FOCUSING ON THE RIGHT PROBLEM

• Grow business by focusing on better retaining new shoppers

The other day I was meeting with a very large regional retailer and talking about digital marketing and strategies for growing the business. At the table were several executives, all with years of experience, and one with both retail and an extensive CPG brand marketing background.

The meeting evolved into a brainstorming session, with different people putting forth ideas around how to leverage new technology innovation into shopper engagement. Some interesting ideas percolated up, such as establishing relationships with other (non-competing) retailers and cross-marketing to shoppers. One executive in particular was focused on getting more new shoppers to come into their stores.

I have heard this refrain countless times over the years; retailers around the world assuming that to grow their business they need more new shoppers. And yet in nearly every case, retailers around the world are focused on the wrong problem. Rather than spending vast financial resources to get more new shoppers coming to their stores, retailers should instead be focused on keeping the new shoppers they already have.

Inevitably, any retail store has some inflow of new shoppers coming into their store every week. And, half of those new shoppers will never be seen again, coming into the store only that once. Of those new shoppers, only 20-30% of them remain after three shopping trips. What if the retailer focused on improving the retention of the new people already coming into their stores, rather than continuously chasing after new shoppers?

We have seen different retailers have marked success here. One retailer instituted a process of having the store manager greet each new shopper, and providing them a small gift bag of signature baked goods along with information about the store (hours, payment types accepted, services, etc.). The result: instead of only retaining 25% of new shoppers after three trips, the retailer boosted this to 35%.

Now put some numbers to this. An average supermarket may easily have 100 new shoppers coming into it each week. Imagine you were able to retain 10 more of those shoppers. Assume the shopper spends $30 per week (one average transaction). That’s $300 per week (10 shoppers @ $30 basket) or $15,600 annually in increased sales. And now do this week after week. Hundreds of thousands of dollars in new revenue, all from focusing on better retaining new shoppers already coming in your doors.

Focusing on the Right Problem