Following is Part 1 of Retail TouchPoints’ two-part Customer Loyalty Report feature. This report will spotlight the rise of the SoLoMo shopper and how today’s retailers are keeping pace with this hyper-connected consumer. It also will uncover how Big Data creates a challenge — but unique opportunity — for merchants to better connect with shoppers and garner long-term loyalty.
Today’s consumers are equipped with the tools and technologies that provide in-depth details on product information, prices and ratings/reviews anywhere and at any time. In addition, they are using smartphones to retrieve information on local inventory and sales, and share retail experiences and potential purchases with friends and family across social networking sites.
Due to the always-on nature of mobile technology and social media, these more hyper-connected shoppers are demanding personalized retail experiences based on their individual wants and needs, as well as their locations. Together, these trends and behaviors are generating today’s Social, Local, Mobile (SoLoMo) shopper.
Noting these trends, best-in-class retailers are utilizing marketing and data-gathering technologies to better track shopper behaviors and preferences, resulting in more efficient marketing and communication strategies.
“Retailers need to understand their consumers’ mindsets, where they flock to in the digital and mobile space, and use those insights to help determine their strategies, rather than relying on the latest bright, shiny object,” said Joy Liuzzo, President of Wave Collapse, LLC. “The most effective strategy for obtaining and retaining customer loyalty is to be available to your customers, no matter where they are. Think about your most loyal friends; they may not be with you every moment of the day, but you know where and how to reach them when you need them.”
SoLoMo: The Loyalty Challenge And Opportunity
The proliferation of SoLoMo shopping habits has presented retailers with an opportunity to build more memorable, one-on-one communication with shoppers and deliver more relevant information and inventory. However, most merchants still are struggling to connect the dots between brand messaging, offers, pricing, inventory management and customer preferences, resulting in lackluster efforts to acquire and retain customer loyalty.
“Customers are willing to be loyal to merchants,” said Nikki Baird, Managing Partner, Retail Systems Research (RSR), “but it’s simply too easy for retailers to break trust with those customers through disconnected messaging and pricing across channels, and inconsistently applied policies across channels.”
Although a vast majority (84.5%) of retailers use customer retention marketing strategies, only 48.8% believe their strategies are working, according to a study sponsored by Acxiom, a technology and marketing service provider, and facilitated by Loyalty 360, an association for loyalty marketers.
Additionally, just under half (49.6%) of merchants are confident they know their best customers, as well as these customers’ preferences and browsing/buying behaviors, resulting in disconnected loyalty efforts, according to the Loyalty360/Acxiom report titled: Making Every Interaction Count: How Customer Intelligence Drives Customer Loyalty.
To maximize loyalty efforts, retailers must be armed with the SoLoMo tools and analytical insights to earn and keep shoppers’ trust and attention, noted Gary Edwards, Chief Customer Officer of Empathica, a customer experience management solution provider.
“The bottom line with social, mobile and local is personalization,” Edwards told Retail TouchPoints. “Consumers increasingly expect a personalized experience in all facets of their interaction with brands. This also extends to loyalty programs — everything from the mechanism customers use to accumulate loyalty points (mobile phone with NFC vs. cards) to the activities allowing them to earn points (social media mentions and check-ins vs. purchases) to the rewards they get (highly personalized offers vs. generic discounts).”
The continued adoption of smartphones and the boost in sharing taking place across social networks have unveiled new channels for retailers to garner insight on customer sentiment and preferences, as well as track brand-focused discussions. By gathering and integrating this detailed data with other customer information, such as purchase history and browsing behaviors, retailers can build a solid foundation for personalized retail experiences and more effective loyalty initiatives.
By rolling out hyper-local and personalized messages, offers and brand experiences across channels, retailers can maximize exposure and pique consumer interest. Retailers then will have the competitive differentiation to combat the rise of showrooming and other price comparison strategies being utilized by tech-savvy shoppers.
The following three sections will outline the challenges and benefits of each the three types of SoLoMo strategies: Social, Local and Mobile.
I. Social Media Communication: Tackling The Relationship Opportunity
Facebook, Twitter, blogs and other social networking tools have triggered a new norm for peer-to-peer and consumer-to-brand communication and information gathering. Consumers are learning about products and brands by gathering insight from social graphs before finalizing purchase decisions.
Social networks and blogs reach nearly 80% of active U.S. Internet users, according to a Nielsen report titled State Of The Media: The Social Media Report Q3 2011. Additionally, time spent on these platforms account for approximately 25% of all U.S. users’ online sessions. As a result, social media is “no longer seen as a science experiment but as a strategic asset,” Edwards explained.
“Social media has now passed the point of consumers merely checking into locations,” Edwards said. “Brands now universally recognize social media as an integral part of the customer communication strategy. I expect that resources and marketing budgets will begin to be allocated accordingly.”
More retailers also are honing in on tracking conversations and responding to customer comments and questions. Just more than half (53%) of B2C companies are tracking mentions and following up with them through comments or personal emails, according to the Worldwide Social Media for Business Study from Satmetrix. Moreover, an additional 25% only tracked conversations, while 4% just followed up with social media acknowledgements.
“From a social perspective, the voice of the customer has never been louder,” said Chris Cunnane, Research Analyst for Retail and Hospitality at Aberdeen Group. “Consumers can share their experiences, feedback and marketing offers in real-time with their peer network. Retailers can track the journey of an offer and use the information as a guide to rolling out future social campaigns.”
Some retailers also are integrating social activities and promotions into brick-and-mortar locations by making it possible for consumers to access Facebook to “Like” items within a store location, as well as displaying how many “Likes” an item has received. For example, C&A, a Brazilian fashion retailer, is testing a strategy that allows shoppers to view and “Like” items in stores. These “Likes” are updated automatically in real time on clothing hangers.
II. Localization: The Key To Personalization and Engagement
Today’s SoLoMo shoppers rely on their smartphones and social networks to receive information on products, as well as feedback from social graphs on current and potential purchases. Retailers are tackling these trends by developing mobile apps, SMS campaigns, and Facebook and Twitter accounts. However, localization is a low-hanging fruit opportunity for optimal SoLoMo strategies, by creating relevant assortments, marketing campaigns and offers for specific stores and geographic areas.
“The most difficult part is ‘Local,’ because it requires engaging stores and their high-turnover employees — who will have to be retrained constantly,” Baird said. However, she added, companies such as Guitar Center, Trader Joe’s and Whole Foods all are enabling their stores as well as some of their associates to take a more localized approach to online and social marketing.
Retail industry experts and analysts are spotlighting localization as the ‘be all, end all’ of successful SoLoMo programs. “Localization will continue to be vital to the success of initiatives going forward,” Liuzzo said. “It brings that relevancy component to the forefront for consumers.”
For example, retailers are tapping into customer data to improve inventory and assortment decision-making. More than half (53%) of retailers strongly or somewhat agreed that localizing assortment was an important strategy for their companies, according to RSR’s Retail Supply Chain 2012: Globalization, Localization, and Cross-Channel report.
“Local stores are where the most important experiences will always happen,” Edwards reaffirmed in support of these findings. “Even the world’s largest online retailers are realizing this and have begun experimenting with pop-up physical stores so that consumers can touch and feel a product before making a purchase, or ask questions of a live associate. Brands that really want to stay in touch do so across all channels, not separately within each channel.”
Just as small- and medium-sized merchants remember consumers’ faces, names and favorite items/goods, big-box retailers and large brands also are implementing more localized marketing strategies based on demographics and psychographics gathered across channels and integrated into a cohesive platform. Larger merchants, such as Nieman Marcus and Whole Foods, are using social media to promote specific store events and sales, and are tailoring print and digital advertisements based on geographic location.
III. Mobile: Connecting Shoppers To Brands Any Time and Anywhere
The smartphone has become consumers’ top shopping tool, especially while in store aisles. Overall, 53% of men and 38% of women say they use smartphones in-store to check prices at other stores, according to research from InsightExpress.
To effectively combat this comparative shopping, and win against Amazon and other discount e-Commerce competitors, brick-and-mortar retailers can utilize mobile to share relevant deals and timely offers while consumers are still shopping. Additionally, the always-on capabilities of smartphones offer merchants the opportunity to link loyalty programs with their mobile strategies.
For example, best-in-class retailers are enabling customers to access loyalty programs to check offer/reward balances and redeem points directly through their mobile devices, Cunnane explained. Mobile technology puts loyalty in the hands of the customer, “a move that is paying dividends in terms of customer satisfaction, customer retention, and customer frequency improvements,” he stated.
Through this new approach to loyalty programs, merchants can use localization as the linchpin for engagement, whether it’s an offer or targeted announcement for a specific store, according to Baird. “Together, ‘Mobile’ and ‘Local’ provide an opportunity for retailers to re-boot their credibility with consumers,” she said, “by putting a more genuine local — and hopefully more relevant — face on their communications.”
Part 2 of the Customer Loyalty Report will publish in the July 24 newsletter.