Customer Loyalty for Retail Gets a Lot More Fun

by Bill McCarthy on 06-02-17

Looking Ahead: 4 principles to keep in mind as customer loyalty for retail continually evolves to meet consumer demands

Years ago, customer loyalty for retail meant that your brand had a dedicated space in shoppers’ wallets. Specifically, committed shoppers carried retailer-specific cards that were used at the checkout to earn discounts. Today, however, customer loyalty for retail has evolved into programs that make direct connections with customers across multiple channels. And repeated purchases are a result of the way a brand personally resonates with them. Factors include price, convenience, value and corporate ideals. Looking ahead, this presents various opportunities for apparel retailers to connect with consumers and forge loyalty.

Smart pricing doesn’t mean cheap
Pricing is a major point of focus across industries, and apparel retailers are always thinking about price, particularly due to trends and the seasonality of items. Today, technology plays a significant role in a shopper’s decision-making process, as evidenced by a survey of U.S. smartphone users that found that 90 percent of shoppers used their phones while in a brick-and-mortar location. Fifty-four percent of the survey respondents used mobile for price comparisons.

Due to increased visibility into pricing, customer loyalty for retail brands is becoming increasingly tricky, as retailers are tasked with improving price perception in order to remain competitive (as opposed to offering deep discounts). In fact, price perception was found to be viewed as important as the price itself, as explored in a recent Harvard Business Review article stemming from a Bain & Co. study. And in order to gain credit from consumers for their pricing — and in turn increase traffic and build loyalty — retailers can choose from four distinct tactics:  offering lower prices, shouting out those prices, giving great deals and tailoring the experience.

Through in-depth research into brand-specific pricing, pricing across industry, and consumer perception, retailers can mold an effective pricing strategy that competitively positions their merchandise without devaluing product. And focusing on perception and customer satisfaction will reinforce loyalty.

Convenience comes in many packages
Customers want physical stores to replicate the ease of online shopping. And successful retailers are harnessing these expectations to create a convenient, engaging in-store experience that fosters strong customer relationships.

For example, mobile POS shows customers that retailers respect their time. Long check-out lines can be virtually eliminated by arming the sales team with mobile devices they can use anywhere in the store. This also gives associates access to valuable customer data that they can use to personalize the sale and increase conversion.

Additionally, a frictionless return experience is vital. A dedicated line and ability to access receipts through the customer’s credit card eases the process. Nordstrom and Kohl’s have earned many loyal customers with their generous return policies and efforts to quickly process these transactions.

Another growing convenience trend is buy online, pick up in-store (BOPIS). A recent JDA/PwC survey of 350 global retail CEOs found increased investment in the strategy, with 51 percent of respondents saying they offer or plan to offer BOPIS in the next 12 months. Luxury apparel retailer Michael Kors plans to roll out the service in all of its 300-plus U.S. locations after a successful pilot program.

Value can mean quality over quantity
Fast-fashion retailers continue to disrupt the industry with their ability to expedite the production process and immediately bring the latest trends directly to consumers at a fraction of the cost. With the help of social media, which provides shoppers with a constant stream of must-have fashion fads, the design-to-production cycle has been dramatically shortened and the volume of apparel flooding the market has skyrocketed. But fast fashion has drawbacks and consumers are increasingly taking issue with diminished apparel quality and environmental implications.

Millennials, with their immense buying power and social influence, are increasingly seeking sustainable clothing options according to a study by Euromonitor International. As a result, they are attracted to retailers — such as REI and Patagonia — that not only provide quality but also are ethically and environmentally responsible. And fast-fashion shops, such as H&M and Zara, are taking note, introducing sustainable collections with the hope of building loyalty with this younger generation.

Corporate ideals take center stage
According to Omnicom Group’s Cone Communications, 70 percent of consumers will spend more on brands supporting causes they care about. But sincerity is critical and companies including Warby Parker and Toms Shoes, with the “buy one, give one” motto, are examples of philanthropy done right. Because their programs tie back to their brands, customers can make the direct connection between their purchases and helping others.

Social and political issues are another way retailers can strengthen loyalty with supporters. For example, United Colors of Benetton recently came out with a campaign promoting gender equality, which was focused on India (one of its biggest global markets), and then rolled out globally on International Women’s Day.

And while there is risk involved in commenting on certain issues, successful retailers are in tune with their customers; they develop an authentic platform, link the cause to the core business and keep customers informed and engaged.

Building customer loyalty for retail: it’s worth the effort
Customer loyalty for retail brands used to feel secure, cemented — shoppers were likely to be decades-long repeat buyers. Today, customer opinion can turn on a dime and a more robust loyalty program is essential for building and nurturing relationships. Because loyalty programs are not one-size-fits-all, especially in retail, it is important for brands to do their research, experiment with a variety of options and constantly measure results. Retaining loyal customers may be an ongoing effort requiring constant attention. But brands that put in the extra effort to differentiate themselves with top-notch service, quality products and ethical proceedings will ultimately win hearts and wallet share.

A version of this article was originally published in Apparel Magazine.

Read more posts by Bill McCarthy

Bill McCarthy is the General Manager of the Americas, in which he oversees regional efforts pertaining to the Traffic Insights business unit.