2022 was a confusing year. On top of existing issues ecommerce merchants were facing in the wake of the pandemic, there was also record-high inflation, layoffs, and talks of recession.
This turbulence in the global economy translated to a shift in consumer behavioral trends. Shoppers were (and, in many cases, still are) operating from a sense of fear in the ambiguous economy, placing value at the forefront. At the same time, the cost of customer acquisition continues to rise with increasing competition and stricter privacy laws.
So, what does this mean for the next 12 months? And what will be the emerging ecommerce trends in 2023?
We uncover all these questions with five significant predictions for 2023:
- Customer acquisition costs will remain high—2023 is the year for retention
- Building customer loyalty is non-negotiable
- Influencer marketing is on the rise
- Create subscription-based models to increase retention
- Understand your customer behavior for exponential growth
#1: Ecommerce CAC is Brutal; Retention is Key
A 2022 study shows a 60% increase in customer acquisition costs from 2017 to 2022. Today, ecommerce brands lose an average of $29 for every new customer acquired. The only sustainable way to combat this rising CAC is to lean into customer retention. But making almost $30 extra per new customer—upfront—is an uphill climb if you’re already struggling with low customer retention.
The answer lies in tightening up your retention strategies:
- Personalize the customer experience
- Build customer loyalty programs
- Introduce gamification to the buying process
- Provide stellar customer support
- Create nurturing email campaigns
- Offer subscription programs
Peel makes it a breeze to personalize the customer experience with its Audiences feature. Create different lists based on the number of purchases in a particular time frame, and create different email copies for customers that haven’t come back in the past 3-4 months. With Audiences, you can go as specific as you want to offer the most personalized customer experience.
#2: Building Customer Loyalty is Essential
Customer retention only happens when a customer has a sense of loyalty to your brand. In other words, to retain customers, you need to build customer loyalty and make it rewarding for your customers to return to you.
This is where customer loyalty programs come into play. For example, The Collagen Co saw more than 50% of customers returning for repeat orders with their loyalty program and SMS marketing. Not just that, there was also a 70% increase in the average order value (AOV) of the loyalty members.
Note that loyalty programs are just a piece of the bigger picture. You need to gear your entire marketing strategy towards customer loyalty and connection with your brand, which you can do through reward programs, personalized pricing tiers, and product recommendations.
You can find your loyal customers with the help of Peel’s Audiences. Just narrow down your search with the number of repeat orders or specific discount codes. Use these lists with your preferred SMS and email marketing apps to keep these customers in the loop. What’s more, you can use the data of loyal customers to measure what’s working and not.
#3: Influencer Marketing Will Only Grow
As paid advertising gets increasingly costly (and less effective), influencer marketing is paving the way for brands to reach a wider audience. From 2016 to 2022, the influencer marketing industry has grown almost 1000% – from $1.7 billion to $16.4 billion.
The growing numbers prove the success of influencers and how ecommerce brands can take advantage of it. Influencer marketing is established around one single factor: trust. An influencer that has the same target audience as you with a decent engagement rate can not only get you initial sales but also help you with building customer loyalty in the long run. The reason: you leverage the existing trust in the influencer-audience relationship and extend it towards your brand.
If you have a smaller budget, start vetting and reaching out to the influencers personally. As your brand grows, you can invest in apps like Afluencer and ReferralCandy to keep the engine running.
The only problem with influencer marketing is the struggle in measuring the ROI. But with Peel, you can segment your customer data by discount codes used and track the results to see which influencers are bringing in the most revenue.
#4: Subscription Business Models Will Continue Winning
2023 is the year of the subscription business model—they are, after all, a great way to promote customer retention and keep customers coming back month after month. Valued at $96 billion in 2022, the market size is expected to grow to more than $2000 billion by 2028.
It makes sense too; the subscription model is a win-win for both customers and brands. Customers save time and money, and businesses get recurring customers with a high lifetime value.
Even if you have a niche product, you can find a way to package your product as a subscription. For example, Jill & Ally is a niche lifestyle store that believed subscriptions might be costly to integrate. However, they launched subscriptions for candles and saw a 51% increase in CLTV in just three months. Not just that, the customer return rate doubled by offering subscriptions.
But once you have your subscription boxes, how do you convert one-time purchasers to subscribers?
With Peel, you can track the behavior metrics of one-time purchasers that convert into subscribers. You can get as specific as the product that converted them and how it relates to their past purchase history. Peel also integrates with the top subscription platforms like Bold Subscriptions and Recharge, Smartrr, Awtomic, Retextion, Rodeo, to name a few. With one click, you can integrate the data from the platforms with your Peel account and analyze the subscription performance.
#5: Understanding Your Customer Behavior Unlocks Growth
All these 2023 ecommerce trends point towards understanding your customers. You already have a lot of customer data—even in the absence of third-party cookies—so now it’s time to use it. In 2023 and beyond, you’ll need a system to analyze the data you have at your fingertips.
With Peel’s powerful dashboards, you can spot the behavioral trends of your customers based on their purchases, when they buy, and how they purchase. For example, if you have a clothing brand and notice that customers buying a particular t-shirt go on to buy complementary trousers for their second purchase, you can create your nurturing campaign around this information. You basically want your customers to go, “How did this brand know exactly what I wanted?!”
Such connections with customers can only form when you leverage data and see what’s working for your store and your customers. You want to meet them right at the moment they start looking for you—and you can understand that with data.
Peel helps you unlock the potential of customer data and increase customer retention as a result. Start a free trial here.