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How optimizing ROAS increases customer loyalty.

October 10, 2022 By: Elissa Quinby

Driving efficiency is the name of the game in the retail industry today. Every function across a digital team has to do more with less, save time, reduce headcount, spend less money, and streamline operations. 

In the second part of this series, we’ll focus on how to increase retail return on ad spend and customer loyalty. There are three primary objectives that a retailer should have when looking at their advertising strategy:

  • Increase customer loyalty 
  • Improve customer lifetime value (CLV) 
  • Generate a higher return on investment (ROI) from advertising

The one metric that ties all of these initiatives together is ROAS.

What does ROAS stand for?

Return on ad spend (ROAS) = Revenue / Cost. In other words, it’s a way of measuring how much revenue you generate for every dollar you spend on advertising. 

Retailers use return on ad spend as the key performance indicator for their digital marketing efforts. Return on ad spend (ROAS) and generating more revenue with a flat or declining budget will be scrutinized more than ever. What is the point of driving traffic to your website if those visitors don’t convert into customers? 

Improving ROAS is hard and takes time. How does a marketer start? With the Quantum Metric platform, digital teams can: 

  • Find and fix errors faster from broken ad campaigns and promo codes
  • Optimize landing pages to improve conversions 
  • Gain immediate visibility of customer behavior 

How exactly? 

Quantum Metric provides real-time analytics. Marketers can proactively determine performance with anomaly detection and real-time alerts on outlier categories or seasonal behavior and trends and build segments using behavioral signals that indicate high intent or high friction (like saw a promo code error). 

With the help of Quantum Metric, retail teams can achieve a higher return on ad spend by quickly fixing errors and optimizing their campaigns and landing pages for conversion. In addition, they can create loyalty their customer base by providing a seamless digital experience.

Let’s bring it to life with a couple of examples. 

How is Quantum Metric helping retailers?

Before Quantum Metric, a luxury lingerie company didn’t have an optimized process for identifying customer friction. They relied on the customer service desk for feedback which wasn’t efficient for the size of their brand.

Quantum Metric and its automated alert system enabled the company was able to identify in real-time when users were hitting a 404 page, and pinpoint errors that impacted the most users. One particular 404 was the result of a surge of traffic coming from Instagram Stories, where the page was linked to the US store only. The luxury lingerie brand was then able to prioritize this fix immediately and create an event to proactively track and alert them of errors like this in the future.

The Head of Digital Customer Experience at the brand said, “Instead of having this information relayed by Customer Service through complaints, Quantum Metric allowed us to quickly pinpoint the date that this highly unpredictable instance started. We were then able to set up redirects to ensure our visitors had the best experience on our site.”

In another example, a sports apparel retailer didn’t have an efficient method for driving personalization in real-time. 

With Quantum Metric, the sports apparel retailer can strategically engage customers at the most critical points in their journey. In one case, the brand aimed to drive customers in the loyalty program to engage with the “Loyalty Customer Benefits.” They leveraged Quantum Metric’s integration with Dynamic Yield and Optimizely to pop up a personalized modal to loyalty program customers that directed them to relevant offers. The sports apparel retailer immediately saw a 72% increase in users engaging with the loyalty benefits.

The VP of Digital Strategy said, “With its real-time data, Quantum Metric gives us the ability to make decisions that have an immediate and direct impact on revenue.”

ROAS is important, but it isn’t the only metric to measure marketing success.

Customer retention, driving purchase frequency, and higher ASPs are all important work streams that marketers should focus on. But it’s hard to acquire a new customer and even harder to retain one. 

How can Quantum Metric support customer loyalty goals for marketers focused on retention? The Quantum Metric platform provides automated funnel analysis for critical customer paths leading to specific conversion goals. Marketers can see and compare how visitors engage with content on key pages, attribute it to conversion, and identify where and why customers get frustrated or blocked to reduce abandonment.

What is customer satisfaction?

Customer satisfaction can be defined as the customer’s perception of how well the product or service meets their needs. 

There are a few key things that retailers can do to increase customer satisfaction:

  • Make it easy for customers to find what they’re looking for on your website or in your store 
  • Offer a wide variety of products and services 
  • Provide excellent customer service 
  • Have competitive prices

What is Customer Engagement?

Customer engagement is the customer’s level of interaction with the product or service. 

There are a few key things that retailers can do to increase customer engagement: 

  • Offer loyalty programs 
  • Send targeted email campaigns 
  • Personalize the shopping experience 
  • Use social media effectively 

This is important because customer loyalty is not only driving revenue from customers who make repeat purchases but also has a direct impact on return on ad spend (ROAS). If a customer returns to purchase more items, they are likely to generate a higher ROAS since they’ve already been converted and are familiar with the product. 

Start generating better results with Quantum Metric. 

Interested in learning more about how Quantum Metric helps digital marketers generate better results? Join us for a live demo.

You can  check out part one of our blog series for how to save time and resources by finding insights faster. 

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