Market Movers The initial impact of the pandemic is over so what's next for brands and retailers - here is an analyst perspective.

Customer Retention and Marketing Strategy in 2020 - An Analyst Perspective

In a recent Annex Cloud Market Movers video discussion, Jeff Herrera, CMO at Annex Cloud talks with industry analyst Emily Collins, Interim Research Director at Forrester, to gauge what brands and retailers are doing now after the initial shock of the pandemic, the importance of customer retention, prioritizing marketing investments, and highlighting various considerations for non-essential brands to effectively compete and win in this very volatile and uncertain economic environment.

Forrester is projecting declining spend in marketing technologies, on media and on headcount throughout 2021. Some companies are actively exploring “Buy Now Pay Later” options. Nordstrom, for example, is offering $25 for every gift card purchase right now to spend on future purchases. Alternatively, brick and mortar companies are thinking about introducing curbside pickup. Starbucks for instance is looking to close down 400 retail locations and replace them with 300 pick-up only stores.

Companies need to have a laser focused approach on customer retention despite the slow economic downturn. Research has shown that brands who continue to market during an economic downturn come out better and grow faster. Mackenzie-Childs, a fully integrated designer, manufacturer, and multichannel merchant of high-quality, handcrafted ceramic and enamel tableware, furniture, and home and garden accessories, recently said,

“If we had to cut down to 2-3 services that we pay for, loyalty would be the one that we would keep.” -- Larry Shaw, CMO at McKenzie-Childs

Omni-channel companies are also altering customer retention strategies to account for the fact that customers may not be comfortable going to a mall for the foreseeable future. For example, Ulta, which has an Ultimate Beauty Program, saw lower overall sales volume in Q1, but their e-commerce sales more than doubled. They are introducing services like curbside pickup and augmented reality as a substitute for that in-store try-on experience.

Key Takeaways

• Brands and retailers reacted to the initial shock of the pandemic by pulling back on a lot of performance marketing and media spend but must now prioritize their investments and continue marketing to their customers
• Customer retention should be a top priority
• Forrester is projecting a 28% drop in U.S marketing spend by the end of 2021
• Brands are now being creative in their marketing strategies by thinking of different ways of delivering value instead of just discounting
• Successful brands and retailers are putting more emphasis on customer loyalty
• Engaging with customers and delivering high perceived value will help maintain business continuity and growth coming out of the pandemic
• In such times of high unemployment rates and economic uncertainty, customers are cautious about spending. Non-essential brands need to provide emotional reassurance, empathy and appreciation for their current economic situation.
• Utilizing social media for brands should be more about listening rather than talking. Social nowadays is about building community based relationships and learning what customers are saying about things that are important to them. Brands and retailers can significantly benefit by reading customer reviews, seeing customer videos and pictures that get posted, and being an active participant is social media. This is an excellent channel to build more meaningful and trustworthy relationships with customers.