eGrocery Performance Benchmarking 2023 – Key Metrics Analysis
Navigating the Challenges of Customer Retention
Regional grocers face unique challenges in a post-COVID market. The eGrocery Performance Benchmarking 2023 report, conducted by Brick Meets Click and sponsored by Mercatus, offers a comprehensive analysis of these challenges. Focusing on U.S. regional grocers’ first-party e-commerce sites, this report is an invaluable resource for understanding and navigating the new eGrocery landscape.This comprehensive study, encompassing 25 U.S. grocery banners, reveals a 13.5% drop in same-store sales compared to the previous year, with a notable decrease of 19.8% in active customer numbers.
Interestingly, the report reveals that the decline in sales isn’t due to existing customers buying less; in fact, active customers are ordering more frequently and spending more per order. The real issue lies in the decline in the number of active customers.
Understanding the Dynamics of Customer Engagement
The benchmarking report stresses the pivotal role of technology in enhancing customer retention. From personalized shopping experiences to digital promotions, technology is a key driver in boosting customer engagement. The use of recommendation engines and targeted marketing campaigns can significantly improve average order values (AOVs) and encourage repeat purchases.
What is the role of technology in customer engagement? The report finds that technology is not just a tool but a strategic asset. From personalized shopping experiences, digital promotions, to the use of recommendation engines, technology can be instrumental in improving average order values and encouraging repeat purchases. The Performance Benchmarking Report reveals that the top performers engage customers digitally to increase their lifetime value.
Customer Retention Strategies
The report underscores the crucial role of customer retention, now a primary game for regional grocers. With a notable shift in customer behavior, regional grocers must allocate more resources to engage existing customers effectively. The report suggests a range of tactics including improved pickup and delivery options, leveraging technology for personalization, and enhancing the last mile of the user experience to reduce wait times and improve order accuracy.
The Cost of Losing a Customer
One of the report’s most compelling findings is the high cost of customer attrition. It takes approximately 2.5 to 3.5 new customers to replace the value lost from a single long-term customer. This statistic alone underscores the importance of not just attracting new customers, but more crucially, keeping existing ones engaged.
There is a significant value that long-standing customers bring with their higher average order values (AOVs) and more frequent orders compared to newer customers.
Pricing Strategies and Their Impact
A key finding from the report was the variation in pricing strategies across first-party and third-party platforms. It highlights a trend of price parity between third-party platforms like Instacart and first-party platforms, versus a noticeable markup in others. This analysis provides regional grocers with actionable insights to revisit and optimize their online pricing philosophies, balancing the need for profitability with competitive pricing.
Once Again: Retention
The report highlights the high cost to losing customers. For instance, replacing a long-term customer requires between 2.5 to 3.5 new customers. Brick Meets Click suggests that only 30% of new customers will age to a comparable level of the one customer lost. Therefore, the value of maintaining customer loyalty is more important than ever.
eGrocery Performance Benchmarking 2023 Final Recommendations
Focus on Retention Over Acquisition
- Prioritize keeping existing customers over acquiring new ones.
- Develop loyalty programs to enhance customer retention.
Leverage Technology for Personalization
- Implement recommendation engines and digital promotions.
- Use customer data to offer personalized shopping experiences.
Optimize Pickup and Delivery Options
- Ensure efficient and flexible pickup and delivery services.
- Reduce wait times and improve order accuracy.
Enhance the Last Mile of User Experience
- Focus on the delivery phase to ensure customer satisfaction.Re
- Offer better fill rates and acceptable substitutions for out-of-stock items.
Implement Subscriptions or Memberships
- Encourage repeat purchases through subscription models.
- Offer incentives for frequent orders to boost customer loyalty.
Revisit Online Pricing Strategies
- Analyze and adjust pricing parity between first-party and third-party platforms.
- Balance profitability with competitive pricing to attract and retain customers.
Invest in Digital Engagement Tools
- Utilize targeted marketing campaigns to improve average order values.
- Engage customers digitally to increase their lifetime value.
Monitor and Adapt to Market Changes
- Stay informed about market trends and customer preferences.
- Continuously adapt strategies to meet evolving customer needs.
Use Data-Driven Decision Making
- Rely on insights from performance benchmarking to guide strategies.
- Regularly analyze customer data to refine tactics.
Build a Strong Online Presence
- Invest in a user-friendly, engaging e-commerce platform.
- Ensure your online presence resonates with your brand and customer expectations.
The eGrocery Performance Benchmarking 2023 report is more than just data; it’s a foundation for strategic decision-making in a rapidly changing market. For regional grocers, this report serves as a compass to navigate the complex eGrocery market, offering insights to improve retention, engagement, optimize pricing strategies, and enhance the overall customer experience.
If you are a grocery retailer, sign up here to access the full report and the wealth of data-backed insights to improve your strategy from Brick Meets Click and Mercatus.