An often-overlooked opportunity for companies selling large ticket products through a dealership distribution model lies in strategic initiatives to track and nurture customer repurchases — those that lead to an increased lifetime value. Many OEMs hold a myopic new customer acquisition focus that too often supersedes strategic initiatives to maintain sight into the customers’ post-purchase behaviors.
However, leveraging insights from a repurchase analysis can transform your marketing strategy and enhance customer loyalty—and generate incremental value of an existing customer.
Retaining existing customers is significantly more cost-effective than acquiring new ones. According to the Harvard Business Review, research done by Frederick Reichheld of Bain & Company found that increasing customer retention rates by 5% increases profits by 25% to 95%.
Have you ever seen Jeep Wrangler drivers offer each other a two-finger wave? The iconic Jeep has fueled more than brand loyalty amongst its customers. It inspires brand ambassadors and a comradery that creates its own brand affinity events, like Jeep Jamborees. To be a Jeep owner means something to them—it says something about who they are. If Jeep neglected to understand its customer’s post-purchase behavior after first purchase, it would lose sight of the richness of how customers identify with the brand and opportunities to nurture that.
Engaging customers post-purchase creates a strong emotional bond with the brand, leading to repeat purchases and long-term loyalty. Loyal customers not only provide consistent revenue but also act as brand ambassadors, recommending your products to others.
How to Shift Focus to Customer Lifetime Value and Repurchase
Get organizational buy-in for a dedicated customer repurchase strategy
It is essential to get an early understanding of sentiments, perspectives, and needs around a customer repurchase focus within the manufacturing business. When internal systems have been designed to attract and convert new customers, varying teams will need clarity on how this work will impact their processes in progress. If your sales team or dealers are used to getting a high number of marketing qualified leads for first time customers, they will need an early understanding of how shifting resources to understand activities that target customers after the purchase might impact lead volume — not that you will do a full shift away from new customer acquisition.
At this stage, it is vital to listen and be transparent, freely sharing information about how this process will move throughout the organization. Lay out the steps you’re taking to build a customer repurchase strategy and describe the milestones where you will present early findings or seek their input. The risk of not getting early buy-in is that you could build a program that goes sideways with later-stage inputs. And it’s important to get the voice of the customer from every stage in the journey, and your internal partners likely represent different parts of the overall customer story.
To launch a successful strategy focused on CLV, you will need to unlock access to customer data across the organization that may have historically been siloed. You will need inputs from dealer service departments, from OEM customer service, from your e-commerce teams, and consumer finance. When you open the dialogue early, you demonstrate a commitment to building trust with these stakeholders who might feel significant impacts to their established goals. Include them early will build efficiency down the road.
Identify required resources to analyze the CLV of your customers
Before you dive into customer data, determine what resources are needed to kick off and sustain the rigor required to know and improve your product repurchase. From budget to roles, mapping out your needs first will set up the initiative for success. Here are the resources to consider and identify:
Roles: Only a few key roles are needed at this early stage of strategy development. Ideally, you will have a project lead who will shepherd the strategy project every step of the way. An internal executive project sponsor can help to clear the way around potential roadblocks and detours internally. You might need to enlist a team member who can liaise with external partners that may be impacted by the strategy or may be suited to contribute inputs and data. And you need dedicated resources to extract, model, and analyze customer data — if you don’t have internal team members to conduct the analysis, here is where an outside partner can expand your bench.
Budget: Determine how much time and financial resources your organization is willing to invest to gain clarity in your customers’ post-purchase behaviors. A common first step is a customer repurchase analysis, which will inform where to invest longer-term. There may also be a testing phase of your repurchasing program roll-out, giving the opportunity to de-risk the investment and start to see indicators of return before full commitment.
Technology: You will need to assess if you have the right technology to extract and analyze essential customer data. Is your current customer relationship management (CRM) system capturing an end-to-end view of purchasing behavior within your product lineup? What data does your manufacturing enterprise resource planning (ERP) system have to complete the picture? And where will you need to manually request data from your dealers to create the full picture — particularly when their systems don’t connect natively to yours?
Ask the right questions to learn more about the customer’s journey
The output of a customer repurchase strategy will only be as good as the questions that influence the input. Anchor your team in how you define your Ideal Customer Profile (ICP) and ask questions of them and the data to learn about customer behaviors within the brand ecosystem. Here are some questions to consider:
- How many customers are currently buying multiple products from us?
- What is the average duration between purchases?
- How quickly does the likelihood of a repeat purchase decrease as time from the last purchase increases?
- Are there natural sequences of purchases? Keeping with Jeep, are customers who first buy a standard Wrangler likely to buy a Wrangler 4xe next? How about a Wagoneer? And what are the most common post-purchase modifications and additions for a first-time Wrangler owner?
- How do positive or negative experiences with the brand, its products, and customer service/support affect repurchase likelihood?
The development of these questions will inform what baseline data you need to capture and, eventually, the metrics you will use to define success.
Determine the data you will need to get clear line of sight into your customers’ post-purchase behaviors
By asking the right questions first, you will quickly see what data you need to obtain meaningful answers. Consider the following data points along the customer’s repurchase path and identify which you can currently access:
- Warranty registrations
- Social media owner group engagement
- Transaction email
- Email marketing engagement
- Dealer lead delivery
- Point of purchase
- Financing
- Customer satisfaction programs
- Loyalty event attendance
- Incremental accessory purchases
Even if you don’t have a full view into all the touchpoints, create a wish list that can help to mature your understanding of customer loyalty and retention. Even one post-purchase milestone, such as warranty registrations, can fuel an insightful repeat customer analysis. Don’t allow perfection to get in the way of progress. Pick a starting point and commit to long-term improvements.
Conduct a thorough repeat customer analysis
Once you know which data signals a repurchase, you will need to organize the data across all of your products. You will want to look at current, discontinued, and acquired products that live within your brand ecosystem. Accessing the data and analyzing the data are two very different things and require different skills. A good first step to assess if you have all the necessary data is to go through thorough data modeling.
To properly answer the key questions you posed, you need the right dedicated resources capable of developing your data analysis approach—how to extract, organize, compare, and illustrate the data. Determine what compelling stories exist within your customers’ post-purchase behaviors and how you are going to report your findings back to your stakeholders.
Your audience will likely have different levels of data literacy, so it will be important to craft a report that accommodates your varying key stakeholders. How you report the analysis back into the organization will require visual reporting to illustrate the correlative relationships between your data points and the customer’s repurchase path. Marketing may be uniquely qualified to lead this aspect of the project because of its role in targeted communications to your ICP. They can position the repeat customer analysis in the full customer journey and in ways that speak directly to the organizations’ overall messaging strategy. And you may want to enlist an outside partner with repeat customer analysis experience.
Make decisions on which plays to make in a customer repurchase strategy
Now that you’ve broken down silos around your customer lifetime value, you are primed to establish customer satisfaction goals and programs to reach those goals. Knowing the duration between purchases or the sequences of purchases you can engineer testing and ways to improve your systems far more efficiently than you can on attracting new customers.
You have insight into what it will take to retain customers and the ability to communicate directly to them with personalized messages. Tailored communications and offers demonstrate that you understand and anticipate your customers’ needs.
Decide what moves the business wants to make and intends to win in its customer repurchase strategy, with things like:
- Loyalty program
- Personalization
- Exclusive access and offers
- Enhanced customer service
Craft a marketing plan to achieve the defined strategic business and marketing goals
An effective marketing plan maps out the operations necessary to achieve our strategic objectives. Planning is the act of laying out activities and tasks, with timelines, budgets, deliverables, owners, responsibilities, and outcomes that achieve the strategy.
- A marketing plan with repurchase-focused considerations must include:
- Prioritized activities and marketing operations clearly tied to customer lifetime value marketing objectives
- Sequencing and timing of activities that address the key moments where customers are in consideration of a repurchase decision
- Documented application of resources for marketing activities (people, budgets, assets). For example, which data modeling tools will be used to visualize your customers’ repurchase paths?
- Owners and key responsibilities. Who will be responsible for ongoing data collection and analysis?
- Expected and/or forecasted results. Based on the repurchase paths identified, what impacts can the business expect to see from marketing? Will there be incremental revenue shifts in the first year of a program? Or the third year based on what you know about your customers buying and re-buying cycle?
The more sophisticated your marketing plan becomes, you will need to consider risks, contingencies, and considerations outlined for each activity and for the plan overall.
Don’t Miss the Customer Lifetime Value Opportunity
To achieve your customer repurchase strategy, you will need exceptional customer service and a commitment to win across the entire organization. The increased focus on customers’ post-purchase behaviors may necessitate change management and careful internal communications.
If you’re an OEM with very little post-purchase marketing activity today and want to get line of sight into the CLV of your customers, get started with a thorough customer repurchase analysis.
