Customer Loyalty: Don’t Buy Your Shoppers' Love

Customer Loyalty: Don’t Buy Your Shoppers’ Love

Article
by Kevin Kearns on 2-12-16 in Industry Trends

You love your shoppers, but do your shoppers love you? Retaining and creating loyal shoppers is a challenge for many retailers, but it’s one that demands attention – in fact, acquiring a new customer can cost up to five times as much as retaining an existing one.

When designing loyalty programs, one common misstep is to assume that reduced prices will draw shoppers into the store. While seeing traffic increase during a promotional period is generally a positive sign, too many sales can not only devalue your brand, but actually attract the wrong kind of “loyal” shopper: one whose loyalty lies with the lowest price.

Instead, many types of retailers should try a different tactic: one where you attempt to attract and retain customers who seek out your brand for its products, not its prices. To do this, focus on building brand and product awareness, providing superior service, and expanding your thought leadership efforts.

Connecting with your shoppers outside of the store is also an excellent way to begin building brand loyalty. Talk to your customers. Email, tweet, or snap at them – anything to show them the careful thought that goes into selecting a product they’ll see in stores. Essentially, aim to make them love your product so much that they’ll stop in the store to just see it for themselves.

Exemplary retailer: Sephora

Customer Loyalty - Sephora

Sephora has taken out-of-store engagement to the next level by engaging with customers via multiple platforms – including, email, direct mail, and even Snapchat. With offers to earn sample products and invitations to attend free beauty classes, Sephora pulls out all the stops to get customers in the store and excited about new products.

Another critical component of increasing loyalty is getting the “extras” right. Extras are all of the intangible elements of your brand that make your brand what it is. Consider the extra services you provide for your customers (e.g., tailoring, free online ordering in the store, complimentary samples, fittings, etc.) as ways of spending money to get customers in your store – without devaluing your products through excessive discounting. This creates demand for the heightened reputation of your brand, while ensuring that your products maintain their esteem.

Exemplary retailer: Neiman Marcus

Customer Loyalty - Neiman Marcus

Neiman Marcus’ InCircle is the epitome of a rewards program that not only increases loyalty but drives better service through data collection – which, in turn, makes customers even more loyal. Neiman Marcus recognizes that it isn’t always necessary to compete on price. Rather, they know that customers value their products and the superior level of service in their high-touch environment.

There is ample room for creativity in the final piece of the loyalty puzzle, thought leadership. This is a retailer’s opportunity to think about the brand beyond the store. Aside from your products, how do customers (and non-customers) think of your brand? What words, ideas, or values are associated with your brand’s name?

Once you’ve determined what your brand stands for, promote it. Engage your customers in a conversation about a facet of your brand that you can expand into something that resonates with a wider audience.

Exemplary retailer: Patagonia

Customer Loyalty - Patagonia

Patagonia’s Common Threads program is part of an eco-friendly initiative that helps shoppers extend the lifecycle and impact of their clothing through providing shoppers with unique ways to fix, donate, recycle, or sell their used, yet still wearable, outerwear. This program, and others like it, are perfectly aligned with Patagonia’s target customers: active, outdoors-y types who care about the environment. This brand of philosophical thought leadership has been lovingly embraced by Patagonia customers, and has prompted them to share their stories.

As a retailer, you’re most likely faced with a high fixed cost of merchandise, which means that creating non-price-based differentiation in the marketplace is a key component of profitability. Loyalty is key. As you continually refine your brand’s path to creating loyal customers, recall the importance of building brand and product awareness, offering best-in-class service, and being perceived as a thought leader.

Read more posts by Kevin Kearns

Kevin Kearns is the Chief Revenue Officer at ShopperTrak, where he oversees the professional services and marketing department, as well as the global sales and sales operations teams. He previously served as the Chief Sales Officer, where he was responsible for leading global sales and customer service operating in over 90 countries.

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