Customer loyalty is a lot like love – you can’t force it. You can’t make someone love you, and contrary to popular belief, you can’t MAKE your customers be loyal. Loyalty is a complex construct that takes into account nearly every interaction. And just like love, it’s the health of the relationship that matters most.
According to Forrester Research, loyalty is both behavioral and emotional. And it requires a sizeable commitment on the part of the retailer:
“Companies that really want to compete for their customers’ loyalty need an evolved approach that extends beyond a loyalty program designed around transactional rewards.”
Retailers are embracing this “evolved approach” by taking a step back and building a strong foundation for loyalty. This foundation starts with a well thought out approach to every touchpoint of the customer journey. An overwhelming 90% of retailers are planning to invest the same (or more) in their existing loyalty programs.
We surveyed 100 retailers in 8 major industries to better understand what their plans are to create a superior customer experience. We learned that retailers are making investments to improve the customer experience in 3 key areas: loyalty programs, new credit options, and measurable marketing efforts.
Retailers understand that rich, fulfilling customer experiences create lasting, long-term customer relationships, which help to foster loyalty. Here’s how retailers are demonstrating their commitment to dedicated investments.
58% of participating retailers plan to invest more in their existing loyalty program.
With 81% of respondents stating that they already offer a loyalty program, nearly three-quarters of those with existing loyalty programs are investing more in them. That means retailers see an opportunity to improve the customer experience through optimized loyalty programs.
Today’s retailers understand that they must take steps to build customer loyalty.
Of our survey participants, zero answered that they do not invest in the checkout experience or in credit financing options. However, how they decide to invest will likely impact their success (or failure) at driving greater loyalty and increased repurchase ratios.
In order to open doors to a broader customer segment, retail credit options must be plentiful and easily accessible. Forward-thinking retailers are allocating budget dollars to make retail credit a reality for as many customers as possible.
2 of the top 3 checkout experience investments (for those who will invest the same or more) are credit-related.
Half of the retailers surveyed plan to invest in the credit application process to improve checkout, and 45% will invest in increasing the number of financing options available to customers. Forward-thinking retailers see retail credit as a key driver to increased loyalty and repeat sales.
Three-quarters of e-commerce players surveyed are increasing their investments in credit options.
E-commerce pure-play retailers are unique, in that their only interaction with customers is online. They’ll never be able to see customers face-to-face in a store and ask how their day is going. By being online-only, e-commerce pure-play retailers must leverage new strategies to create great experiences that drive loyalty and repeat purchases.
Retailers believe that credit options have a large impact on customer loyalty.
Our survey polled retailers on which factors were influential in building customer loyalty, and for those factors, how much influence they had. Retailers reported that all of the following were extremely influential: offering multiple financing options (78%), high credit approval rates (72%), and offering mobile credit applications (67%).
Measurable Marketing Efforts
Retailers are overwhelmingly focusing on meeting customers where they are, regardless of where they are shopping. That means looking at what’s worked historically and continuing to invest in those key areas.
The top 2 metrics retailers use to measure customer loyalty are loyalty program membership (64%) and repurchase ratio (62%).
Given those key measurements, it makes sense that retailers would invest heavily in anything that (a) drives higher loyalty program enrollments and (b) makes customers more likely to purchase again.
However, several other factors trump offering loyalty programs.
When asked which factors were the most influential in driving customer loyalty, the top answer from respondents was offering promotions and discounts (86%), followed by offering an incentives program (80%) and having a speedy checkout process (80%). Even though loyalty programs may perform well, retailers are likely to see higher repurchase rates coming from discounts, incentives, and fast checkout experience.
Retailers are investing in strategies that have demonstrated results for driving both higher repurchase rates and loyalty enrollments.
For retailers investing more, their top 3 categories for investment are app-based mobile technologies (57%), the checkout experience (54%), and credit financing options (54%).
These 3 priorities align with what’s happening in the broader marketplace. More users than ever are using their phones to shop. A seamless checkout process has proven to repeatedly drive higher purchase rates. And credit options open doors to shoppers who wouldn’t otherwise make a purchase.
Driving true loyalty depends upon a diversified investment strategy that is customer-centric.
Retailers must demonstrate to customers that they are committed to lasting customer relationships. The way to do that is through thoughtful, easy interactions that put the customer first. Forrester Research said it best:
“Shoppers will look for far more than points and offers — so the savviest retailers will offer meaningful rewards that create deep emotional loyalty, steaming ahead of competitors still stuck on these currencies.”