired actions, predictive marketing and analytics can increase ROI by up to 500%.
To find out how predictive analytics and insights-led engagement strategies can enhance customer interactions to bolster retention and reduce customer churn, download: Customer Retention Benchmarks Handbook – Europe | MoEngage.