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  • Writer's pictureRick Kenney

Customer Value… on the Mark

DTC’s breakout year delivered scads of new shoppers. The pandemic induced a digital-only shopping season where brands and retailers knew their shoppers exclusively through their clicks and taps. While last year’s success was wild - commerce grew at 44% in the US last year according to eMarketer, the early returns on the first year-over-year period since the pandemic are mild, with Salesforce claiming 3% digital commerce growth in 2021 Q2.

With the constant pressure for positive comps, retailers that rode last year’s wave all the way into shore are still waiting for the next curl to form. So, what will it take to revisit the go-go digital days of 2020?

Deconstructing 2020’s growth reveals a critical insight. Per the Customer Lifecycle Benchmark brands grew 43%, the product of a 38% increase in active customers, and 4% increase in active customer value.

This means that most of brand growth - 91% in fact - was driven by a bigger active shopper audience. Digital became the destination, and more shoppers crowded in. The average spend per active customer ticket up only nominally, accounting for only 9% of growth. Putting it together, brands achieved massive growth in 2020 thanks to a focus on attracting new (and, in fairness, activating lapsed) customers.

And it worked then. But, now what? For many, it's time to dust off the gospel of customer value.

If 2020 was the year to attract and convert new shoppers, 2021 is the time to get to know and grow those relationships.

Deepening those relationships is a direct line to brand value growth. Instead of massive acquisition cost outlays, investments in conversion and retention are required to sustain growth. This also means a newfound appreciation for customer lifetime value. Or, more simply, annual customer value -- how much a customer spends in total with you over the past 12 months. Either way, a myopic focus on top of the funnel channels is an expensive trip that likely won’t carry you as far as you need to grow. Instead, a commitment towards retention and engagement of your known shoppers, is the new foundation to build on your 2020 success.

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