By Elissa Quinby, Global Director of Retail Insights, Quantum Metric
The start of 2022 has seen the UK retail industry adapt to the lifting of all COVID-19 restrictions and many retailers, particularly supermarkets, are looking to entice customers back by revising their existing loyalty schemes.
As a result, loyalty schemes are becoming more about building customer loyalty, and less about gathering data for marketing purposes. This means it’s more important than ever for retailers to understand what influences purchase decision making.
Creating a knock-out customer experience
Loyalty is earned, at least in part, through outstanding customer experience (CX). When a customer has a positive experience with a brand, they begin to trust them more, and over time this built-up trust will lead to increased purchases. However, amazing CX has become about far more than simply meeting consumers’ basic needs.
Today, in order for a brand’s CX to stand-out, retailers must go above and beyond to identify needs and offer solutions, in some cases before the customer is even aware of the requirement themselves. When businesses understand not only what their customers are doing, but also why they’re doing it, this level of insight will allow them to adapt and iterate their loyalty schemes accordingly.
In the past two years, there has been a clear shift in consumers’ values when it comes to shopping, with many consumers demonstrating a greater interest in lowering their carbon footprint through making cautious, environmentally-friendly shopping choices. In fact, data from a recent Quantum Metric survey, revealed that more than a quarter of UK consumers intend to ‘make do and mend’ in 2022, rather than buying new items. This emphasises the importance of outstanding CX for the cautious consumer in particular.
As such, retailers who are seeking to increase brand loyalty should also demonstrate an understanding of what matters to their customers and provide a loyalty scheme that aligns with this. For example, retailers who offer higher rewards for shoppers that make sustainable purchases will, in turn, illustrate commitment to both CX as well as consumer values.
Supermarkets are ahead of the rest of the retail industry when considering customer lifetime value (CLV) – the holy grail of customer loyalty – and the better the CX, the higher CLVs are likely to be. One factor that has a huge impact on the quality of a brand’s CX is personalisation, so we are seeing big-name retailers, like Waitrose, attempt to be more personalised in the approach to their customer loyalty programme.
Personalisation is easier to provide to customers via digital-first apps, as data can be automatically stored for each individual shopper and used to make suggestions based on their unique buying history. For example, digital stores and apps can even preempt the purchase of essentials based on when a customer last bought them.
On paper, the idea of gifting customers weekly rewards, via an app, on things they buy the most sounds like a great way to personalise CX and, in turn, raise CLVs. However, retailers need to be wary that digital-first schemes are not going to appeal to every customer. In fact, 77% of consumers in the UK are loyal to a brand even if its app is not on their phone. If a brand attempts to fix a system that in the eyes of its customers wasn’t broken, by making it digital-first, then this could lead to frustrations and complaints.
Adopting a full omnichannel approach
To succeed, retailers must offer a full omnichannel approach with quality CX at the core. While some customers are going to prefer a digital-first approach, others may not have a smartphone with which to run a loyalty app, favouring printable vouchers instead. Understanding what individual customers want and providing an experience in a way they prefer is key.
If a brand is going to offer an app, they must make sure that it provides the customer with exactly what they want. If it doesn’t retailers must be prepared to adapt quickly and have an alternative option up their sleeve.
The best approach for retailers is to ensure that their brick-and-mortar stores and online operations work in tandem. In a world where technology is becoming increasingly more predominant, it’s understandable that retailers would want to drive digitisation, but they mustn’t restrict customers’ choices by making an app the only option available. Those brands that provide a full omnichannel system, alongside exceptional CX will be the ones that customers choose to be loyal to.