Comment: Retailers must adapt to new rules of loyalty

With the path-to-purchase ever more complex, it is becoming harder to influence purchasing decisions. The shopper journey is littered with a plethora of interruption points and consideration sets. It is now imperative that retailers are able to engage and interact with shoppers throughout their purchasing decision if they are to convert them into customers, and then begin the process of retaining them as advocates.

Gaining loyal customers has obvious benefits. They are easier to convert, spend more, cost less to service and help create greater advocacy through positive reviews and recommendations to their peers. The benefits of earning genuine brand advocacy are obvious, but to achieve this, we need to understand what the drivers of loyalty actually are.

To this end, we can look at Planet Retail’s global shopper research to determine what influences the consumer’s choice of retailer, the factors deemed most important when shopping online, the impact of social media and the role of mobiles. Here I’ll draw on the overall findings of the research, rather than any specific country.

The ever-fickle shopper has a plethora of choices regarding how, when and where to shop. They are empowered with complete visibility over price, availability, reviews and recommendations. At the same time, the retailer is no longer gatekeeper for their brand. They no longer fully control the conversation with consumers, how the conversation evolves, or the creation of brand advocates. The rules of the game have changed and, if retailers are to nurture loyalty, they will need to provide tailored, relevant and personalised shopping experiences.

To attain loyalty, retailers will need to gain a better understanding of their customers, and then effectively leverage this knowledge to meet their demands. When looking at what influences consumer retailer choice, Planet Retail found personalisation featured heavily, with our research showing 42% of shoppers’ choice of retailer being influenced by receiving bespoke promotions and deals.

Personalisation is also critical because time-poor customers only want to see what they are interested in buying – Planet Retail finding the ability to customise websites influenced retailer choice for 36% of shoppers. Personalising every touchpoint a consumer has with the brand, from adverts, to marketing emails, through to the look and feel of the site, will be a likely driver of loyalty.

The real potential for nurturing loyalty through personalisation is providing contextual offers. With consumers expecting constant connectivity and interactivity with retailers – thanks to the rise in use of smartphones on the path-to-purchase and free instore Wi-Fi becoming commonplace – there is a growing opportunity to reach customers at the right time in the right place and with the right message.

Technology such as Apple’s iOS7 iBeacon, when paired with in-store sensors, enables retailers to send a message to a shopper’s iPhone when they enter a store, or even at a specific shop floor location, so genuinely targeted offers are within the realms of possibility.

Planet Retail discovered that 41% want to receive real-time promotions via their mobiles when instore, while 38% want to receive tailored vouchers and discount codes when instore based on previous purchases. Contextual and proximity marketing will enable retailers to hyper-target customers when they’re most likely to buy, and gather relevant data so the retailer can continuously improve the in-store experience.

While retailers will need excellent customer data management to achieve contextual promotions, if they can engage customers at point of purchase with an offer too tempting to refuse, instore conversion rates will increase.

It is not just about personalisation though. It is about leveraging the powerful tool consumers are bringing with them to stores in simpler ways. Planet Retail found 44% of consumers want to use their mobiles to gather loyalty points and savings as they shop. Engaging consumers by facilitating how they want to shop, and implementing solutions around the technology they already possess, has the potential to create greater brand advocacy.

Consumers are increasingly willing to interface with retailers via social networks, and are utilising the information-rich resources of online and social media when making purchasing decisions. Planet Retail found that while 54% agreed with the statement "I am more influenced by peer reviews and recommendations than social media when making a purchasing decision" – with 44% agreeing that "social networks were a good source of peer review and recommendations" – is clear that retailers need to build closer relationships with customers, and help them share experiences with peers via social media, if they are to gain their loyalty.

Indeed, only 32% agreed with the statement "I do not take into account any information on social media when making a purchasing decision". Consumers are also turning to retailers for inspiration. Retailers, in turn, now need to blend content and commerce to create compelling, enticing experiences. With a multitude of choice and ease of shop, it is now crucial to keep the capricious consumer engaged throughout the path-to-purchase if they are to convert and retain them.

Retailers must look at the business through their shoppers’ eyes if they are to build a better, closer relationship with them and cultivate loyalty. Only by gaining an understanding of customer needs and effectively utilising this knowledge will retailers be able to deliver the tailored, personalised shopping experiences being demanded of them. In doing so, they’ll be adhering to – and profiting from – the new rules of the loyalty game.

Planet Retail's Malcolm Pinkerton writes a regular eCommerce column for Essential Retail.

Planet Retail will be exhibiting on stand 277 at RBTE 2014.

Helen Slaven, managing director of Planet Retail, will be presenting a session on 'Global Trends & Forecasts 2014 – Drivers of Change in International Retail' as part of the RBTE 2014 conference programme.

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