Customers are defecting because of irrelevant offers
Know you customers or they'll forget all about you
There is a growing gap between the offers that brands send, and what their customers actually want, according to offer optimization platform provider Formation, following the publication of a Forrester study entitled 'The State Of Offer Relevancy 2021'.
The study found that nearly 70% of consumers do not think the offers they receive are relevant, which means brands are at risk of losing revenue and customers at a time when consumer spending is surging, because half of US customers have left brands if competitors better met their needs.
The bar for relevance and value dramatically rose with the acceleration of digital commerce experiences consumers had during COVID-19. This has intensified the need for greater relevance as companies re-engage customers and re-establish relationships in both online and offline channels.
The research shows that while there is great opportunity for brands, many are falling behind in creating relevancy for their customers:
- 92% of companies believe the offers they send are relevant, but only 33% of offers are considered relevant by consumers
- Just 5% of consumers say email offers are well-timed to their needs
- 83% of consumers say they will buy from brands that send relevant offers
"We as retailers and brands must build capabilities, journeys, and offers that put the people we're serving at our center through a deep and empathic understanding of what they value and need." Justin Weinstein, Sr. Director of Customer Experience, Giant Eagle.
Business-to-consumer (B2C) companies are entering an era when acquisition costs are increasing due to data privacy laws, cookie deprecation, and the removal of IDFA. This makes first-party data strategies even more critical for brands, as it enables them to create deeper customer engagement, and ultimately grow customer lifetime valueto offset the growing acquisition costs. However, it's clear that many brands are falling behind in how they use first-party data to create relevant offers & loyalty programs.
According to Christian Selchau-Hansen, CEO of Formation.ai, "the world of loyalty is fundamentally changing, and companies that don't improve how they engage with current customers will lose market share and, ultimately, revenue. This is precisely why it is critical for brands to improve the relevancy of their offers, enabling them to capitalize on the surge of consumer purchasing that is coming as the world re-opens for business."
Dynamic Offer Optimization
Optimized offers and loyalty represent the next frontier for business growth, the company suggests, and smart brand owners will start to leverage technology to sustain and accelerate post-pandemic growth through customer engagement.
In fact, 71% of brands say they plan to invest in offer optimization technology moving forward, in order to quickly create tailored offers for customers that will drive deeper engagement.
Brands must have a renewed focus on what matters most to customers and implement technology tools to keep pace with rapidly evolving consumer expectations and to leverage automation to achieve greater operational efficiency, drive increased sales and enhance customer satisfaction.
Sources: Formation; Forrester Consulting / The Marketing Factbook.
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