By Luis Artiz, Epson America
Most retailers understand that
their success depends heavily on their ability to provide a positive customer
experience (CX). The problem, however, is that delivering CX isn’t as
straightforward as it seems, and it requires merchants to be continually
learning and updating their strategy. By taking a closer look at the loyalty
program lessons learned by Starbucks and Woolworths, retailers can learn a few
lessons about winning repeat customers in today’s environment.
A Few Facts About Your Biggest Demographic
For starters, let’s consider a few
fundamental points about retailers’ largest consumer group:
- The Millennial generation, which includes those
born between 1982 and 2000, is already more numerous than any other age
group—even the baby boomers (83
million vs. 75 million). - It’s estimated Millennials spent $200
billion in 2017 and they will pay $10 trillion over their lifetimes as
consumers.
One thing that separates this
generation from previous ones is that the majority of its members have been
immersed in the world of online shopping, search engines and constant Internet
connectivity from a very young age. Many of them also have never experienced
waiting in line at a bank, waiting for a letter to arrive in the mail or having
their musical choices limited by what’s on the radio. Because of this, two
things are happening: 1) Millennials have the power to change their minds as
fast as they can enter a new web address, and 2) They are helping older
generations expect the same things.
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No One Gets Marketing Right Every Time (The
Key Is To Keep Listening And Adapting)
Knowing customers’ shopping preferences is a crucial capability for
merchants all around the world. Australian supermarket chain Woolworths changed
its loyalty program three times between 2015 and 2016 trying to find one that
resonated with its customers. Its original loyalty program awarded Woolworths
customers with Qantas frequent-flyer points. Then the retailer decided to
replace this program with “Woolworths Dollars,” a program that awarded
Woolworths rebates only for the purchases of select items.
After receiving consumer backlash,
the retailer once again redesigned its plan to allow customers to use loyalty
points toward Qantas miles. Woolworths conducted follow-up surveys that
revealed only 41% of customers believed the program offered good value. As a
result, Woolworths made another change to its program, opting for Woolworth Points,
which could be used toward discounts at Woolworths or as Qantas points.
An article that appeared in the
Australian Business Review titled, “Woolies
finally reclaims supermarket title,” suggests the supermarket chain’s
responsiveness and persistence paid off.
Starbucks is another excellent
example of a retailer that’s winning by listening carefully to customer
feedback and responding accordingly. In 2016, the coffeehouse giant changed the
earning structure of its 11 million-member Starbucks Rewards program, awarding
points based on dollars spent rather than the number of visits. The backlash
was immediate and fierce. Starbucks’ response was to heavily promote
monthly double-point days (for customers to earn rewards quicker), and they
added other specials, including a chance to win free Starbucks for life.
Its biggest hit, however, was its
Mobile Order & Pay app, a time-saver that enables loyalty members to order
ahead and pick up in-store. The coffee retailer’s Q2 2017 earnings were 6%
higher than 2016, confirming its ability to adapt to customers’ needs.
However, the positive effect of
the mobile app led to a new challenge: an increase in orders and in-store
traffic. If there’s one thing today’s consumers have little patience for, it’s
waiting in line.
Business Insider did a one-week
study of the problem and reported that “While Starbucks promises mobile
orders will be ready within three to five minutes of placing an order, the
chain fulfilled this promise in just one out of five visits.”
Again, Starbucks recognized right
away that it had a problem (paying attention to its customers’ feedback on
social media), and they resolved the issues quickly. Shortly after the article
was released, Starbucks announced it was going to tweak its store layouts to
free up more space at pickup counters for mobile orders, and that it would add
more employees focused solely on mobile orders during busy hours.
Starbucks didn’t just focus on
short-term fixes; it shared that it’s looking into more intensive store design
revamps that will enable it to more easily segment in-store and mobile orders
because its mobile app orders accounted for 8% of orders in the US — more than
double 2016’s figures.
Conclusion
Figuring out the formula for CX
success can be a daunting task, and even the best merchants miss the mark at times.
One thing we can learn from savvy retailers like Woolworths and Starbucks is
that the customer loyalty program is a crucial part of the equation.
Getting customer feedback on your
loyalty program is vital. And if a majority of customers are feeling
underwhelmed by it, find out why and fix it — quickly. They’ll appreciate the
fact that you’re listening, and they’ll continue rewarding you with their continued patronage.
Luis Artiz is Group Product
Manager for Epson America’s point-of-sale (POS) solutions division. For
the last two years, he’s led product marketing, business strategy and product
launches for the North America region. Prior to Epson, Artiz spent seven years
at Belkin International as Director of Product Management leading the worldwide
business products division, with responsibility for marketing, product
development, roadmap, and P&L for all global regions. He started his
career as an Engineering Group Manager at Xponent Photonics, a fiber optics
technology start-up in Monrovia, CA. He earned both his MBA and Masters
in Electrical Engineering from the University of Southern California.
