Loyalty is not enough

Every­one knows that cus­tomers want a per­son­alised ser­vice and this is now easy for retail­ers to achieve. Loy­al­ty pro­grammes are adept at cap­tur­ing past pur­chas­es and tai­lor­ing offers. But to work effec­tive­ly for cus­tomers, loy­al­ty must be human­ised.

Con­sumers these days require the same thing from a brand that they require from their human rela­tion­ships: devo­tion. There’s noth­ing quite like the barista know­ing just how you like your flat white or the florist remem­ber­ing the type of lily you pre­fer.

Any old retail­er can get to know their cus­tomers’ likes and dis­likes, but not every­one knows how to use that knowl­edge effec­tive­ly. Mass afflu­ent research* dis­cov­ered that the afflu­ent mid­dle class is moti­vat­ed by dif­fer­ent things.

For exam­ple, 53 per cent would be encour­aged to spend more or shop more fre­quent­ly if they got free named-day deliv­ery and 27 per cent would for real-time, loca­tion-based offers to smart­phones. Mean­while, 25 per cent said they would be like­ly to spend more if store staff recog­nised them or knew their name.

Retail­ers already know that con­sumers are promis­cu­ous, par­tic­u­lar­ly now they have the abil­i­ty to com­pare prices at the touch of a but­ton. If they’re not able to get the ser­vice or prod­uct they need there and then, and at a price they are com­fort­able pay­ing, they feel no qualms about going else­where. This means retail­ers must make even more effort to deep­en their rela­tion­ship with their cus­tomers to avoid them “stray­ing” to the com­pe­ti­tion.

Mignon Buck­ing­ham
Man­ag­ing direc­tor of glob­al loy­al­ty agency ICLP

The desire to have a high­ly cus­tomised expe­ri­ence has always been more preva­lent among cus­tomers with­in high-end retail. Mignon Buck­ing­ham, man­ag­ing direc­tor of loy­al­ty agency ICLP, says: “These retail­ers have always had their lit­tle black books, but as con­sumers are shop­ping across mul­ti­ple chan­nels, they’re mov­ing towards a high-touch recog­ni­tion approach.”

Oth­er brands that have pre­vi­ous­ly focused on dis­counts to keep cus­tomers return­ing are wis­ing up and try­ing to give cus­tomers oth­er, more expe­ri­en­tial rea­sons to come back into the store. These kinds of rewards also have a place on the high street.

Per­son­al styl­ist and per­son­al shop­ping used to be exclu­sive to lux­u­ry stores, but brands such as Top­shop now offer an acces­si­ble ser­vice where, in exchange for pledg­ing to spend a mod­est amount, cus­tomers can fill out a design brief and seek guid­ance from a per­son­al assis­tant on what to buy in a VIP room while drink­ing cham­pagne.

It’s about dis­tin­guish­ing between a trans­ac­tion­al state of loy­al­ty which is fleet­ing and the emo­tion­al state of devo­tion which lasts

Top­shop know exact­ly what they are doing; this type of reward may not dri­ve huge incre­men­tal spend­ing at the indi­vid­ual lev­el, but it will cer­tain­ly dri­ve an avalanche of “likes” and brand admi­ra­tion across a myr­i­ad of social media plat­forms. In addi­tion, adding val­ue to cus­tomers’ lives in a way which reflects how well they under­stand their deep­est desires will dri­ve the devot­ed state nec­es­sary to make their cus­tomers return to them again and again.

Whether it’s excelling at help­ing cus­tomers in-store or online, the retailer’s chal­lenge is to under­stand when and where to inter­act in every­day life. Dig­i­tal cus­tomers are now being empow­ered with flex­i­ble shop­ping expe­ri­ences, such as order track­ing and mul­ti­ple deliv­ery options.

This pos­i­tive online shop­ping expe­ri­ence is trans­lat­ing into the store with inno­va­tions such as con­nect­ed walls, dig­i­tal mir­rors, use of QR codes to make the try­ing-on process eas­i­er, apps to speed up queu­ing and the abil­i­ty to save wish lists straight to their phones for access lat­er when they are online.

“How­ev­er, over and above mak­ing them feel ‘val­ued’, retail­ers should be mak­ing con­sumers feel like a some­body, using big data to dig deep into their indi­vid­ual ratio­nal and emo­tion­al needs, uncov­er­ing aspects of their cus­tomers that even they don’t know about them­selves,” says Ms Buck­ing­ham. Build­ing a rela­tion­ship on this under­stand­ing gives users a per­son­alised expe­ri­ence, where every inter­ac­tion engages, excites, sur­pris­es and delights.

For retail­ers, dri­ving brand devo­tion is about every employ­ee liv­ing and breath­ing it, from front of house to ful­fil­ment ware­hous­es

As Ms Buck­ing­ham explains: “It’s about turn­ing the brand-con­sumer rela­tion­ship into some­thing almost akin to the rela­tion­ships we have with our loved ones. It’s about dis­tin­guish­ing between a trans­ac­tion­al state of loy­al­ty which is fleet­ing and the emo­tion­al state of devo­tion which lasts.

“High­er-end brands already focus on an excel­lent cus­tomer expe­ri­ence and increas­ing­ly use data to pro­vide con­tex­tu­al rewards and expe­ri­ences, such as wel­com­ing in a high-val­ue return­ing cus­tomer with a glass of cham­pagne or offer­ing a free scarf to match a blouse they’ve pre­vi­ous­ly pur­chased.”

This, of course, is what inspires the cus­tomer to buy more and become an advo­cate among fam­i­ly and friends, and in their social media com­mu­ni­ties.

But secur­ing this lev­el of devo­tion belongs to every depart­ment with­in the organ­i­sa­tion, says Ms Buck­ing­ham. It’s not enough to take cus­tomer data, turn it over to a loy­al­ty pro­gramme and be done with it. “For retail­ers, dri­ving brand devo­tion is about every employ­ee liv­ing and breath­ing it, from front of house to ful­fil­ment ware­hous­es,” she says.

Yet still this isn’t enough. We know mil­len­ni­als want to buy from retail­ers who share their val­ues and beliefs, and they are more like­ly to become advo­cates for brands they believe in. Brands who are dri­ving great devo­tion are not just those who offer great expe­ri­ences in exchange for loy­al­ty, but those who per­son­alise them to each of their cus­tomers.

Space NK’s n.dulge scheme, for exam­ple, not only offers loy­al cus­tomers dis­counts on their birth­day, but also sends out com­pli­men­ta­ry sam­ples as a present. Inno­v­a­tive ideas like these make VIPs feel exclu­sive with expe­ri­ences that mon­ey can’t buy. These suc­cess­ful pro­grammes direct­ly reflect the brand and dri­ve the cus­tomer even deep­er there­in.

Ms Buck­ing­ham believes the loy­al­ty pro­gramme of the future will move from points and prizes to more expe­ri­en­tial rewards. Brands will use data more judi­cious­ly and we may even see many open­ing the doors to cus­tomers in terms of giv­ing them the abil­i­ty to access their own pur­chas­ing data, as they have start­ed to do in the trav­el space.

Ulti­mate­ly, we will see an increase in the devel­op­ment of tight brand com­mu­ni­ties, some­thing that is already hap­pen­ing in fash­ion retail with the likes of Insta­gram, she says.

Devot­ed cus­tomers are less price sen­si­tive. They want val­ue, but val­ue that comes from a bet­ter, more per­son­al expe­ri­ence and that’s some­thing they are pre­pared to pay a lit­tle bit more for. The lead­ers will be those that com­bine in-store expe­ri­ences with mobile and e‑commerce chan­nels to bring cus­tomers well-timed, rel­e­vant sur­pris­es.

In the age of the empow­ered cus­tomer, retail­ers need to stand out from the crowd and realise that loy­al­ty is not enough.

*Mass afflu­ent research under­tak­en by SSI across 6,125 glob­al con­sumers, on behalf of ICLP’s par­ent com­pa­ny Collinson Group, Feb­ru­ary 2016

Learn more about dri­ving devot­ed cus­tomer rela­tion­ships at www.iclployalty.com