Most retailers have adapted to the most pressing challenges of COVID-19, finding impressive ways to pivot and stay afloat. However, not every business is adapting to the changed state of the market, or they’re focusing on acquisition and forgetting about current customer retention.
Despite higher traffic, a large number of marketing teams have not adapted to the long-term needs and behaviors of customers after the pandemic. Worse, some are solely focused on monetary metrics that don’t tell the whole customer story. Loyalty is extremely valuable, especially in this altered economy. But loyalty is more than customer dollars spent and focusing on the transaction, brands need to elevate their thinking if they want to compete in the new business reality in 2021.
The good news? Despite changing consumer behavior, the defined pillars of emotional loyalty — habit, status and reciprocity — remain the same, and in some cases can be easier to establish via digital channels. By increasing engagement between transactions, rethinking how to capture and action on emotional data, and iterating based on customer feedback, marketers can build the trust necessary to maintain and earn loyalty, even amid a pandemic. If done successfully, you’ll find these transformations won’t just help you weather the pandemic, but thrive in the new economy. At Kobie, we wholeheartedly believe loyalty can be the catalyst to drive overall marketing, if executed properly.
A primer on pandemic customer retention.
Increased loyalty has many hard and soft benefits for retailers. Loyal customers are more likely to provide feedback, fill out surveys, write reviews, encourage friends to join loyalty programs and mention a brand on social media. A loyal customer is a true brand advocate.
But capturing loyalty on an emotional level means marketers must have empathy, and put themselves in the customer’s shoes (or perhaps house slippers, since brick-and-mortar has taken a backseat to online shopping, for now). Shoppers are cautious, dealing with unpredictable incomes and making more deliberate choices about the brands they shop with in the pandemic. These are challenging variables, to be sure, but loyalty can be built and maintained with a few key strategies:
1. Optimize touchpoints between transactions.
Traditional measures of loyalty have changed. One of the most important exercises marketers can undertake is re-evaluating the key performance indicators (KPIs) that define loyalty. For example: is the customer who writes product reviews, positively posts about your brand on social media, submits user generated content, and frequently buys, but at a lower value items, treated the same as a customer that shops once a year with a substantially larger cart? While the answer to that will depend on your business, one fact is undeniable: loyalty comes down to more than the bottom line.
Where to focus: Ensure you’re monitoring and responding to customers on every channel you interact with them — call centers, social media, apps, website, support chats. Branching out your data strategy to include metrics that aren’t focused on hard dollars can uncover new insights about customer behavior, so don’t leave any stones unturned and think beyond the purchase.
The bottom line: Even when customers aren’t filling their cart, it’s important to keep them engaged — and rewarded.
2. Make strategic emotional connections — across ALL customer touchpoints.
Uncertainty is at an all-time high and retailers are feeling the impact. Especially at a time when face-to-face interaction is so low (or even when it may happen, it’s skewed due to mask coverings and social distancing), customer touchpoints like a call center, chatbot or voice activated mechanisms are crucial both for day-to-day service and service recovery. Call center call volumes are spiking, according to the Harvard Business Review, as are call escalations and long hold times. In one case, HBR notes, a company saw a 250% increase in calls about financial hardship.
Where to focus: The stressed customer needs some relief, and they’ll appreciate any effort you make to provide it. Are your call center agents or online customer service representatives getting emotional training – the training to understand how to be empathetic and respond during service issues, feedback and general inquiries? Are hiring practices being adjusted to attract the right talent? Are they equipped to capture feedback and even more, is your technology integrated to action on that feedback? This final step is often an afterthought for marketers, but integrating real time voice of the customer is a valuable source of firsthand data. These interactions are invaluable opportunities to find out what’s really going on with your customers, capture their sentiment and make real changes. And if you stick to a script in customer service, ditch it. Research shows organizations that allow call center reps to collaborate and adapt their message perform 50% better than organizations that don’t.
The bottom line: The support and empathy you offer customers goes beyond the point of sale. These are the moments that will be remembered, especially if you act on it. Connect beyond the transaction to know the needs your customers have and react accordingly with care.
3. Improving technology to better understand your customer base.
The reason many retail loyalty programs fall short is because most of the effort has gone into the member-facing components of the program (associate training, store decorating, social posting, influencer strategy, media buying, etc.). However, it’s just as important that your loyalty program has a strong technology backbone if you really want to create emotional connections, be able to action on those connections and even more, modify consumer behavior. The best solution will vary depending on your needs but will need to be able to capture customer interactions/engagement in real time and enable you to action upon that engagement. Transactional data is table stakes for most modern systems, so focus on finding a solution that integrates behavioral and emotional data. By understanding the emotional motivators of your consumers — status, habit and reciprocity — you can make sure your actions align with their expectations. Customers influenced by habit, for example, are not the best target for a “surprise and delight” effort as it may disrupt their buying pattern, and shoppers emotionally motivated by status will be threatened if you introduce changes that makes their standing less exclusive. Marry these insights with application downloads, reviews, social sharing, email open rates, product searches and other data points from disparate sources, and you create a 360-degree, holistic view of the customer.
Where to focus: Marketers need to determine if a change to their MarTech stacks are in order, and if the ability to make changes falls within their IT capabilities.
The bottom line: Up leveling your marketing capabilities might mean engaging with an external vendor who can help improve your infrastructure and organize your data to capture better insights. Or it might mean you need to invest more up front when implementing or updating loyalty technology, but the long-term gain far outweighs the short-term implications as data shows highly engaged consumers are twice as likely to stick with a brand than consumers who engage less.
Loyal customers help businesses survive during disruption. Focusing on meeting them between transactions, connecting on an emotional level, and taking action on their feedback will continue to earn their loyalty. It doesn’t have to happen all at once. With some strategic upfront planning and building up small wins, you’ll begin charting a path toward a holistic view of your customers that can help you keep them engaged even through the biggest disruption.