Part 1 of the Retail TouchPoints Customer Loyalty Report
As shoppers devote more time to social media and mobile for interaction, shopping and information search, retailers must adopt new and innovative loyalty tactics that align with these new behaviors, but continue to garner the perks of traditional loyalty programs.
Punch cards, frequent buyer memberships, online points and email newsletters have allowed customers to stay in contact with their favorite brands online and in-store. Now, these loyalty programs can be promoted and maintained through mobile applications and social media. New programs also can be deployed via text message, geo-location app and social gaming. These tactics in particular have contributed to the fast-paced growth of mobile marketing, according to Nikki Baird, Managing Partner, Retail Systems Research (RSR).
“So far, online and store have been the dominant channel, but we're seeing huge growth in mobile,” Baird said. “According to our research, the number of retailers offering something via the mobile channel — whether just information or full commerce capabilities — is going to double in the next 12 to 18 months.”
In this new era of customer loyalty, retailers are beginning to recognize the boundless opportunities available from the implementation of tactics and technologies that peak customer attention at home or in-store. To that end, according to the “IBM 2010 CEO Study,” 88% of respondents chose “getting closer to the customer” as a top priority in leveraging online and digital technologies.
The survey also noted that 76% of CEOs view “insight and intelligence” as key focus areas for business growth. Through data analytics, retail marketers can gain a clearer understanding of their target consumer base, including purchase behavior and the channels most frequently visited. This information can help merchants develop a strategy that will increase customer loyalty and enhance one-to-one communication.
Many innovative leading retailers, such as Sephora and Moosejaw, are optimizing multiple channels to extend inventory information and ignite memorable dialogue with shoppers. By moving past age-old batch-and-blast campaigns, these retailers have developed strategies using mobile, web, social media and in-store to stand out in the increasingly competitive cross-channel market.
Beyond CRM: Top Tips To
Improve Customer Loyalty
Due to the influx of channels consumers are using to interact with brands, retailers are struggling to determine an accurate method to measure and track customer loyalty. While many retailers implement CRM strategies to measure loyalty,, Robert Passikoff, Founder and President of Brand Keys, Inc., revealed more efficient ways to determine the success of loyalty initiatives.
Passikoff provided a checklist of three open-ended questions retailers should refer to when analyzing customer loyalty efforts:
- What actually drives loyalty in the category?;
- What expectations do consumers hold for the drivers of loyalty and engagement?; and
- How well does the brand meet — or even exceed — these expectations?
To that end, Passikoff noted that retailers should stop looking through a “brand lens” and start looking through a “consumer lens.” He explained: “Know how the consumer really views the category, how they'll compare offerings, and how they actually buy. Have a measure of unconstrained-by-category expectations, and know how well your brand meets those expectations.” Retailers can then measure responses to advertising and communication tactics to track trends that engage and engender loyal customers.
Although many retailers have built and deployed loyalty strategies around discounts and coupons, focusing on optimal customer service and an engaging experience across channels is more effective in winning true loyalty, according to RSR’s Baird.
“Retailers need to focus on customer needs and wants — and delights,” Baird noted. “The more you delight a customer, the more likely they are to come back. If you can consistently delight them, then you build loyalty. Too many retailers have defined ‘delight’ as equivalent with ‘discount,’ and I just don't find that to be true. Yes, an unexpected or ‘bonus’ discount can be ‘delightful’ in that kind of circumstance, but so can a good employee interaction, no line at the register, or even something as simple as acknowledgement that the shopper is a great customer.”
Because a seamless buying process is vital to increase consumers’ willingness to purchase, either online or in-store, retailers can implement multiple channels and strategies to peak consumer interest throughout the browsing and buying journey. Both Sephora and Moosejaw have made great strides in this area.
Sephora Optimizes New Technology To Enhance Online Shopping
Sephora has put forth made numerous efforts to drive purchases by engaging with shoppers in-store and online. In 2007, the beauty and toiletries retailer developed the Beauty Insider loyalty program for frequent shoppers. This initiative allows consumers to collect loyalty points following completed purchases. Points are redeemable for a collection of sample packs and limited-edition products. In 2009, Sephora added another level to its loyalty initiative — the V.I.B. (Very Important Beauty Insider) — for premium buyers. Members of this program can receive exclusive gifts, event invitations and early access to select products.
In addition to selling through 1,000 stores in more than 24 countries, Sephora offers a customer service call center, catalogs and a web site featuring the full line of products and specials. More recently, Sephora has expanded its customer experience across multiple platforms, including iPad, mobile, YouTube and social media.
Through the retailer’s YouTube channel and BeautyTalk program, shoppers can learn about the latest cosmetic products, trends and styles from makeup artists and associates from makeup brands such as NARS. The iPad app also features an interactive catalog of all Sephora brands, expert makeup tips and videos. Mobile applications feature seamless shopping capabilities so customers can easily browse inventory, quickly view new arrivals, and read product descriptions and reviews. The apps also include an in-depth view of past purchases, product recommendations and reward point balances, a shopping list feature and store locator. Although Sephora’s applications enhance the browsing experience, the retailer’s social efforts increase communication between shoppers.
With nearly two million “Likes” on Facebook and more than 200,000 Twitter “Followers,” Sephora uses a variety of techniques to increase communication with loyal shoppers and brand fans through the social channel. While both social pages offer sales and deals, the retailer’s Twitter page features fun makeup facts and its Facebook site contains high-definition photos, makeup tutorials and a discussion board for fans to ask questions and discuss their Sephora buys.
“Sephora does a great job with customer engagement via social channels,” noted Baird. “It's harder to get that same level of experience on their site and even harder in their stores, though they are working on these channels too.” By focusing on optimizing social media efforts, Sephora has successfully increased customer interaction and created a community among its shoppers.
Moosejaw Creates Personal Relationships With Shoppers
Moosejaw is known as a traditionally online-focused retailer in the outdoor apparel and equipment space. With only seven brick-and-mortar locations, the retailer has gained a quality fan base primarily from its innovative approaches to brand engagement through multiple channels. Moosejaw excels in initiating conversations with consumers through their online site by implementing unique promotions, such as the “Free Chinese Food” campaign, which promised free takeout to customers who mailed their POS receipts to retailer headquarters. The retailer also has consistently encouraged purchases through its rewards program.
By becoming a member of the Moosejaw Rewards Program, shoppers can collect points that are redeemable for free items. For example, consumers who opt-in to the Moosejaw email newsletter for the first time receive 397 reward points. Visitors also can enter to join the retailer’s daily point giveaway and receive 15,000 points. In addition to boosting overall income for Moosejaw, the rewards programs also have proven to successfully optimize brand loyalty through compelling dialogue with shoppers via social media on the company web site. In the “Moosejaw Madness” section, brand fans can share personal pictures, read the Moosejaw blog and share product reviews.
To fortify social media efforts, which are a vital component of Moosejaw’s customer loyalty program, the retailer composed a team dedicated to tracking and interacting on Facebook. Social media staff developed a consistent strategy around posting status updates and pictures, and answering questions or complaints. The retailer’s Twitter and SMS initiatives provide strong yet entertaining calls-to-action to engage shoppers, including quiz questions that are redeemable for free merchandise and coupons.
The more a retailer offers innovative ways to communicate with consumers via web and social media, the more consumers will grow attached to a brand, according to Jerry Lewis, VP of Technology for Moosejaw.
“You have to find ways to interact with your customer where you are not selling them something,” Lewis said. “How vital this is to your success totally depends on your industry, brand strength, and social ‘relevance.’ By relevance, I mean how much people would care about your company and products in a social setting where they will talk about it.”
CRM Solutions Surpass Moosejaw’s Customer Loyalty Expectations
Currently, Moosejaw is working to advance its customer service options by employing a live chat solution so retail personnel can immediately answer shopper questions and diffuse any inventory or shipping issues.
“The keys to customer loyalty in the omni-channel age are outstanding product quality, great customer service, and consistent style and flavor of communication across all channels,” noted Lewis. “This particularly drives home the authenticity of your message and brand.”
To further the success of its loyalty projects, Moosejaw is implementing a new CRM system in correlation with a deeper integration of its email service provider. According to Lewis, this new project will increase efficiencies in the retailer’s email response process based on shopper interests and communication history. The new CRM system also will allow marketing personnel to track campaign successes.
“Customers hate getting spammed, but they love our emails, so most of them read them all and laugh,” Lewis said. “You can go too far though, so we want to be sure we’re as able to listen to our customers, as we are able to talk to them.”
Part II of the Customer Loyalty Report will appear in next week’s Retail TouchPoints newsletter and will feature analyst insights on mobile and social strategies. The report also will provide detailed information covering the latest loyalty trends and technologies that will optimize customer engagement online and in-store.