It may cause some retailers to cry into their cereal to hear, but it is undeniable that loyalty is changing. With a world of choice literally at their fingertips, customers are more unlikely than ever to be loyal to just one brand.
Loyalty schemes promising deals or discounts for repeated purchases are, with a few exceptions, making little headway. In a world of instant gratification, redeeming points collected over time is just not appealing. Today, a brand must offer something unique to stand a chance.
Understanding Your Customer
A local shopkeeper will recognise the behaviours of most local customers who come through their door, and will know what mindset they’re in. They will prepare a customer’s regular order, or recommend a product based on an understanding of the customer, and cater their service accordingly.But is there an online equivalent of this personalised attention? Maybe website remembers your name. Perhaps you can view your recent purchases. The site may even offer recommendations based on purchase history. But that’s usually the extent of personalisation when it comes to online shopping. It’s easy to see why this falls short.
Delivering the Experience the Customer Wants
We all know a loyal customer is more profitable, so the challenge online is how to create loyalty without the level of personalisation available during in-person interactions. There are traditional old school approaches to increasing customer loyalty, like loyalty card schemes – seem to be stagnating. A 2016 study by Accenture found that 58% of loyalty programme members are inactive, and that 57% of shoppers report having received offers for items they are not interested in.
Recently, though an unexpected source of loyalty has emerged: UX. Amazon Prime succeeds, for example, because it removes customer anxieties about delivery cost and speed – two common sources of friction in ecommerce. In fact, Amazon is confident enough in the benefits of Prime to show the Prime price alongside alternatives from the Amazon Marketplace, even when the alternatives are cheaper.
Tim MacIvor, Head of Customer Experience at River Island, agrees that experiences have become a driver of loyalty. “Having a strong campaign and a strong brand, particularly in fast fashion, is just getting bulldozed, because customers are increasingly promiscuous with the brands they use and shop with. It’s about convenience.”
“If we’re able to harness our data and turn that into something that allows us to predict what customers want, then we’re making their lives easier,” he adds. “That is a great way to loyalty, because it will come from us delivering a great customer experience.” Likewise the speed and simplicity of a service like Uber engenders loyalty – despite the company’s much publicised recent setbacks. For many customers, the hassle of checking rival apps for price and availability would make the process of getting a cab so inconvenient that it isn’t worth it. Shopping around adds friction. In some ways, the Uber purchase point is when the app is downloaded, not when a ride is requested.
“I call it the ‘Netflix effect’,” says Mr MacIvor. “I can download a film in 10 seconds, so why can I not get my latest dress in an equivalent period of time? The kind of patience levels that our customers exhibit are pretty low.”