This blog post is the fifth installment in Shoptelligence’s “Five Ways to Thrive” series designed to help furniture retailers with pragmatic ways to grow during this pandemic.
As the pandemic unfolds, the furniture retail landscape has been affected beyond anyone’s predictions. Rather than experiencing a decrease in demand due to a loss of consumer confidence, sales have increased, causing frequent stock-outs.
Retailers looking for a bigger piece of the market may be spending time and money going after new customers, but a more reliable source of sales is your existing clientele, according to OutboundEngine. Acquiring a new customer can cost five times more than nurturing an existing customer relationship. Increasing customer retention by 5% can boost profits by more than 25%. And the success rate of selling to a customer you already have is 60% to 70%, while the success rate of selling to a new customer is just 5% to 20%.
How to successfully bring customers back?
Social media is important, but email marketing has proven to be more effective. The average social media engagement is 0.58%, while email click-through rates are 3.71%. Your first step should be to create email marketing campaigns that engage your existing customers, especially those who have credit lines with your brand.
Most furniture purchases are financed. Tapping into customers who have approved but unused credit lines offers furniture retailers a unique opportunity to help shoppers make large purchases or find the finishing touches for their projects. The use of non-revolving credit lines is up slightly but not substantially in 2020, according to the Federal Reserve, indicating this remains a good merchandising opportunity for retailers.
While new customers who have yet to build a relationship with a brand might be driven by deals, coupons are less necessary than good content with existing customers. Instead, personalizing your messages is more effective than generic email blasts. Look at these stats from Digital Doughnut:
- Personalized emails help to improve the conversion rates by 10% and click-through rates by 14%.
- Personalized email campaigns help to produce almost 20% more sales opportunities when compared with the non-personalized ones.
- Personalized Calls to Action (CTAs) help in a 42% higher conversion rate than the regular CTAs.
- And nearly 31% of the consumers are more likely to make the purchase when they are offered tailored content.
How do you address stock-outs?
Once you reengage with customers, you don’t want to disappoint them with limited or sold-out inventory. According to Furniture Today, new orders for furniture continued to soar in July, increasing 39% over the same month last year. The strong business followed a 30% increase reported in June. However, backlogs rose 69% and inventories fell 10% compared with July 2019, reflecting the lower levels of shipments due to the pandemic. Deliveries are taking months instead of weeks, which has the potential to frustrate your customers and send them looking elsewhere.
To serve your customers, focus your merchandising on what’s available and achievable. For example, shoppers may be looking to spruce up their spaces for their holiday celebrations, and accessories sales are likely to increase. This is good news because as these categories can often be fulfilled multiple ways—traditionally and via drop ship programs.
It also helps to improve transparency by adding more granular data to your ecommerce feeds about product availability and timelines. Incorporate expected delivery windows, and use intelligent merchandising solutions.
Bringing it All Together
Shoptelligence offers three easy solutions, including two enhancements for COVID, to help retailers maximize their results with existing customers.
First, Dynamic Curation has been enhanced with the capability of merchandising items similar to what the shopper is looking for and providing an option to find items that are available sooner. Interactive Ensembles has also been enhanced to favor items that are available sooner within the context of the ensemble. And our Email Marketing solution allows you to easily personalize email content by merchandising items specific to the shopper based on their past purchases, preferences, and remaining credit.
The 2020 holiday season is setting up to be a unique one for retailers. Building on the relationships you’ve established with your existing customers can be a smart strategy. Learn how Shoptelligence can help you better serve shoppers in this unique market by scheduling a demo today.