Any retailer will tell you that customer loyalty is something of a holy grail – once you have hit upon a way of helping customers to value your products above your competitors’, you can rely on them for repeat business. However, ‘loyalty’ suggests that the customer owes something to the retailer – in reality, the reverse is true. Today’s retailers are beholden to the customer - if they don’t meet their needs, even the most traditionally loyal customers can easily go elsewhere.
Rather than loyalty, retailers should be looking for ‘relevance’ – context-specific, personalised customer engagement matched to the customer’s individual needs, including:
Retail segment – tailored activity related to customer type, for example:
- People making luxury purchases will be looking for a true one-to-one experience, facilitated by a personal shopper
- People doing their weekly grocery shop are more inclined to value discounts, offers and initiatives which make their lives easier
Location – where shoppers are, both physically and in the purchase cycle, for example:
- Pinpointing customers as they pass or enter stores using beacon technology and smart ads/displays
- Sending reminders and alerts as they approach the checkout
Time – when people choose to make purchases, seasonal and ‘milestone’ influences, for example:
- Alerting customers to special lunchtime offers/meal deals which are time-limited
- Sending information and offers linked to personal occasions such as birthdays
How to be relevant
Wanting to provide relevant experiences is one thing – delivering them is another. It involves accessing customer data and gathering it into one place so that it can be analysed and used intelligently. This is where retailers’ IT and tech departments sometimes get stuck – it’s difficult to justify the perceived cost of this kind of systems integration if there’s no existing business case for it.
The key is to focus on small initiatives that target small, measurable sub-sections of customer which will prove the business case for broader changes. If you can show the business what relevant, targeted loyalty can do for your uptake and conversion, it should be easier to get agreement to broader and bigger initiatives.
Step 1 – choose an area relevant to the customer
- Focus on something which definitely has an impact on customer behaviour
- Who uses the retail application is a good place to start. As the data is ‘owned’ by the retailer, it’s easy to access and customers have opted in to providing information by downloading it. This is important – there’s a fine line between providing a personal service and ‘stalking’ your customer
Step 2 – analyse the data to identify customer profiles and activity:
- When and where they access the application – when they’re out shopping, in-store, in the changing room etc
- What they use it for – product comparison, special offers, price checks, advice and so on
Step 3 – use the results to segment customer behaviour
- When and how they are most likely to make a purchase
- Which initiatives they are most likely to respond to – does the data indicate that they like receiving product-specific offers when they’re in-store, do they look for additional product information when making big-ticket purchases?
Step 4 – experiment with small initiatives and swift iterations
- Select one or two areas where you can make changes based on customer behaviour – if the data shows that they respond to alerts about product offers, trial in-aisle deals and discounts related to previous purchases. If they tend to make significant purchases based on special occasions, trial birthday offers related to wishlists. Limit activity to a couple of stores so that the data and results can be managed easily and without too much disruption to the business as a whole. This will also allow you to collect user feedback so that any future initiatives can use it to make improvements
- Focus on where customers are likely to buy (context) and when they buy (chronology) to pinpoint the best time and place for data-led initiatives
Step 5 – gather the results to make a business case
- Small, swift iterations allow you to quickly access the outcomes, analyse the results and get a sound idea of the impact of your initiative
- Make sure you have a control group, so that the business can easily see the impact your initiative has made outside of the wider business conditions
- Impact analysis and implementation results can be built into an evidence-based business case in advance of full rollout – this ‘test and learn’ approach can be key to selling in a concept as it minimises risk and investment.
Clearly, it’s not possible to become truly relevant to the customer without access to the data, and that involves connecting online with offline in an intelligent, useable way. This is where IT departments need to take a leap of faith and develop a strategy which includes a plan for data integration and orchestration. Once they’ve taken the plunge, this ‘start small, move fast’ approach should not only increase sales - it will also have the added benefit of making the customer feel that the retailer ‘gets’ them and what they need.