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, suggests.
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 (36per cent) of retailers’ average customer retention rates are currently up to 30 per cent, with a further two fifths (22 per cent) saying their average retention rate falls between 31-40per cent. Meanwhile, just 2 per cent of retailers say their retention rate sits at over 80 per cent, 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 cost-of-living pressures put more strain on consumers’ disposable spending, three-quarters (74 per cent) 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 per cent of the retail and eCommerce brands polled are now experiencing customer churn rates of 51 per cent or higher, while 18 per cent see 51-60 per cent churn and 14 per cent report a churn rate between 61-70 per cent.
The poll showed retailers experience the highest levels of customer churn during the first seven days after sign-up (20 per cent) and after the end of a free trial period (20 per cent), highlighting the importance of continued customer engagement and nurturing right after the initial conversion. Two-fifths of retailers (18 per cent) 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 per cent.
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