Custora Retail Benchmarking: Trends from 2018 to 2019

July 16, 2019 Brady Walker

Through our extensive work with retailers, we’ve gotten privileged access to some of the retail world’s top brands, and with this access, we’ve been able to develop a holistic view of how retailers in various industries are performing across key metrics. Which is why we have created  Customer-Centric Benchmark Reporting.  

 

How Does Your Retail Marketing Really Measure Up?

As a customer intelligence platform, Custora provides solutions to help retailers take control of challenges like acquiring higher-value customers, converting one-time buyers, and slowing down customer attrition. 

The platform stitches together disparate customer data, uses AI to surface insights on each shopper, then provides an interface for marketing leaders to activate a cross-functional, cross-channel strategy to move the needle on key customer KPIs. Over 100 leading retail brands use Custora to be more customer-centric and grow customer lifetime value.

 

So What Are the Industry Averages?

You know you were hoping we’d show our cards, at least a little bit. Today we’re going to talk about some of the averages for each of the metrics we talked about earlier. 

If you didn’t read our article introducing our customer-centric retail benchmarks, you can read it here

Our benchmarks cover three overarching business areas, which themselves comprise three to four key metrics. 

The three areas that our Retail Benchmarks focus on are:

  • Customer Lifecycle
  • Mobile & Omnichannel Engagement
  • Customer Economics 

We took a snapshot across all of our retail customers between February 2018 and February 2019 for all of these different metrics and analyzed the trends through a number of lenses to better understand what was going on. 

 

Customer Lifecycle Metrics, February 2018–2019

Starting with Customer Lifecycle, we looked at the following metrics:

  • Acquisition — year-over-year (YoY) growth in the number of new customers
  • Retention —YoY growth in the number of retained customers
  • Reactivation — YoY growth in the number of reactivated customers

Below is the average year-over-year growth by industry vertical for the above three metrics. 


When you look across, you’ll notice that Apparel, Footwear & Accessories, and Luxury are pretty closely matched in terms of growth. And quite obviously, Beauty is the clear winner across all three of these metrics. 

When we dug in here, we realized that this growth is actually a function of the lower average order volume (AOV) compared to the other three verticals.  

Looking below, you can see that the most growth was in the <$100 AOV range and that Acquisition and Retention fall with an inverse rise in AOV.   


 

On the left-hand side, you can see that just as lower-priced brands are winning in terms of lifecycle, so too are smaller companies. Brands that have fewer than one million customers are typically smaller, younger brands, and they’re growing at a bit of a higher rate than their larger competitors.
 

Customer Economics Metrics, February 2018–2019

Customer Economics is a function of the following three metrics: 

  • Frequency — YoY growth in the average number of orders per customer
  • Upsell — YoY growth in the average unit revenue
  • Cross-Sell — YoY growth in the average number of items per order

Below you’ll notice a bit less movement year over year than you saw in Customer Lifecycle Metrics. These things tend to be more inherent to the business model — i.e., inventory creates customer behavior — and thus more static.



What we can see is that items per order were up a healthy amount year-over-year for every vertical except for Beauty, which saw more of the growth coming from the number of customers — as we saw in the Customer Lifecycle Metrics — and also a bit from average unit revenue. 

Apparel, by far, saw the biggest growth here in items per order, though average unit revenue went down more than the other verticals. 



Looking at these customer economics metrics through the lens of company size and price point, we see almost no movement for these metrics among the larger brands, who also represent the more mature businesses. For smaller brands — who are, in general, also newer to the scene — these metrics are a bit more dynamic because they are continually evolving their selection and product assortment.

A couple of spots are actually trending down year-over-year, notably average unit revenue is contracting year-over-year for small companies and for mid-priced brands. 
 

Mobile & Omnichannel Engagement, February 2018–2019

Mobile and Omnichannel Engagement as an overarching business area covers the following four metrics: 

  • Mobile Growth — YoY growth in the number of customers who have purchased via mobile 
  • Mobile Penetration — The share of active customers who have purchased via mobile
  • Omnichannel Growth — YoY growth in the number of customers who have purchased both online and in-store
  • Omnichannel Penetration — The share of active customers who have purchased both online and in store

Looking at the graph below, it shouldn’t be a surprise that Mobile is growing fast. Across the board, omnichannel growth is not nearly as aggressive. 

On the left-hand side below, looking at this growth in terms of company size, again, we see mobile growing much faster, with omnichannel looking comparatively static at somewhere between 20% and 30% in terms of penetration. 



Omnichannel growth is higher for smaller companies. Assuming that the majority of smaller companies are newer to the scene than the bigger companies, this outpacing in omnichannel growth makes sense because newer brands tend to prioritize online growth first and make the move to in-store sales much later, so there is simply more room to grow. 



Then finally, looking at customer engagement in terms of average order size, we can see that omnichannel is not growing quite as fast when you look at the more expensive brands. Just as with the others, mobile is growing quite fast for companies with an AOV of less than $100. One possible reason for this might be that impulse purchases on mobile are more common. 

That wraps up our overview of 2018-2019 retail benchmarks. In the coming weeks you can look forward to interviews with the top performers we discovered through our analysis. Even they were surprised to hear how they were outpacing 100+ retailers.

 

 

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