By Dimitri Kyprianou, Managing Director at Go Inspire CX
Lockdowns were the struggle of a generation for many retailers – but that already feels like a lifetime ago as the economy lurches further into the cost-of-living crisis and towards a probable recession.
Across retail categories firms are braced for trouble as consumers tighten their belts. In response, retailers must pinpoint ways to persuade more people not to shop around and stick with them instead.
Against this backdrop, we sought to understand retailers’ mindsets and knowledge of customer behaviour. We asked a wide range of CMOs, heads of loyalty, insight and CRM across the UK how they will walk the tightrope between customer acquisition and retention in the harsh months ahead.
It turns out many will be bold: 55% say their organisation will concentrate on customer retention and building loyalty in the next 12 months, with just a fifth focusing on acquiring new customers.
This approach isn’t just sensible; it’s vital. More than a third of respondents in our study (37%) say they are already noticing consumer loyalty waning as people shop around for different brands. Almost half (46%) of the respondents state this behaviour is price driven.
The good news is the retail experts we polled seem to be on the right track, as interest in using loyalty schemes has stayed strong. Almost half (46%) of respondents say shoppers are making the most of loyalty points.
As a result, retailers will make loyalty strategies a key focus in the forthcoming year. Almost one in three (32%) respondents state their firm intends to enhance loyalty incentives, deals and offers for existing customers, while a quarter (25%) will beef up loyalty incentives for new customers.
Data can unleash the loyalty at retail’s core
Putting loyalty programs front and centre in a bid to strengthen the bonds between brand and customer is a smart strategy in trying times. It makes perfect sense: as the old advertising adage states, the cost of finding new customers vastly outweighs the price of hanging on to existing ones.
To succeed, retailers will need better data – and a better understanding of what it’s telling them.
The trouble is many firms still base their core approach to customer communications on data that pre-dates the pandemic. It’s neither fit for the purpose of fathoming consumer behaviour during short-term financial shocks, nor for devising a marketing model to attract and secure long-term loyalty from shoppers.
In fact, when we directly asked respondents what would make achieving their loyalty objectives easier, the highest proportion (37%) pinpoint access to better customer insight. In addition, 34% believe the ability to more effectively measure their marketing programs across all channels would be beneficial. And more than a quarter (28%) state specific improvements to channel attribution measurement would make loyalty goals more attainable.
However, just having data at their disposal won’t be enough. Anyone can gather data; it’s what you use it for that counts. A successful data strategy demands expert orchestration and implementation, if retail organisations are to respond to fast-shifting customer trends with agility and efficiency.
Retention PLUS acquisition
Our study shows that retailers need customers to stay loyal now more than ever. Most of them know this, and they’re already focusing on how to hold on to shoppers for both the short and long term.
But loyalty strategies must be built on multiple strong components to succeed. That begins with an understanding of where loyalty starts: following the first purchase or only after repeat transactions?
It also means having:
- All of the data required to drive customer insight, and also operational agility. A minority of the respondents to our poll feel they are in a good place at present to implement agile strategies and react to shifting economic sands.
- Customer communications through channels that suit each shopper. In our era of media fragmentation, knowing where to find customers – particularly in the moment when they’re ready to purchase – can make the difference between capturing a sale, or losing a loyal customer to a rival.
- Campaign execution that excites consumers, turning them into loyal customers. That means analysing the data and leaning on the insights to activate an approach to marketing that surprises, delights and engages the customer over and over again, persuading them to come back for more.
By combining invaluable customer insight with improved operational agility, and targeting shoppers with the right offers, retailers can keep their customers on board for the long run.
Now is not the time for faint hearts, tinkering around the edges or even folding marketing budget back into the business. A focus on loyalty can bring great rewards – not just for consumers, but for retailers too.