Fit for the Future of Retail

We sat down recently with Abhishek Gupta, who is Chief Customer officer at CleverTap. And if you’re not familiar, CleverTap released a report called Fit for the Future of Retail and we have its updated version here; we’ve been poring through it. There’s tons and tons of great stuff that can inform marketing basically in all spectrums, in all corners of the spectrum, rather.

Below is a full transcript of the conversation.


TheCustomer:
I’m here with Abhishek Gupta, who is chief customer officer at CleverTap. And if you’re not familiar, CleverTap released a report called Fit for the Future of Retail and I have its updated version here; I’ve been poring through it.

There’s tons and tons of great stuff that I think can inform marketing basically in all spectrums, in all corners of the spectrum, rather. But first of all, Abhishek, thank you for joining me. Really appreciate it.

 

Abhishek:
Thank you, Mike.

 

TheCustomer:
So maybe first of all, for those who don’t know, can you describe what CleverTap is – what CleverTap does? And then I thought we’d just jump right into the report.

 

Abhishek:
Certainly. So, CleverTap is a retention cloud platform. What we mean by retention cloud is: we help brands, apps, websites, we help the brands deal with the problem of user retention. If you look at some of the, some of the studies that have been published, 90% of the users acquired by a brand. They leave them within the first 90 days.

But that’s a mass of users. And that is a problem that we are solving at CleverTap by building this purposeful software which we call this retention cloud, which is an industry first where we provide brands an ability to do. And it takes segmentation, engagement, orchestration on one single platform so that they’re able to engage with the right person in the right context with the right channel and in the right time.

 

TheCustomer:
Can you talk a little bit about some of the mechanics without getting too deep in the weeds, some of the mechanics of how CleverTap does that?

 

Abhishek:
Yeah. So what we do is we integrate with customer websites – we integrate with their applications. And what happens is all the actions that are being performed by the user, they come into the platform; and that data is entered by the brands to the first party database they carry in their system, which could be like the point of sale systems or any of the tools they have. When all of the data come together brands have the data about the consumer.

They know they’re able to create the right set of cohorts. They can even get down to the level of individualization which is a segment of one. They also have the real time context of the customer. And so because of that context, they are able to engage with these users in real time. So, let’s say in a retail example, if there’s a customer who comes – say it’s a new customer – let’s say you’re acquiring a user and the first thing that you would want to do is to be able to convert that user to a named user: a registration.

So being able to engage with that user in that moment around a specific use case, you are able to do it very seamlessly because we do all of this in one single platform.

 

TheCustomer:
Does that activity need to happen all within the platform? The real question to me is can that data and insight be then exported out to the brands, primary CDP and for further use, or does everything have to kind of live within the CleverTap ecosystem?

 

Abhishek:
So we allow free exchange of data because we do recognize that for us to be able to engage the customers, we do need to have data which is pertinent for the user, but then there is a nuance here, which is you can move the data from one system to another. Like you can have an analytics tool, you can have segmentation, you can do engagement; you can do something else.

But being able to engage– actually, if I take a step back: so technically the data can flow from one system to another, but what does not flow is the context of the user. Now, for example: if there is a user who is on an app and they are performing a certain action and you want to be able to engage them now being able to engage with them on a channel that they prefer, whether it’s email, whether it’s WhatsApp, SMS, push notification – now making the decision in an instance and being able to have that communication out while the customer is still on your property.

That cannot happen when you actually use disparate systems, the context is not there.

 

TheCustomer:
Sure, context is everything in that case. That’s really interesting. We’ll have links to CleverTap, and we’ll also have links to this report below this article. But if you don’t mind, let’s just jump right in because there’s, as I said, it’s fascinating stuff and you can get lost in this. That’s not to say that it’s not beautifully organized because it is; there’s just so much here. The report’s broken out into basically four different phases, I would call it: increasing user retention, customer engagement, increasing order transactions, and reducing churn. So maybe we’ll just kind of run through that flow here.

But I’m intrigued by a couple of things here. You say in this first section, 30% of new users create an account with a merchant within a week of installing that merchant’s app. I’ve heard similar statistics, maybe not that exact number, but something close to it that 61% of the top percent of the top 10% of new users create an account during that time – which to me says that that first week is a critical, it’s a critical moment, if you will, in the engagement process.

I’d like to hear more about how CleverTap addresses that and optimizes that.

 

Abhishek:
Yeah. So if you look at the way companies grow, right? If you’re a brand, you’re starting out. There’s a lot of focus on user acquisition. But as you basically grow, you have to focus on user retention because you realize that existing installed base and user base is much higher and you need to retain the user.

Let’s talk about that from an acquisition standpoint. To get users into the funnel, brands have to spend a disproportionate amount of money to get the users there. Now, once the users come to the product, they come to the app, they come to the website. You have to engage them in a very pertinent manner which is relevant to them.

And even in the first go, there is a lot of context which is available to the brands. Let’s say, for example, the location they are coming from, the source they’re coming from, and any other kind of behavior they may have exhibited when they actually kind of came out of the particular property. Now, at that point, actually, not just the first week, that moment, that first moment is perhaps the most crucial moment in the journey of that customer with the brand.

And you have to be able to engage with that user in that, with that specific context, and be able to convert them into a named user. And offer them something which is of value, which makes them believe that: yes, the need has been met. Now, what happens is that first interaction is not the only interaction – brands have an opportunity to engage with the users over a period of time by nudging them, by basically utilizing all of the data they have shared.

And then reaching out to them with something which is meaningful, which brings them back. So, what we have seen is the first day is extremely crucial. So, you look at your retention on a one day basis, then you look at your retention on a weekly basis. And then you look at a slightly bigger horizon, which is on a monthly basis, and then on a quarterly basis. But the point is: it’s extremely important to focus on retention in smaller buckets.

Look at day one, day seven, because that’s when you have the maximum opportunity to convert the user, impress them, and then create value for them. And the sooner you do it, you also start seeing benefit in terms of their transacting on your program, on your product, on your website, and then take the journey as a customer along with you.

 

TheCustomer:
We’ve seen data that supports that from I can’t tell you how many sources that, you know, that the moment of either install or download or account creation is an emotionally heightened moment. Which can work for you or against you if things are not set up to manage that flow well, buyer’s remorse gets set in, and you’ve got all kinds of problems on your hands.

But if you can manage that flow well and extend that heightened emotion in a positive way, you stand to make great gains. My question is – and you probably have a perspective on this – is do most brands see that moment as that critical or do they need to be shown that that’s that critical? I’m just curious, because you probably see a lot of data.

You probably see a lot of brands interacting and lightbulbs going off. So, what’s your take on that?

 

Abhishek:
Yeah, actually, what happens is, when you look at a company that’s trying to grow fast, there’s a lot of emphasis on user acquisition because that is a very visible part of marketing and advertising, in terms of bringing users into the funnel. And what happens is: brands as they mature, they start recognizing what is happening in that funnel, how many people are converting, how many people are actually registering, how many people are transacting.

So, there is a level of, there’s a maturity curve with respect to the brands. As they start recognizing importance of user retention. But one of the most interesting things is – actually two things. One is this is such a pivotal moment in the journey of the customer, where the brands do some of the basics right.

There’s a tremendous amount of value to get, so the ROI by having, let’s say, something as simple as an onboarding journey for a customer is extremely high because you retain a significant number of users by launching that one engagement. But the second piece is – you spoke about some averages that we have in the report – but what we’re also trying to educate the brands on, that we work with, is there’s law of averages, right? There’s an average that we see in that industry while working with a large number of clients.

But what we also do, is we basically steer people also towards what we see as the best benchmark. So, sure – the average is one part of it; but what are the best in the industry doing? And that makes for a very interesting conversation with the brands that we work with.

 

TheCustomer:
I would like to be a fly on the wall for some of those. I’m sure I won’t be able to, though… A few more – I want to just call out a few more of these, of these statistics, and we can talk them through. Only 15% of users convert from onboarding to engagement. And again, I’ve seen similar statistics but that’s such an important understanding because, as you spoke of earlier, you invest a disproportionate amount of income and energy getting to that point.

And if you’re losing 85% of them at that very moment then there’s certainly some optimization to be done. We’ll talk about that, but the other one here: you can achieve a 10-35% increase in conversions for dormant segments by using predictive analytics. I want to hear how that works.

 

Abhishek:
Yeah. So, we have it. There are a couple of ways to do it. So, what we do is we have a segmentation approach that we provided in the platform, which is RFM. RFM stands for recency, frequency, and monetary. It allows brands to look at the entire customer cohort in ten different segments. Now, in there, we also have a segment of dormant users.

By deep diving into that segment of users, you fundamentally can see where exactly those dormant users have come from. What was the last action or last set of actions performed by them before they became dormant? And from that insight, you can determine what kind of engagement you need to do with them that would allow them to go from dormant to active customers.

So, the level of insight that you can have, it’s phenomenal. Because again, as I said – before the customer became dormant, you need to know what are the things, or the things that they did not do. Knowing that allows brands to do a lot more meaningful things. And so, across these ten segments, we are not only able to show brands what exactly the customer base is, but we are also able to show them transitions.

So, people who are in the dormant and people look like, say, in hibernating stage. What’s the transition that is happening? And that transition is very insightful and allows brands to make – they’re able to make more calibrated decisions.

 

TheCustomer:
Perhaps this is a different conversation, but there’s an ongoing debate we’ll call it, within certain segments of marketing. Let’s just say, you have a loyalty program, and you’ve got a high performing, very passionate cohort versus some other cohort that, say, is moderately well performing, moderately passionate about your brand. Which one do you focus the most effort and energy and income on?

And to me, that’s never really been a debate worth having because the data should be able to point the way to that fairly easily. But it seems like if what CleverTap has as part of the system, is a kind of built in RFM index, if that’s really what it is, you can probably solve that just at a glance.

Am I reading that wrong?

 

Abhishek:
Yeah. So, RFM is one part. Let me also talk about the second aspect that we have. We have one other type of segmentation, which is intent-based segmentation. So, whatever your objective is, you can look at your customer base, and you can see what is the propensity to carry out that action. So, for example, it could be as simple as: I want to identify the users who are likely to transact on my retail website in the next one week, an objective that most of the marketers have liked to see who are more likely to transact.

And we’re able to tell them that here are the people who have a high propensity to transact and the people who have moderate propensity to transact, and here are the other people have a lower propensity to transact. The point is: in the absence of the data, marketers are typically doing like a one-size-fits-all approach, basically relaying the same message to all of these customers.

And fundamentally, as a result of that, they lose out on a lot of business. Now, contrast that with an approach where the marketer is depending upon the nature of the business to decide – okay, people who have higher propensity to purchase, right? I am likely to get an x conversion rate if I actually incentivize them to a certain offer. I’m going to get a lot more return on this investment because now I don’t have to incentivize everyone.

People who are moderately likely to purchase, they may be looking for a certain other set of incentives, based on the behaviors they exhibit; and people who are, let’s say, less likely to buy. Now, that does not mean that they’re not going to buy with you on a move-forward basis. Maybe something as simple as: can you do something to just engage with them outside of a transactional context?

Just build the relationship. They may not buy from you in that week, or they’ll come back and buy from you then the next week. So, you take the customers up the funnel from having a low propensity to buy maybe in week one, but those customers will show up as moderate propensity or a high propensity to buy because you actually engage with them in the right manner,by having that data on hand.

 

TheCustomer:
I love that you’re advocating engagement outside of a transaction because there are so many ways you can enrich a relationship through that. I’ve found – and that a lot of brands will nod accordingly – in theory, that this is a good idea; but when it comes right down to practice, there’s an ROI they’re looking for. You know, somehow this needs to translate directly into dollars and cents.

Do you find it difficult to educate brands, or is that something that is just an easy sell?

 

Abhishek:
Yeah, let’s just call it – It’s a discussion, right? It’s a discussion that happens in a very transparent manner between us and the brands that we sell to. But here is a point that the brands that we work with appreciate: we don’t have to look at ROI at a campaign level, which is where the conversion rate, the CTRs, and some of these KPIs come in.

What brands today are more focused on is a lifetime value of that customer. What they’re focused on is customer advocacy. Now, that only happens when you engage with the customers both from a transactional standpoint, but also from an emotional and relationship standpoint. You have to earn the trust of the customers, which cannot be just earned from a transactional standpoint. And so brands as they mature, they start recognizing the value of this more and more, because at the end of the day, this is about the relationship between the brand and the customer.

And the longer that relationship lasts, the stronger the relationship is, it manifests in the form of not a campaign-level metric, but in the form of user-level metrics, which is increase in your lifetime value – increase in, let’s say, number of transactions, the number of orders that a customer has placed, increase in average order value, increase in customer advocacy.

So, there’s a huge ROI that happens by focusing on this entire customer journey standpoint. And I think that is a discussion which is very interesting. At least with the brands that we work with, we have found them to be very receptive.

 

TheCustomer:
I would love to be a participant in some of those myself. I like that you called it a function of brand maturity rather than brand culture, because I think you’re right. I think that a brand moves down that spectrum, and you start to understand that it really is about customer lifetime value and all the nuances that you can apply it to enhance that. We have literally hours worth of material we could continue with here.

But I want to be kind to your schedule – thank you for joining me. This is huge. And I would love to reconvene this conversation in a couple months and talk about how it’s been received. And whether the data points within it have changed at all. And just touch base again if you’re okay with that.

 

Abhishek:
Sure. No, I’d love to share more. And of course, the purpose of all of this is to make sure that we’re able to share more information with the brands that we serve, but also industry at large so that some of the things that are happening maybe in a smaller set of brands can essentially happen in the industry.

That would make us really happy and very proud.

 

TheCustomer:
Well, my goal as well, so we’re all on the same page there. Abishek, thank you so much for your time!

 

Abhishek:
Thank you very much, Mike.

 

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