Melissa Coleman, vice president of customer success at Adjust
Digital Commerce 360 projects that holiday ecommerce sales will rise 10.5% this year to roughly $212.28 billion. And Shopify says consumers made 72% of their Black Friday purchases from mobile devices, increasing 67% last year. 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 will be critical to mobile commerce’s success in the 2021 holiday season.
Research from Frederick Reichheld of Bain & Co. 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 the 2021 ecommerce app report by Adjust with Insights from Sensor Tower shows increased retention for ecommerce apps in Q2 2021 compared to Q1 and 2020—with a retention rate of 26% on day 1, 17% on day 7, 14% for day 15, and 11% on day 30 (as of Q2 of 2021). However, as app markets grow, app marketers are faced with increased competition for user attention, often resulting in increased install prices.
The global median eCPI (effective cost per install), or the cost to acquire users, rose from $1.06 in Q1 of 2020 to $1.67 in Q1 of 2021. Q2 saw a more dramatic rise, with install costs rising from $1.31 in Q2 of 2020 to $2.42 in Q2 2021. You can see why getting a return on that investment is so important. To ensure you earn the most from the initial install cost, you need to focus on retention.
Monetization is relatively straightforward for ecommerce, as users typically engage with these apps to make 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
Contextual advertising is one way advertisers are dealing with the shortage of data. Consumer data becomes less critical if retailers tailor ads based on the “context” of a user’s experiences online instead of a specific set of personal characteristics. 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. However, finding users who have opted in to receive personalized ads is increasingly difficult, 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.
Zero in on zero-party data
Coined by Forrester, 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 sure that a customer wants to hear from you. Users who give 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.
This will become particularly important for email marketers 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 essential to keep in mind that 37% of all mobile users open their mail in the Mail app. This number could be significantly higher among iOS users.
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.
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 ecommerce 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. Deciding which behaviors to incentivize should be part of your loyalty strategy I mentioned earlier. Loyalty programs benefit from intuitively explaining to customers what they get out of specific actions. There’s a clear outcome, and often a dollar amount, paired with taking 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.
Adjust is a mobile marketing analytics platform.
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