• by Ray Schultz , Columnist, August 10, 2020

Email remains a useful retail prospecting tool during the COVID-19 pandemic despite a slight decline from last year, according to the 2020 Customer Loyalty Benchmark Report, a study by Retail Touchpoints, sponsored by Extole. 

Of the retailers polled, 65% use email to acquire customers -- second only to social networks, which come in at 83% usage. But email has declined from 69% in 2019 while social has grown from 74%. 

This is happening as both acquisition and retention budgets have taken hits during the COVID-19 pandemic. 

Last year, 9% reported they had decreased their customer acquisition spending, and 8% had reduced their retention spend.

This year, 26% have reduced their acquisition budget and 20% have reduced their retention allocation. 

In addition to email, 59% are deploying paid search and 55% are using organic search for acquisition. And 42% send mobile ads -- up from 3% in 2019. 

In another finding, 31% use email opens as a metric in defining customer lifetime value (CLV). 

But email opens are surpassed by the type of products purchased (48%), customer demographics (48%), average basket size (40%) and acquisition channels/method (35%). 

And despite social’s value in acquiring customers, social activity is used as a CLV metric by only 25%. And a mere 18% use mobile app download/usage.

Logic suggests that email clicks and conversions are a stronger indicator of CLV than open rates. But retailers seem to have bigger problems on their minds. 

Retail Touchpoints surveyed 109 senior retail executives in June and July. 

It found that COVID-19 has affected the ability to attract new customers in these ways:

• Gained new ecommerce customers — 68% 
• Gained new in-store customers — 32% 
• Store closures have hampered our ability to attract/engage new customers — 32%
• Gained more multi-channel customers — 20% 
• Difficulty attracting new customers because we lack curbside/contactless fulfillment — 18%
• No impact — 5% 

At the same time, retention has been affected by COVID-19 as follows:

• E-commerce customers making more frequent purchases—46%
• Difficulties retaining customers because our stores are closed—28% 
• Difficulties retaining customers due to out-of-stocks—27%
• Difficulties retaining customers due to fulfillment challenges—26%
• More customers have signed up for our loyalty program—21% 
• No impact—14% 
• More customers have signed up for our subscription offerings—9%
• Difficulties retaining customers because loyalty programs designed for in-store shopping rather than online—8% 

The biggest challenges in driving repeat purchases are: 

• Competition from lower-price competitors — 39%
• Long purchase cycles for products — 33%
• Insufficient outdated technology — 31% 
• Lack of customer information for retargeting — 23% 
• Losing subsequent sales to marketplaces like Amazon — 22%
• Insufficient budget for retargeting — 19%

Meanwhile, retailers have improved their ability to retain subscribers — 39% with subscription programs holding on to members for one year or more.   

Here are the benefits of subscription programs: 

• Recurring revenue source — 57%
• Subscribers are more loyal customers — 35% 
• Subscribers refer new customers at a higher rate than non-subscribers — 30%
• Scheduled engagement provides opportunities to sell additional products/services — 22% 
• Subscribers’ annual spend higher than non-subscribers — 13%