Customer loyalty is often described as the most valuable currency on the market. Yet despite understanding how valuable it is, many retailers struggle to effectively implement retention and loyalty strategies that generate real-world value to the consumer. Simply providing reward points - most of which are never used is not enough to drive consistent customer engagement. Most consumers expect loyalty programs as minimum, but developing competitive advantage requires brands to go above and beyond if they wish to remain front of mind with existing and future customers.
Loyalty is Earned
Loyalty is a two-way street, and today’s savvy consumer fully understands the power they wield in the modern retail dynamic. Companies compete with each other for their business, and it's up to e-commerce managers to ensure that their customer retention strategies are effectively engaging customers. It is arguably at least five times as expensive to acquire a new customer compared to keeping existing ones - and engagement is rapidly becoming a key loyalty indicator.
Engaged customers feel emotionally connected to their purchasing habits and are influenced by multiple factors. A study by Rosetta Consulting found that engaged customers buy 90% more frequently and spend 60% more during each transaction, and are five times more likely to remain completely loyal customers.
Engagement is Key
Although engagement is widely accepted as a key catalyst for customer retention and loyalty, many retailers still fail to effectively leverage and execute on this opportunity which could effectively prove a real game-changer for their customer acquisition and retention ambitions. From personalised sales and promotions, complaints and dispute resolution to reviews, social media and outreach management, all should be tracked as part of a holistic and robust competitor monitoring strategy.
Customer engagement strategies rarely vary in method but execution is where retailers have an opportunity to differentiate themselves. Through their customer experience. Even though strategies are replicated over time by competitors, first mover position will provide an initial advantage in most cases. It is important to monitor competitor tactics from their promotional strategies to email communications with the view to gain a deeper insight and better differentiate the brand and its offering.
Executing an engagement strategy unique to your business and personalised for each customer is important, but there are areas where direct competition could prove valuable especially when competitors execute a new or improved strategy like in the case of Amazon and Walmart.
Personalise Customer Experience
Customer experience and engagement isn't just reserved for execution as part of a sales process but implemented as part of a wider strategy, provides ongoing opportunities for retailers to communicate a unique tone and personality that resonates with customers. Every customer contact point is an opportunity to delight and provide memorable experiences that extend beyond price. This encourages emotional connections between customers and brands, making them not only repeat purchasers but also brand advocates as long as their positive experience with the retailer remains consistent.
Increasingly, these two aspects continue to converge driven by increased spending power enjoyed by the millennial generation. This being said, eMarketer indicates that 52% of consumers have switched retailers over a poor customer service experience. Unsurprisingly, retailers today have leveraged social media as a direct channel to offer a better customer experience. If the competition uses Twitter to connect emotionally with customers, they undoubtedly have an increased chance of retaining existing customers while attracting those who are unhappy with their previously prepared retailer or brand.