Using customers who move home to counter retail churn

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By: Wise Marketer Staff |

Posted on July 25, 2006

Consumers moving into a community - thanks to a lack of local knowledge and unsettled buying patterns - represent an often-missed opportunity for local retailers, according to a report from US-based direct marketing firm Moving Targets.

The report, entitled How to Overcome Retail Customer Erosion by Capturing New Residents, was produced as a result of the company's focus on and experiences in direct marketing to new residents throughout the US.

Consumer transition
Because new residents typically move due to a major life transition (e.g. a new job, marriage, divorce, births, deaths, or retirement) they are faced with a host of challenges, the report suggests. Not only are new movers often lonely and unsure about their new surroundings but all the social and community connections they had before are usually severed and need to be replaced as quickly as possible.

According to research cited in the study, movers go through five stages of transition during a move:

  1. Separation - as people say goodbye to their old connections;
  2. Transformation - the physical aspect of the move;
  3. Early Integration - the first six months in the new community;
  4. Later Integration - the subsequent period of adjustment;
  5. Maintenance - the indefinite period after settling in.

The time for acquisition
According to Moving Targets, it is during the Transformation, Early Integration and Later Integration stages that new residents represent a major opportunity for local retailers. According to the U.S. Postal Service this period represents a time of "hyper-spending", as movers buy everything from new curtains to takeaway food.

On average, new residents in the US spend some US$7,100 on goods directly attributable to their relocation. During the first 24 months after a move, an estimated 80% of new residents try new products and services from local businesses.

Replacing customers
The report also suggests that targeting new residents is one of the most effective ways to replace the high annual customer turnover that typical small retailers currently face.

For example, the report notes that the average lifetime value of a car repair shop customer (that is, the amount of net profit the business can expect from an average customer based on the current turnover rate) is US$1,706. Consequently, acquiring a new customer who has just moved into the area - and is therefore actively seeking alliances with such businesses - is a quick and relatively cheap way of countering churn (compared to normal customer acquisition campaigns).

Wanting to be loyal
According to Jay Siff, CEO for Moving Targets, "Compared to the 20% of customers who leave a merchant in any given year, the 80% of new movers who are actively searching for a business they can be loyal to is highly encouraging."

The study also reported some interesting findings about new movers:

  • 62% eat pizza;
  • 65% of female movers are anxious about finding a good hairstylist;
  • 67% said it's difficult to find an honest car repair shop;
  • 80% redeem gift certificates offered by local merchants;
  • 98% appreciate gifts or offers from local merchants.

But, the report found, new residents are seldom contacted directly by local businesses. This, combined with the US average moving frequency of five years, represents a significant opportunity for local independent businesses.

Practical ideas to reach movers
There is, of course, some difficulty in quickly and accurately identifying new residents because - by definition - they aren't on any mailing lists or databases at their new address yet. But there are practical methods of reaching them even before they move in, details of which are found in the report.

The full report has been made available to download for free from the Moving Targets web site - click here.

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