It’s been a tough start to the year for retailers, as marketing budgets are shrinking and 52% of consumers are cutting back on non-essentials. Many brands feel as though they’ve missed out on revenue, and it’s been warned that the U.S. economy “could get worse before it gets better.”
Source: Individuality Unleashed: The Retail Recession with Lorraine Hutchinson, Bank of America
But all is not lost: This is how to recover lost revenue through marketing strategies that can put you back on top.
5 strategies to recover revenue loss
1. Re-engage with churned customers
As consumers cut back on spending, you might have noticed some customers have disappeared, not returning for repeat purchases. Instead of just targeting new customers, now is the time to remind lost customers why they should shop with you.
“Getting someone over their first purchase threshold is really difficult for any marketer,” explains Margaret Kazmierczak, Associate Director of Strategy Consulting at Wunderkind. “Especially in a time when customers don’t have as much spare income. However, if these customers have crossed the third purchase threshold, it’s going to be much easier to encourage them to buy again. When you can reach these people across multiple devices—because you already know who they are—it makes the cost of the sale much cheaper.”
Let your customers know why they should return; whether it’s because of a seasonal sale, a new product release, or best-sellers coming back in stock. Use channels such as text and email to advise lost customers on what they’re missing out on—also known as FOMO marketing.
2. Entice customers with discounts
In a recent report, Wunderkind found that 54% of U.S. consumers are cutting back on non-essentials, 54% on luxuries, and 37% on essentials. This isn’t the news brands want to hear, but it poses an interesting opportunity. How? By driving revenue through discounts.
57% of U.S. consumers are on the hunt for deals, and discounts are a tried and tested way to bring customers in when they’re on a budget. Presenting them with the opportunity to purchase long-lasting items at a discounted rate is guaranteed to help you recover lost revenue.
“One of the best ways to get a high-intent customer who’s yet to purchase through the door is by using discounts,” Kazmierczak says. “Particularly as people have less money. With groups that have already bought from you, it’s a lower-risk marketing strategy to target them, which ultimately gains back revenue.”
3. Bucket customers based on their acquisition cost
In eCommerce, two of the most common measurements of success are ROAS (return on ad spend) and CAC (customer acquisition cost). The issue is that these metrics aren’t one-size-fits-all. If you’re relying heavily on these metrics to indicate success, stop measuring all of your prospects using the exact same benchmarks.
Rather, segment your audiences into different categories (even if it’s just five to start) and assess which cohorts of customers (whether new, returning, heavy spenders, etc.) are performing well against industry benchmarks or your other cohorts. Use this data to heavily target those high performers.
Once you’ve identified who you’d like to target, adjust your ROAS and CAC accordingly. Don’t just go after the highest-value customer cohorts, but if the CAC on one cohort is $50, while it’s $100 on another, you should be prepared to spend twice as much on the latter than the former. It’s about effectively understanding what it costs to bring in high-performing customers and spending the right amount on acquiring them—not just assigning a blanket value to any customer across the board.
4. Focus on customer retention
Did you know that on average it costs 5x as much to acquire a new customer than to retain an old one? Retention is key, not just because of the costs involved in obtaining new customers, but because of the lifetime value that comes with loyal customers. These customers will keep you afloat in times of economic hardship.
Focusing on retaining your customers before it’s too late. Engage with those who have already made a purchase with you, and nurture them throughout each stage of the buyer’s journey. Create an omnichannel experience by guiding those customers from text or email, to your site, where they can convert. Creating a personalized experience for these repeat customers will drive higher engagement and retention rates.
5. Craft content around how customers currently live
To effectively market to consumers, you need to understand how they’re living, how they’re feeling, and how they’re spending. For example, marketing during the pandemic (consumers generally had more spare income and more free time) is very different compared to now (consumers are cutting back spend).
Ensure you’re doing a full audit of the content that is currently attached to your brand. It could be anything from digital ads to emails, social posts to webinars, or even a partner blog from years ago. Whatever it is, now is the time to check your public-facing content to ensure it isn’t tone-deaf given the current environment.
How can you adjust your messaging around what the customer is looking for from your products? Kazmierczak explains, “During tough times, it’s a good idea to think about how you position yourself. For example, are your products a frivolous purchase? In which case, you should have options for those budgeting for $8 on frivolous purchases, as well as those who have $80 to spare (offering both price points). Or are you an essential—in which case your price point might be more fixed across your range.”
Start recovering lost revenue
All is not lost when you miss out on revenue. Re-engaging with churned customers, segmenting your lists, and crafting relevant content are among some of the many ways you can recover that revenue in no time.
Want more information on how to future-proof your business against diminishing returns? Take a look at our Driving Revenue During a Recession Whitepaper to find out how to confidently face economic headwinds.