How to grow your marketing audiences in Shopify to drive repeat customers
We look at the role that first-party data has in helping merchants survive ad-mageddon. And what you need to do to set your store up for success in a privacy-first world.
When growing your online store, one of the keys to success is repeat sales to existing customers.
On average, it costs five times more to acquire a new customer than to sell to an existing one.
And that’s before we factor in the current upheaval across the advertising industry, causing customer acquisition costs to rise even more.
However, in the age of data privacy, you need to pay a lot of attention to how you collect marketing consent from your customers. Otherwise, you won’t be able to send them follow-up email campaigns.
Two customers land on your online store, and both make a purchase. One customer is based in the United Kingdom, while the other is based in the United States.
Happy days, you’ve got yourself two new customers. Time to start sending them marketing emails with other products they may like, right?
Not so fast. If your checkout uses a one-size-fits-all approach to consent collection, you may not have collected the appropriate consent for one of those customers.
Now imagine one of your online competitors.
They recognized the problem with using a one-size fits all approach to consent collection.
To address this problem, they found a tool that they could add to their Shopify checkout that automatically updated how consent was collected based on the regional data laws where their new customers are based.
They now have the legal right to send follow-up email campaigns to both customers.
What does this mean for you? All things being equal, it will be hard for you to win repeat business if you’re not allowed to send them email marketing campaigns while your competitor can.
So what can you do?
The key is understanding that you have a data collection problem. Too many retailers ignore the issue, significantly slowing down their business growth. Not to mention the fines.
In this guide, we will look at the impact of data privacy on advertising. The role that first-party data has in helping merchants survive ad-mageddon. And what you need to do to set your store up for success in a privacy-first world.
Data regulations impact on online advertising
Here’s the hard truth that many online retailers are facing up to.
Traditional online advertising strategies no longer work like they used to. If you run your own retail business or create e-commerce marketing campaigns, this won’t be news to you.
I’m sure you remember the day Apple dropped its iOS 14.5 updates. For many, this signaled the beginning of the end for third-party advertising.
In reality, giving users the ability to delete personal data and block tracking was the latest step toward the privacy-first landscape many consumers are demanding.
There’s no doubting the impact this has had on advertisers like Facebook, but the truth is that the traditional approach to online advertising has been declining for years.
The decline of third-party advertising
SimplicityDX’s research found that online merchants spend almost $29 on average to acquire a new customer in 2022. This number has risen from $9 in 2013.
That’s a 222% increase in 9 years. And this trend is only set to continue.
As I mentioned above, Apple’s update has had a significant impact. But it was only the latest nail in the third-party advertising coffin.
The slow demise of third-party cookies and the constant introduction of new data privacy regulations has seen customer acquisition costs rise by up to 60% in the last five years alone.
Europe led the way with the implementation of GDPR. And its effects were felt straight away.
For example, the impact of banner ads fell by 65% when it came to influencing consumer behavior.
While Europe has the strictest privacy laws, countries like the USA are catching up fast. Several state-level privacy regulations have been enacted this year and may be followed by a national data privacy law.
Even the introduction of moderate regulations has been found to impact the effectiveness of online advertising massively.
Consumer response to data privacy
Implementing regulations like GDPR and CCPA has firmly placed the spotlight on how online stores use personal data. As a result, consumer awareness has also grown.
In fact, data privacy has quickly become one of the main reasons for choosing or avoiding certain brands.
Ketch’s consumer report shows how privacy has become a priority for consumers, with 82% saying they are concerned about how their data is collected and used.
Wyng’s report found that almost 70% of respondents said that they abandoned purchases because they didn’t trust how their data would be used.
On the other hand, consumers are also aware of the benefits of sharing their data.
They are willing to do so under the right circumstances. Almost 90% of respondents agreed that they had stronger customer relationships with brands that are transparent with their data and respect their preferences.
The study also found that responsible data practices affected retailers’ bottom line and long-term brand preference.
Wyng backs this up, with more than 60% of consumers saying they would be happy to share data with a brand if they could see what data has been shared and stored.
McKinsey’s recent study found that 76% of consumers are frustrated by a lack of personalization.
While 78% of respondents were more likely to make repeat purchases with a retailer that personalized their experience.
There you have it; modern consumers want privacy and personalization. And they are happy to walk away if they feel like you cannot provide both in equal measure.
So what can you do to solve the privacy-personalization paradox?
First-party data is the key to privacy & personalization
So what can you do to respect consumers’ privacy while delivering an online experience that keeps them coming back for more?
For many online merchants, the key to long-term personalization is first-party data.
First-party data is the data you collect from your customers when they make an online purchase or subscribe to your newsletter, for example.
In fact, according to one report, 37% of retailers exclusively use first-party data to personalize their brand experience.
First-party data is vital as it allows you to create marketing campaigns targeted at your most engaged customers.
These campaigns can significantly impact your bottom line, with repeat sales now generating $39 on average – a 36% increase since 2013 ($28).
Segment’s study of 3,500 businesses and consumers found that personalization and your return on investment go hand in hand.
Personalization can refer to product recommendations, relevant offers, and discounts you send your customers via email marketing campaigns. Or could mean providing a seamless customer experience across their preferred marketing channels.
Nearly 49% of the consumers that responded said they were likely to become repeat buyers after experiencing a personalized shopping experience.
Prioritizing the collection of first-party data (that you can actually use) is the first step to creating a personalized customer experience that keeps them coming back for more.
Gathering compliant customer data on Shopify
If you’ve got this far, you know the key takeaway to future-proofing your business is to focus on nurturing your customer relationships.
And the key to nurturing customer relationships is collecting first-party data.
How you collect this data is vitally important. If you don’t do so compliantly, you risk this data becoming unusable and practically useless. And if you decide to use the data in your marketing campaigns anyway, you could be putting your business at risk of fines or worse.
Having the right technology in place will ensure you can focus on building your personalization strategy without worrying about data privacy regulations.
When paired with a tool like Klaviyo, the Shopify ecosystem is particularly suited to creating customer retention strategies.
You can launch personalized customer campaigns by collecting your first-party data on your Shopify store and passing it to Klaviyo. Getting this process right will help you get the most out of every user interaction.
Shopify has helped to revolutionize the online retail business by making it easy for new entrepreneurs to get up and running fast. However, when it comes to data privacy, things never stay the same for long.
Shopify’s built-in consent collection feature can hold you back as you use a one-size fits all approach to data privacy no matter where your customers are based.
Consent collection on Shopify
As we have already addressed, you must collect consent from your customers to store and use their personal information in your marketing campaigns.
Most importantly, you must inform your customer about what information is being collected and how you plan to use it before asking for their consent.
The problem for merchants is that Shopify uses a one-size fits all approach to consent collection. Their default checkout only allows you to set the consent as opt-in or opt-out regardless of where your customers are.
Again this is more than understandable. At the end of the day, they are an e-commerce platform, not a dedicated consent collection platform.
However, here’s where the main problem arises. How you are legally obliged to obtain consent depends on where your customers come from.
So whether you’re asking your users to opt-in or opt-out is a very different proposition.
In general, the regulators in EU countries strongly advocate for an opt-in policy when obtaining consumer consent.
However, in the US, a consent box is not needed in most cases. As such, by using a one-size-fits-all approach on your Shopify checkout, you are not only adding friction but also giving your customers the opportunity to opt-out when that is not needed.
Doing so could reduce the potential value of this customer interaction. And the impact on your growth can be huge.
New data emphasizes the importance of collecting marketing consent
Over the last few months, we surveyed 213 Shopify merchants to better understand their current consent collection process.
We also wanted to understand the impact that this was having on their business growth, and their bottom line.
On average, the Shopify merchants we surveyed have a repeat customer rate of 34%. Repeat customers, in this case, are classified as customers who had made two or more purchases over the previous 3-month period.
Our findings align with previous online retail research, where the repeat customer rate ranged from 20% to 40% on average.
Generally, you’re doing pretty well if your repeat customer rate is between 20-30%.
Gorgias’s study of merchant data found that while repeat customers only accounted for 21% of the customer base, these customers accounted for 44% of revenue and 46% of orders.
If you have heard of the pareto principle, this will make a lot of sense.
For the merchants in our survey, 61% of their repeat customers had opted into their marketing. This shows the important role that re-engagement campaigns play in stimulating repeat purchases.
As we have already seen, building this brand loyalty can be one of the most effective ways to drive future online growth.
Bain & Company found that even a 5% increase in customer retention can lead to a 25% increase in profits.
On the other hand, we found that the percentage of one-time customers that opted into marketing was only 26% on average.
Another important point is that consumer brand loyalty is rising. Once you start stimulating repeat purchases, you will also build brand loyalty.
73% of North American consumers agree that once they find a product or brand they like, they stick with it.
The key is capturing their consent to follow up with email marketing campaigns during their first purchase so you can create a personalized online experience that keeps them coming back for more.
With ad costs continuing to rise, this has become even more important.
How Moyee Coffee grew their marketing audiences by over 200%
When the pandemic hit, Moyee Coffee quickly shifted from selling to large offices to online sales on their Shopify Store.
Like most businesses, their eCommerce sales surged and quickly became a crucial part of their business. However, the team at Moyee recognized they had a problem.
Their average marketing consent acceptance rate then was just over 27%.
Realizing that they needed to get more out of every customer interaction, they looked for ways to increase their consent rates.
Working closely with Dataships, Moyee Coffee implemented an optimized consent management tool at their checkout, more than tripling their marketable acceptance rate to 83%.
How, I hear you ask?
By adding the Dataships consent collection tool to their Shopify checkout. This simple change removed any friction when it came to collecting consent.
Turn data privacy from a nuisance into a competitive advantage
The bottom line is simple.
The combination of new data regulations and consumer demand for control over their data is placing more importance on how you collect and use your customer data.
Using a one-size fits all approach to consent will harm your online growth as it does not allow you to maximize the value from each new customer that goes through your checkout.
Taking a more dynamic approach to marketing consent will allow you to turn data privacy from a growth killer into a competitive advantage.
With more complex data laws being enacted worldwide, now is the time to get ahead of the curve and supercharge your online growth.
Fuel your email marketing campaigns on Klaviyo
When it comes to growing your store online, Shopify is one of the best tools at your disposal. Adding Dataships to your Shopify checkout will help maximize your potential business growth.
Dataships automatically updates how you collect consent based on the location of your customers. This removes any possible friction, guarantees compliance, and ensures you get the highest marketing acceptance rate possible.
So far, Shopify merchants using Dataships have seen their marketing audiences grow by 150% on average.
Get started for free today and see how easy it is to fuel your next email marketing campaign on Klaviyo.