Adding value brings the real retail reward

19 January 2012

In the current economic climate retailers can boost loyalty, without cutting prices, by improving customer experience.

  • Question: Discounting helped retail sales end 2011 on a high, but can stores build loyalty without continually cutting prices?
  • Answer: Yes, by working with customers to improve the shopping experience.

Retailers with reward and loyalty programmes in 2012 must address customer cynicism to get shoppers returning again and again.

For too long, say industry experts, consumers have felt stores are simply trying to bribe them with rewards and special offers to make them spend more. The retailers wanting loyalty this year must demonstrate how they add value to the shopping experience.

Driving customer loyalty

"Consumers must be encouraged to look for the 'unpublished' soft benefits of a loyalty programme. These include having more relevant products on the shelves and better customer service as well as the more obvious benefits such as cash-backs and discounts," says Stuart Evans, Director Global Loyalty Practice, at loyalty agency ICLP.

He urges retailers to exploit the data they hold on customers and use the insight it provides intelligently. Data informs retailers of the value of a particular customer over time, whether they shop instore or online and if they are buying the same products today that they did a year ago, all key ingredients to winning long-term loyalty.

"A loyalty programme is like buying a new car. If you leave it on your drive and don't make the most of it, it will soon get spoiled and lose its shine," says Evans.

Recent innovations

Waitrose added a loyalty card to its myWaitrose members scheme in October and is analysing in-depth data to discover shoppers' likes and dislikes. Card members get exclusive access to competitions, tailored offers and can even win back the value of their shopping.

Technology is enabling retailers to demonstrate less obvious loyalty benefits to customers. John Lewis is taking on the online price comparison sites with free wi-fi in its department stores so customers can compare prices and look up product information. It is also working on an iPhone app aimed at in-store customers.

New ways of satisfying your customers

More retailers will integrate social media into their loyalty strategies in 2012 in a bid to focus more on improving the retail experience.

Fashion chain Republic has attracted shoppers to its store at Westfield Stratford City in London using an in-store touchscreen virtual mirror in its changing rooms. Shoppers try on clothes and share pictures on social media so friends and family can comment on how they look.

Understand what matters

In the current economic climate retailers will also boost loyalty if they deal effectively with complaints. A survey by accountants PriceWaterhouseCoopers found that 72 per cent of consumers are unwilling to shop again at retailers who fail to resolve their issues - rewards or no rewards.

Article appeared in the supplement, Loyalty and Rewards, distributed within the Guardian by Mediaplanet on January 19th 2012. Written by Steve Hemsley and reproduced with the permission of Mediaplanet. 

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