Retention Marketing for Online Market Players

August, 2016

Nikhil Mittal

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Key Metrics to Consider

Churna. What is the current churn definition that is followed?b. After How many days of inactivity, a customer is considered to be churned?

a. Current Churn rate for 30 days, 60 days, 90 days, 120 days of transaction

b. Classification of customers (segmentation) based on

I. Transaction Value on the website (UHVC, HVC, MVC, LVC)

II. Last transaction date (r)

III. Frequency of Transactions (f)

c. What is the Dunning cycle for Churn – Classify the current notification period / frequency of reminder mails to customers based on their segmentation

A customer with high last transaction date and low frequency of transactions are probable future churn segments – Prepare a matrix accordingly

You might not want to send frequent reminders to a UHVC and HVC customer, leading to a feeling of spamming

Compare our current churn rate vs. Industry average

• If Current Churn > Industry Average – Identify the best practices in the industry followed

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Customer Churn vs. Revenue Churn

Understand the Revenue Churn due to the volumes

Revenue Churn =

Volume of Churn X Average Customer Lifecycle Value

A higher % of revenue churn as compared to volume is detrimental as it indicates the leakage of UHVC and HVC

Understand the volume of churn over a particular time period

Identify segmental break-up of the churn volumes

Customer Churn Revenue Churn

Categorize retention into two categories:a. Volume churn retention rateb. Revenue Churn retention rate

Calculate DRR (daily run rate) for both the metrics and maintain a balance between the two

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Average Customer Lifetime Value (ACLV) vs. Customer Acquisition Cost (CAC)

Average Customer

Lifetime Value

Identify the draining segment

Check timeperiod for

ACLV = CAC (breakeven)

Analyse CLV for 2 months, 3 months, 6 months, 9 months

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Will give an idea of Profitability from current customer

and win-back rate of customers

Current Profitability from Customers – Quality of acquisitions

Aim to be profitable i.e. ACLV > CAC

within 12 months so that business

doesn’t require too much capital to

invest

Aim for Profitability

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Active vs. Inactive customers

Current Category Analysis

Re-check current definition of Active and Inactive customers

After how many days of a purchase a customer is considered as Inactive

Analyse a DRR for Active vs. Inactive subscribers

Plan deals if DRR for Active customers is down

Predict the ratio of Active vs. Inactive subs based on industry trends and seasonality

Launch campaigns accordingly

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Current KBI’s and Metrics used for measuring online engagement

List the KBI’s and metrics for online industry that are

measured on a daily, weekly and monthly

basis

Metrics Description

Bounce Rate

Bounce rate on various pages such as home page, deal page, checkout page measured on a FTD (for the day) basis

Home Page Deal Page Checkout Page

A customer is a regularvisitor but deals on our home page doesn’t excite them

Customer has concerns or is confused about the deal – send a follow up mail to check the purpose of discontent and try for conversion

Pricing issues / paymentrelated issues – try to minimize payment related concerns such as saving card details, accepting wallets etc.

Acquisition Rate Average conversions vs. site logins from existing customers

Geography Cities vs. deals analysis

Level of engagement across different cities

Page Views High Page views vs. low acquisition will mean to re-think the deals on website or the aesthetics of the website

Traffic Sources Identify the source of traffic from existing customers – via advertisement, organic search or direct website login

Average time on site For e.g. if average time on a page is too less for a long post, then we might need to rethink the content length

In-Page Analysis Identify the map of page where users click most frequently

Campaign Analysis Identify the effectiveness of current campaigns running

Analyse the metrics and plan accordingly

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Mobile vs. Desktop Market share

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Mobile app downloads across segments:

Geographic segments

UHVC / HVC / MVC / LVC

Frequency of visits

Volume of transactions via App and small screen data

Revenue drawn from M-Commerce from App and small screen data

Customer Rating for Mobile App

Activation time for an App User

Segment wise engagement for desktop vs. mobile

Geographic segments

UHVC / HVC / MVC / LVC

Frequency of visits

Volume of transactions via desktop

Revenue Share from Desktop

Mobile Desktop

Measure the engagement

level of customers via App vs.

Desktop

Analyse the share of M-Commerce when the Industry is going more towards mobile

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Average Order Value (AOV)

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What’s the average amount a customer spends when they place an order on the site?

Sum of Value of all ordersNumber of Orders

Higher quality of current customers

Check current shopping behavior of customers

Check if financing schemes required for higher value orders to increase AOV

Cross-sell as per future industry behavior and not just by current shopping behavior

Higher AOV

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Efficiency of Campaigns

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Track the efficiency of campaigns related to brand awareness

Understand the conversion metrics used for campaigns (e.g. buying a deal)

Analyse the efficiency of all the campaigns calculating the take rate %

Compare with industry standards

Modify campaigns according to their performance and evolving needs of the customers

Automate certain critical campaigns

List the Campaignscurrently Running

Understand the Segmentation and Target audience for the campaigns

Evaluate different campaigns targeted based on their geography, time period, age groups etc. and learn from the mistakes and positives of each.

Moreover, automate certain critical campaigns (for e.g. Inactive User campaign where a person who haven’t made any transaction for a certain period will get automated

reminders)

Awareness campaigns vs. Conversion

Campaigns

Base Targeted vs. Take Rate

Revamp the campaigns as per analysis and

segmentation

Offers Vs. Discounts

Give Retention offers to customers instead of discounts

(Cashback , Dynamic pricing for repeated purchases within a

time period)

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Demographics and other parameters of customer base

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What’s the current demographics and other parameters to take note from the current customer base?

Gender Ratio Age Mix Time and Day Category break-up

Parameters

Understand the user behavior for each gender

Try to re-order the deals on homepage / include new deals as per the behavior

Understand different age group who interact via different media i.e. desktop, mobile

Understand the level of interactions vs. time of the day

Understand the pattern for days of interaction

Identify most popular categories

Give more visibility to the ones popular

Compare the industry take rate of unpopular categories

1 2 3 4Occupational

break-up

Understand the segment with most popular deals and apply retention campaigns accordingly

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List all the parameters which can be analysed on a regular basis and target marketing campaigns accordingly

Geographic Break-up

Understand the level of engagement across different cities

City wise breakup of all the KBI’s and segmentation parameters

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Enter into Mobile Phone Category – One

of the highest growing market for

online purchase

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VOC (voice of customers) and VOM (voice of merchants)

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Different Needs and issues on different devices

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Customer’s Online experience

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Reasons of satisfaction / dissatisfaction among

customers

Understand from existing base:

Customers considered as Active

(Satisfied Customers)

Customers considered as Churned

(Dis-Satisfied Customers)

Target Samples

Merchants

Quality – Degree of Contribution to customer satisfaction

Timeliness – Speed of VOC Handling

Cost – Amount of money to handle the VOC

VOC Analysis

Quantity – Number of VOC occurrence

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Customer Service and Ease of Transactions

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Understand the level of Customer Service we are providing to customers

Customer Service is the most important factor for Retention Marketing

Current Support Systems

Understand current ways and level of interactions with the customer

Efficiency of Chat, telephonic, email support systems and current satisfaction index

Proactive Services for Customer delight

Welcome emails efficiency – They can act as engagement mediums to create impression

Retention Emails – How, When, To Whom, frequency with which retention emails are sent to the customers

Loyalty Services

Surprise and Delight customers with unique propositions

Share your company’s growth story and achievements with customers via E-mails

Ease of Transactions

Enable Account Creation Post

Check-out

Enable guest checkout even for

returning customers

(enable purchase via OTP instead of

entering password)

Option to save card details to make

repeated purchase easier

Enable Quick Buy option for the deals

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Thank You

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