Retail has been having a tough time. Inflation is up, wages are down, credit is no longer easy to find and customers are spending less as a result. This much we all know. So how do retailers keep their customers happy in such a tough environment? Obviously, they have to have the right product at a price their particular audience will pay, whether high or low end. Yet to retain customers and keep them coming back, they need more.
So why do customers keep coming back? Sometimes, it is down to convenience and lack of alternatives. This is fine whilst it works, but is no measure of long-term loyalty. Sometimes, the decision to buy from a specific retailer is based purely on price. At other times, purchase decisions are based on a stronger, more emotional attachment to the brand, engendered through a combination of good product, good value, excellent customer service and importantly, feeling valued. This motivation to buy is the one retailers seek to engender in their customers, as it means that customers will return to buy more often and spend more money if they feel valued.
In most businesses, 80% of profit is generated by 20% of customers and these are the people who feel brand affinity. Getting this band of customers to buy just once more can significantly impact profit. Getting more than 20% of customers to feel this way will generate even more.
So how can retailers achieve this? Well, it is possibly less through discount and short term reward and more through added value and longer term benefits of being with the brand. Promotional tactics may bring money in short bursts to the bottom line, but will they engage the customer over time? Recognising customers with personal rewards can reap greater levels of loyalty. The real answer lies in a mix of the two approaches, where retailers incentivise customers to shop and reward them for repeat purchase in as personal way as possible, whilst still delivering on customer service at all levels.
CRM programmes are invaluable in achieving all of the above. If customer data is collected and analysed in line with business and marketing objectives and crucially, used all the time so that it is active and not dead data, it is possible to segment and reward customers according to their preferences and purchasing habits.
Customer choice is important too. Ask them how they want you to contact them, whether by email, mail, SMS or phone. Provide them with an app. Ask for feedback and act on it. It is important that brands are able to listen, as well as to transmit.