Estimates from eMarketer suggest holiday e-commerce sales will rise 11.3% this year to roughly $207 billion, but mobile commerce brands will have to fight harder than ever to get their share in our first-ever post-IDFA holiday shopping season. For many, retaining existing users is going to be key to mobile commerce success in the 2021 holiday season.
App user retention makes good business sense — and always has. User acquisition (UA) can be expensive, and marketers are increasingly aware that it pays to maintain those users. For instance, acquiring a new e-commerce customer is anywhere from five to 25 times more expensive than retaining an existing one.
Moreover, existing customers are worth more. Research from Frederick Reichheld of Bain & Company suggests that increasing customer retention rates by 5% increases profits by 25% to 95%. Now that UA is even more challenging thanks to iOS 14’s changes to user privacy and attribution data — not to mention upcoming changes to email tracking starting with iOS 15 — focusing on retention has become even more crucial. As efficiently acquiring new users gets harder, inspiring loyalty is key to every app’s success.
Data from Adjust’s App Trends report finds relatively high retention for e-commerce apps compared to other verticals — with a retention rate of 13% on day 7 and 8% on day 30. However, when we consider that the global median eCPI (Effective Cost Per Install) for an e-commerce app in Q4 2020 was $1.56, with even higher prices in more developed e-commerce markets like the U.S. (a median of $2.87 per install), you can see why getting a return on that investment is so important.
For developers in APAC, the figure decreased to $1.45, in EMEA it’s slightly higher at $1.57 and in the U.S. prices are significantly higher, with a median of $2.87 per install. To ensure you earn the most from that initial install cost, you need to focus on retention.
Monetization is relatively straightforward for e-commerce, as users typically engage with these apps for the purpose of making purchases. With less deterministic data to evaluate channels on iOS 15, and less precise targeting to find shoppers interested in your offering, the initial costs to find high-quality, high-conversion users are increasing. This is combined with a reduced ability to offer relevant, personalized ads.
Ways to increase loyalty ahead of the holiday shopping season
Contextual advertising is one way advertisers are dealing with the dearth of data. By tailoring ads based on the “context” of a user’s experiences online, as opposed to a specific set of personal characteristics, consumer data becomes less critical. While it’s key for marketers to try out approaches such as contextual advertising, there is another way to gain powerful consumer data: earning it from your existing users.
Personalization is a powerful tool in modern commerce, with 91% of consumers more likely to shop with a brand if they provide personalized offers and recommendations. Finding users who have opted in to receive personalized ads is increasingly difficult, however, so marketers need to get creative to find and retain quality users.
Offering loyalty programs is one way to ensure you’re using customers’ zero-party data and avoiding privacy concerns. By compelling users to fill out surveys for incentives, or offering targeted discounts for certain user behaviors, you can build a bank of data that customers are enthusiastically opting-in to share.
What is zero-party data?
Forrester coined the term zero-party data and defines it as “Data that a customer intentionally and proactively shares with a brand, which can include preference center data, purchase intentions, personal context, and how the individual wants the brand to recognize her.”
Zero-party data is among the most valuable user information available. Because it is sourced directly from the user, it’s dependable, and you can be certain that a customer wants to hear from you. Users who are giving zero-party data also expect the value exchange to result in a more personalized experience, so they’re willing to help you provide them with more relevant opportunities to convert.
For email marketers, this will become particularly important on iOS 15, as tracking pixels will no longer be allowed in the Apple Mail app. While tracking pixels will still be possible for users of GMail or other email clients installed on iOS 15, it’s important to keep in mind that 37% of all mobile users open their mail in the Mail app — a number that could be significantly higher among iOS users.
New challenges and increased importance of email marketing
Some 60% of the average email list is inactive or dead, and without a way to check open rates, there’s no way to weed out users that have dropped off. By creating a double opt-in in the initial sign-up — such as an additional email confirmation link upon sign-up — you can ensure you’re getting users who are willing to make at least that first initial investment of attention.
There are some key ways to do this.
Five tips to increase your email opt-in rates
- Offer a coupon or discount. For example, beauty brand Bliss offers a 20% discount toward a subscriber’s first order when they opt-in to receive emails. If this doesn’t work for your app, try offering some other form of value, such as premium content or in-app credits, to show the user you value their attention.
- Ask with a pop-up or in-app message. Make sure to use an attractive design that fits your app’s branding, collect minimal information, provide a clear exit button, and only ask once to avoid annoying users.
- Test and iterate to improve. Aswith any other UX decision, experimenting with different creatives and A/B testing to find what works can help optimize your conversion rate. Try different call to action (CTA) formats, such as banners, copy-heavy landing pages, and more.
- Time it right. In addition to creatives, test to find the best timing to make the ask. Launching a pop-up right after install may lead to a user to instantly opt-out, but the same user may be more willing to receive emails once you’ve demonstrated the value of your app.
- Use clear and compelling copy. Let your users know the value they will receive from your emails. Will they get the latest news, valuable tips, or special coupons and deals? Give them a reason to say yes.
Learning about your customers
Keeping users in-app through loyalty tactics works across verticals — with non-gaming apps deploying gamification tactics and gaming apps deploying loyalty tiers and bonuses more often seen in the airline industry. Casino apps are particularly adept at using loyalty tactics to increase retention, but e-commerce apps are well-positioned to use these tactics to win over holiday shoppers.
While relying on IDFA as a dependable omnichannel identifier is no longer a reliable option, marketers will still have access to the Identifier for Vendor (IDFV), as well as any other first-party identifiers to attribute events and behaviors to customers. The IDFV gives companies an identifier to access first-party user data and provides an opportunity to understand the audiences within apps they own
Potentially any event can trigger a loyalty benefit, and deciding which behaviors to incentivize should be part of your loyalty strategy I mentioned earlier. Loyalty programs have the benefit of intuitively explaining to customers what they get out of certain actions. There’s a clear outcome, and often a dollar amount, that is paired with taking an action. Users are willing to create accounts to benefit from loyalty incentives, and they also clearly see the benefit of personalization in the loyalty environment.
With an ever-increasing focus on privacy, combining zero- and first-party data to offer a personalized customer experience this holiday season is the most effective way to improve user retention, without risking their data.