Ornella Urso (Senior Research Analyst, IDC Retail Insights in Europe)

In retail, nothing will be as it was before. It’s time for retailers to really make a difference to survive in the new shopping experience era. This requires them to prioritise immediate business initiatives such as a contextual customer experience, engaging customers everywhere and responding to customers’ needs in real time. Among the key actions for retailers, loyalty management remains critical.

Leading global brands are already investing in customer loyalty. For example, Best Buy Canada is updating its in-store POS and loyalty programme to integrate them into its ecommerce offering. The Body Shop’s Open Hiring initiative aims to promote open hiring to attract diverse candidates and increase employee loyalty. Under the slogan “The more active you are, the more you get rewarded,” NikePlus membership offers free services from Nike’s new partners Apple Music, Headspace and ClassPass. Walgreens recently revamped its myWalgreens loyalty programme to include same-day pickup, partnerships with third-party delivery platforms (such as DoorDash and Postmates) and new mobile app services. Lidl’s new loyalty app (Lidl Plus) offers personalised deals to shoppers based on their purchasing history.

It’s not just about rewards. According to IDC’s Global Retail Innovation Survey, 33% of retailers need to identify new loyalty strategies to improve CX personalisation at speed and scale. At the same time, 23% of retailers that consider CX a key enabler of company business model innovation over the next three years plan to evolve existing loyalty programmes as a key area of intervention to drive new revenues and increase KPI scores.

As this new shopping era begins, let’s see what retailers should focus on to improve customer experience through loyalty.

The 4 Strategies to Build Customer Loyalty in Retail

  1. Be Transparent and Fix the Problem

Post-purchase is a crucial moment for customers that have bought a product and passed through all the main steps of the shopping journey but then need support or need to return an item. This is even more evident when customers shop online and experience some friction along their purchasing journey or simply add the wrong item to the cart or receive a damaged parcel.

Retailers can now support the customer not only in store but also online through virtual agents from the mobile app and contact centre AI. The goal is to provide customers with a real-time, clearer and more personalised solution to their problem. This enables retailers to retain the customer and increase overall customer satisfaction while strengthening mutual trust between the brand and the customer in the long term.

 

  1. Take Advantage of Existing Customers to Generate New Customers

Happy customers generate new customers. Engaging new customers is often perceived as being something different to retaining loyal customers. However, in a world where customer reviews matter, customer satisfaction is vital for new client engagement, especially in the initial stages of the shopping journey.

It’s important therefore for retailers to provide a superior customer experience that meets loyal customers’ needs and expectations, as shared experiences can in turn enable retailers to reach new clients. Satisfied customers can promote a brand or product to their friends and family.

Retailers, for instance, can launch a “bring a friend” initiative as part of their loyalty programme, so members can receive rewards in exchange for inviting friends to join the programme. At the same time, as potential clients can reach the brand through multiple interfaces, retailers should recognise them, collecting and managing customer data through advanced analytics to personalise and offer a coherent marketing and advertising message (special discounts, personalised offerings, etc.).

 

  1. Aim for Initiatives to Increase Customer Experience

Loyalty needs to go beyond the mere collection of loyalty points and rewards — and should be a combination of initiatives and personalised strategies aimed at increasing customer experience. Through their loyalty programmes, retailers create exclusivity, providing customers with differentiated offerings (exclusive events, one-of-a-kind experiences, birthday gifts, tier celebration gifts, free shipping, seasonal savings, etc.) while becoming part of a community.

As part of its loyalty strategy, US-based beauty retailer Ulta Beauty launched its #SeeBeautifulToday campaign to enhance the sense of community and human connection through communication and CX. By taking part in the campaign, customers can pass on positive messages and transmit shared values to the rest of the community.

 

  1. Drive Customers to Visit or Use the Store to Collect Orders

Frictionless engagement drives loyalty. In response to the new shopping paradigm, retailers need to rethink the store and store operations to better serve the customer and improve frictionless customer engagement between online and offline experiences.

In 2021, 25% of retailers plan to implement IoT technology to deliver a real-time contextual customer experience in the store. Retailers can improve customer loyalty by leveraging technologies such as AI, IoT and AR/VR in store. By doing so, they can effectively blur the line between online and offline and provide a unified and contextual customer journey. ​

 

IDC Retail Insights is carrying out dedicated research and original surveys across the extended retail value chain with a focus on customer experience and loyalty. To find out more, see what’s in store within IDC’s Worldwide Retail Customer Experience and Commerce Strategies programme — and don’t forget to join us at the IDC European Retail Executive Digital Summit 2021.

 

If you want to learn more about this topic or have any questions, please contact Ornella Urso, or head over to https://uk.idc.com and drop your details in the form on the top right.

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