At Vend, we often talk about how one of our biggest jobs is to democratise the best behaviour, techniques and strategies in retail. That means we learn from the best of our retailers how to do retail well (you are the experts after all). And from there, we become experts ourselves and then we figure out how to change our product so that all of Vend’s customers start to look more like the best of our retailers. A rising standard for all of retail on Vend.
We don’t often do what I am about to do: share how we decide what to work on, why and how that decision turned out for us. But I think it’s important that we start to do this a bit more, because we want you to understandhow much we care about retail, and how much we believe that our product development can help you become a better retailer without you even knowing it.
In October of 2018 I wrote a strategy paper for Vend called “Customer Retention”. The executive summary follows:
Improving customer retention is one of the best ways that retailers can increase their profitability. Repeat customers don’t come with acquisition costs, and they spend more money. This is even more pronounced when they’re part of a loyalty programme because they are more likely to pay higher prices for the same products as non-members. Many retailers opt to implement loyalty programmes to increase retention, but just having a loyalty programme is not enough. Customers who don’t redeem their rewards are more likely to not return than those who do redeem their rewards, so retailers need to know if their customers are redeeming their rewards, or offers, to determine if their retention strategies are successful or not.
There are four milestones that build on each other to enable retailers to improve their customer retention:
1. Help retailers attach customers to salesWendzich, L (2018). Customer Retention. Auckland: Vend.
2. Help retailers contact drifting customers
3. Help retailers react to at-risk customers
4. Help retailers understand if their retention strategies are working
It’s a long paper, and I’m obviously not going to quote it all here, but I’d like to draw out one more paragraph:
At-risk analysis is key to continually improve a businesses’ profitability, but this analysis requires information.
Vend retailers have low attachment rates. The median attachment rate is currently around 7.5%. In their analysis, Stitch Labs found that 11.6% of customers are repeat customers; about 1 in 10 customers. While Accenture suggests that 24% of all customers are active loyalty members, and that 36% of transactions are with loyalty members. Combine this with the fact that the upper percentile of Vend retailers see attachment rates closer to 70%, and it becomes clear that Vend retailers, on the whole, are not attaching customers at industry-best rates.Wendzich, L (2018). Customer Retention. Auckland: Vend.
Baking retail best practices into product design
One of the goals in the paper we set for ourselves was to raise our median attachment rate from 7.5% to 10%.
We reached that goal early December of 2018. Over time, we’d been improving our Sell screen and our median attachment rate had grown to 16.5% in March 2020. In March 2020 a pandemic raced across the world. It became clear that retailers were going to have to close their doors and they would have to rely on communicating with their customers digitally. If they didn’t know who their customers were, or how to contact them, then they would be stranded during lockdown.
One of the things COVID-19 has done in the world is accelerated trends that were already in progress. Especially around digital transformation. Customer attachment was one of these trends. We had a number of ideas that we wanted to deploy in 2018 but most of our retailers were not ready for them (or we weren’t ready to convince most of our retailers that these changes were good for them!) But in March 2020 everything changed. We immediately pulled those ideas back out of the drawer (7 different tweaks and initiatives on the Sell screen to increase customer attachment) and initiated other projects that would help retailers stay in contact with their customer base (like deepening our partnership with Marsello and building out a Mailchimp integration.)
Almost overnight, after releasing these changes, the customer attachment rate skyrocketed up to 64% during the week of March 30, peaking at 71% during the week of 6 April before settling around 60%. That means half of Vend retailers attach a customer to 3 out of every 5 sales they make.
That means more than half of Vend retailers look like the best-performing (in terms of this metric) retailers in October 2018. That also means over half of our retailers are better set up to improve their customer retention because they (a) know who their customers are and (b) can contact them.
This is a fantastic result for you, our retailers, but this doesn’t end there. Vend has partnered with Marsello to help you (c) react to at-risk customers and (d) understand if their retention strategies are working.
To quote from that paper again, slightly updated for 2020: “Using Vend and Marsello, hand in hand, is one of the best ways Vend customers can improve their profitability.”
The bottom line
Why am I sharing all this? Aside from me encouraging you to use Marsello to boost your profitability, I also wanted to highlight the fact that we’re serious about helping you create a remarkable retail life.
With Vend, you’re not just getting a POS system that lets you ring up sales. You’re getting a solution that was designed with your success in mind.
About Ludwig Wendzich
Ludwig is the Director of Product Design at Vend by Lightspeed. He’s been leading Product and Design at Vend since 2016. Before Vend, he worked as a Senior Front-End Engineer at Apple’s Marcom team in California.