The current economic climate is prompting greater emphasis on value and experience among shoppers. For merchants, building loyalty among increasingly price conscious audiences can be a challenge, but there are some key areas that can help with both retention and growth.
Dan Edelman, Vice President and UK General Manager, Merchant Services at American Express shares his advice.
Seizing the moment – why retailers need to make every step of the customer experience count
Many UK retailers are feeling an air of cautious optimism as we head into Spring; with the warmer months typically signalling increased footfall, and a general uplift in positivity amongst consumers.
However, it’s clear retailers are by no means out of the woods yet. According to the British Retail Consortium, shop price inflation is around 8% – with food price inflation reaching 17% – meaning that shoppers’ buying behaviour remains more selective and deliberate as a result of higher prices.
Shoppers are looking for more bang for their buck, so retailers need to be poised to meet higher expectations. Customer experience is more important now than ever before, meaning there is no room for inconvenience, poorly targeted offers or unrewarding loyalty schemes.
And the margin for error is small – research conducted by American Express last year found that three fifths (61%) of shoppers think that retailers need to do more reward them for their loyalty. So, it’s clear that even if spend picks up in the coming months, letting customer experience standards slip is not an option.
Here are some key focus areas that can help merchants stand out in an increasingly competitive landscape.
Put the ‘reward’ back in ‘reward scheme’
Increased cost of living pressures have left customers looking to make their cash go further. They don’t just want great products and services without a premium price tag – if customers are to return again and again, they need to feel as though they’re getting as much meaningful value as possible.
But how do merchants respond to this level of expectation? We found that just over half (52%) of shoppers would be more likely to shop with a merchant that has a loyalty scheme, meaning these programmes can be a key competitive advantage.
However, simply running a loyalty scheme doesn’t necessarily go far enough, especially if rewards are perceived as hard to access, poorly targeted or worse – not particularly rewarding.
Our research found that over two fifths of shoppers (43%) said they found loyalty points hard to use, and often not worth claiming back. Meaningful discounts on repeat purchases, appealing opportunities to redeem rewards throughout the year and exciting prize draws are all components worth considering if merchants are to overcome this hurdle. But most importantly, insights on the customer base must underpin any loyalty programme to ensure relevant targeting.
Personalisation by design
Key retail moments are often considered prime opportunities to offer flash discounts and offers, and for many retailers these can boost sales.
But it’s not always sustainable to slash prices around particular dates or peak periods; arguably there are greater returns from more sustained, personalised approaches. From conversations with our merchant partners who run established and successful loyalty programmes, they have seen that accessibility and personalisation is vital to ensuring these schemes are genuinely valued by customers. Even if they don’t always redeem offers, being relevant and considered will improve their overall perceptions of the brand.
Upgrade your customer experience
Implementing or upgrading a loyalty programme is just one step retailers need to create positive sentiment among their customers. Our research highlighted that almost three-quarters (73%) of shoppers wouldn’t buy from a retailer again if they had a negative experience.
Optimising the customer experience both in-person and online, and making browsing, checkout and delivery convenient is essential to driving positive engagement. Taking simple steps such as accommodating last minute purchases or ensuring a preferred payment method is available at checkout, all contribute towards customer satisfaction.
Boost your multi-channel appeal
Another area of focus for retailers is effectively joining up the on and offline experience. Technology is a key enabler, with apps, QR codes, geotagging and other tech helping to bring bricks and mortar and digital experiences closer together. But retailers should be consistent – ensuring that the in-store experience feels aligned with digital in regard to service, brand voice and checkout. This is crucial to maintaining a strong brand reputation and true multi-channel appeal.
Now more than ever, customers are demanding more than just a product or a service. Although it’s true that compelling discounts and convenience are motivating factors, creating an experience that leaves customers with a strong sense of value is just as important.
If customers feel listened to, catered for, rewarded and empowered during their journey, then they will return time and again.