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5 Ways Retailers Can Tackle Wavering Customer Loyalty

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New research from PwC has found that three in 10 customers are more likely to try a new brand — and that number is even higher among younger consumers.  
 
But winning (and keeping) customers’ loyalty is no longer confined to programs and points. Results from Retail TouchPoints’ annual Customer Loyalty and Personalization Benchmark Report reaffirm that retailers are focused on building a strong foundation of first-party data to support their supply chain, in-store services, omnichannel marketing and experiential strategies.  

Despite their investments, there are a few gaps and opportunities for improvement. As you develop your plans for 2023, consider these recommendations, based on the 2022 survey findings:

Diversify Your Marketing Mix  

Customer acquisition costs online have reached unprecedented levels, which means marketing leaders are trying to diversify their toolkits. In some cases, they’re even returning to the channels of yester-year to shake things up.  
 
In fact, the use of traditional media — such as TV, radio, direct mail and outdoor advertising — as a customer acquisition tool rose from 29% in 2021 to 51% in 2022, second only to email outreach (68%). Over the last year, we’ve seen digitally native direct-to-consumer (DTC) brands like Athletic Greens and SmileDirectClub drop linear TV spots on networks.  
 
But make no mistake, the return to “traditional” media by no means has to be boring. Consider the immersive 3D billboard Fortnite x Balenciaga launched in key markets to promote their partnership. Sure, it technically was a traditional channel (outdoor advertising), but the execution was anything but traditional.  
 
As you develop your 2023 strategies and investments, consider shaking up your marketing mix to include a more diverse range of channels that can address your brand and performance marketing goals. Sure, marketing teams want to make a fast and measurable impact on the business, but brand building is still key for forming valuable relationships with consumers.  

Collect and Leverage First-Party Data 

Inflation and the threat of a recession are bringing discounts to the forefront. Nearly three quarters (73%) of survey respondents said discounts were their top method for customer retention — up from 55% in 2021. 
 
It’s impossible to ignore the real economic concerns of consumers, but if loyalty is top-of-mind, brands and retailers need to expand their thinking and consider how they can build long-term appreciation and value for the customer. After all, retail isn’t just about a one-time transaction; it’s about building a relationship that is mutually beneficial and meaningful. This is where first- and zero-party data plays a critical role however, brands are facing several challenges as they strive to collect and use data to their advantage.  
 
Top data-related challenges include:  

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  • Analyzing data to determine optimal communications and offers (75%);  
  • Maintaining a database of comprehensive, real-time information on customers (71%); and  
  • Incorporating both structured and unstructured data (68%). 

 
Overall, respondents said they were less concerned with issues around privacy, including consumers’ concerns (58%), compliance with regulations such as GDPR and CCPA (51%) and the prospect of fewer “cookies” that facilitate online tracking (32%). However, brands cannot underestimate the importance of implementing a compliant and transparent process for collecting and using customer data.  

Stand Out Beyond Free Shipping 

Last year’s top retention tool — free shipping — fell slightly, from 64% in 2021 to 57% in 2022. This is likely because free shipping is no longer a competitive differentiator, but rather, an omnichannel standard. Brands and retailers need to find new ways to differentiate through experience.  
 
Brands and retailers are investing in a variety of capabilities, from high-touch in-store services and relationship-building (62%) to personalized product recommendations that are delivered via email and tailored based on customer preferences, purchase history and/or liked products. It’s worth noting though that like free shipping, these methods are low-hanging fruit opportunities and not necessarily innovative approaches.  
 
Moving forward, brands and retailers should bolster their capabilities to include lesser common tactics, including: personalized abandoned-cart emails (41%); mobile app-driven recommendations (38%); adjusting email campaigns and cadences based on customer engagement levels (29%); and segmenting consumers into tailored email streams based on their behaviors (29%).  

Invest in Your People 

Considering the headlines surrounding the “Great Resignation,” it should come as no surprise that employee turnover is impacting customer experiences and overall loyalty efforts. In fact, 41% of respondents said their top challenge is that insufficient staffing is negatively impacting in-store CX. With so many brands and retailers relying on in-store services and relationship-building to foster loyalty, this is something that needs to be addressed. 
 
Brands and retailers are focusing on culture: creating internal communities centered on support and empowerment. While training and progression opportunities are great, associates should feel empowered to do their best work right now. That means giving them access to tools, technology and data that can help them have better conversations with customers and provide more pointed service experiences.  
 
However, there are a lot of variances in respondents’ data collection practices: 65% have access to purchase history, broken down by items and basket content and 45% collect customer service data such as complaints, product returns and reviews. Even fewer respondents have access to social media activity related to the company (33%), customer referrals (23%) and customer lifetime value (22%). It’s worth noting, too, that these results represent broad data collection practices; we do not have insight into whether associates are able to access and use this data — a clearly untapped opportunity for brands across categories.  

Be Transparent About Inventory Challenges  

For the second year in a row, product availability issues topped the list of retailers’ toughest customer loyalty challenges, at 44%.  
 
The supply chain challenges are real (and they’re certainly not going away over the next year), which is why brands should focus on being transparent about these issues. Marketing, ecommerce, social and operations teams should work collaboratively on campaigns and adjust their calendars as supply chain hiccups and out-of-stocks emerge. Agility is key in this volatile era and having all hands on deck is key to developing proactive response plans.  
 
Moreover, companies should explore different ways to drive product awareness and engagement. For example, we saw more brands reveal that they’re integrating VIP perks into their loyalty initiatives, such as exclusive experiences and early access to products. Limited product drops can provide brands with a great view into demand and help them adapt their future plans. Focusing releases on specific shopper groups or segments also keeps inventory (and demand) controlled.  
 
Brands and retailers also can expand their approach to product curation and merchandising. Ecommerce recommendations and personalized store service are widely known, but social media influencers can also help shape the narrative around product availability and demand. For example, if you find a hot new sneaker design quickly went out of stock, share similar designs with your influencers and broader social community so they know that alternatives exist.  
 
Customer loyalty is shifting and being reshaped as shopping behaviors change. But by considering these five takeaways, you can have productive internal conversations that can drive innovation across your business in 2022 and beyond. 

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