THE CLARUS Blog

3 Huge Threats to Loyalty (And How to Protect Your Customers From Them)

Nearly 70% of consumers agree their loyalty is more difficult for a retailer to maintain than ever before.

It makes a lot of sense.

In the past, your customers were somewhat protected either by assortment, prices and even location.

Now it’s easy for your customers to find the cheapest price, the fastest shipping, and the most convenience for just about any product.

It’s not that your customers are inherently less loyal than they used to be. There are simply more things fighting for their attention.

Here are three of the biggest threats to customer loyalty and what to do about them.

 

1. Unlimited Shopping Options

“Best cold weather sleeping bag”

That’s a pretty specific search term. Yet, it still brought me back over 48 million search results in just over a second.

And if you click over to Google Shopping, you could spend all day looking at all the various stores, brands, colors and prices.

It’s true that consumers have unlimited choice. There are more brands, more deals, and more ways brands are marketing to your customers every day.

They can do a Google search or hop on Amazon and find most items at the lowest price within seconds.

In fact, nearly half of U.S. internet users started product searches on Amazon compared with 34.6% who went to Google first.

There’s no longer much pain in switching brands. That’s why differentiation is more important than ever before.

Enter your premium loyalty program.

Learn more about premium loyalty programs here.

These programs go beyond just offering transactional benefits. Sure, they provide those monetary perks like instant discounts, free shipping and free return shipping every time you shop.

But they also provide unique experiences.

And experiences are where you can set yourself apart from your competitors. That’s where you can create emotional loyalty.

87% of consumers who are satisfied with the special benefits offered by a retailer’s premium loyalty program will likely choose that retailer over a competitor that is offering a lower price.

That can be applied to the sleeping bag example above.

So, which one did I go with?

After scrolling for a few seconds, one brand caught my eye: REI.

REI is a quality brand and I could see the positive reviews. But the same was true for The North Face, L.L. Bean, Cabela’s, and other brands that came up in the results.

Why did I choose that one?

The answer lies in REI’s premium loyalty program, REI Co-Op.

Twenty dollars gets you a lifetime membership with transactional benefits like annual dividends and discounts.

But you also get those experiential benefits like access to members’ only merch, special discounts on REI Adventures, and deep discounts on lift tickets.

REI really understands its customer base and the outdoor lifestyle. It makes the brand different from others and really creates an emotional connection to its customer base.

For someone already investing in the membership, why would they shop elsewhere for outdoor gear?

Your premium loyalty program can be a powerful way to cut through the sea of endless ads and promotions and protect your best customers from the competition.

 

2. Direct-to-Consumer Brands Fighting for Your Customers

How many times have you seen an ad for sneakers, prepared meals, or ancestry tests while scrolling through Facebook?

Like my sleeping bag experience, I was recently searching for wool socks as a gift for my wife.

Five minutes later, I started seeing ads for Norwegian wool socks on Facebook. This came as no surprise to me.

In the past year alone, DTC advertising increased 50%.

To give that some color, 81% of American shoppers will make at least one purchase from a DTC brand in the next five years.

So, I clicked the link to learn more about these seemingly amazing socks.

What did I find?

Not a whole lot. There was no story. There were no employee bios. There wasn’t even an address on the website.

I went back to Facebook. Almost 5000 “likes”, but hardly any interaction anywhere. I began to think something seemed off, so I closed out of the website and Facebook.

What was lacking was trust.

I couldn’t see and feel the products. I couldn’t find anyone to talk to about socks.

That’s the thing about DTC. By selling only online, there is no face to face interaction. It’s harder to build trust.

That’s why your customers still enjoy shopping in-store.

More than half (58%) of consumers shop for clothing at long-standing physical stores. 44% shop for footwear/shoes there.

Your customers want to touch and feel items before purchasing them, especially considered purchases like mattresses or glasses.

Plus, it’s challenging for pure DTC companies to offer free shipping and returns. And it’s even harder for them to offer customers a unique experience.

Nearly 60% of consumers are more satisfied with customer service in-store than online while 62% of consumers ranked friendly and/or knowledgeable employees as the most important aspect of in-store customer service.

So, what does this have to do with the socks?

I didn’t end up buying them online. My wife and I are taking each other to Maine as our big holiday gift this year, so I’m planning on taking her to the L.L. Bean flagship store and buying her a gift there. Maybe some socks.

We both love the feeling of the store, being able to check out all the cool outdoor clothing and gear and checking out the aquarium inside.

Retailers can’t lose sight of the in-store experience. It’s one of their biggest assets.

They can’t forget that’s where emotional connections are created.

If stores fail to leverage their own key differentiators — on-the-spot, in-person customer service and the ability to see, touch and try the merchandise — consumers will turn to online sales for their needs.

That’s why it’s so important to make sure the in-store experience in great for your customers.

So-called Norwegian socks from a DTC that just popped up? Or socks from a well-known omnichannel retailer with a store that’s a destination in its own right?

What great in-store experiences can you offer your premium loyalty members?

 

3. Personalization That Lacks Human Touch

Forty-four percent of consumers say they will likely repeat after a personalized shopping experience.

We’ve all received emails that greet us by name. And we’ve all been recommended products on website based on prior history.

In fact, 63% of consumers expect personalization as a standard of service and believe they are recognized as an individual when sent special offers.

But personalization isn’t simply putting someone’s name in an email.

It’s about helping your customers find what they need while giving them a better experience. It’s based on data that they have willingly provided.

Doesn’t it make you feel special to sit down at your favorite local bar and have the bartender know what you like?

“Hey Paul. We just got this new stout from this local brewery. I think you’d really enjoy it.”

That’s personalization in the truest sense. But how can retailers do that at scale using technology?

First, you need to collect and use first-party data from your best customers.

Set the stage for more relevant, personalized offers and experiences by analyzing data from your premium loyalty program.

Your customers want to be recognized and they expect brands to know them and their preferences.

They are comfortable providing information if it is used to provide highly tailored, valuable experiences.

The more information you can consider when evaluating the success of specific benefits, the easier it will be to make improvements and create an engaging, valuable loyalty program.

If customers aren’t engaging with a few experiential rewards, try to get a sense of what might be more beneficial.

Think about marrying technology to your physical stores to digitize the in-store experience.

Macy’s, Starbucks, and Sephora are using GPS technology and company apps to trigger relevant in-app offers when customers near a store.

Other retailers have begun to provide sales associates with apps that generate personalized product recommendations for specific customers automatically.

Think about how to apply this to your premium loyalty program.

44 percent of CMOs say that frontline employees will rely on insights from advanced analytics to provide a personalized offering. 40 percent say that personal shoppers will use AI-enabled tools to improve service.

Imagine if upon walking into one of your stores, your VIP member was greeting by a personal shopping assistant who was there to make recommendations or even load bags into the car.

To create powerful loyalty moments across all channels, retailers will be expected to deliver these experiences across digital and physical channels.

Consumers prefer personalized rewards for their loyalty to a brand, with 68% indicating they would shop at a store offering them over one that did not.

Don’t just use the word “personalized”, but clearly communicate what that means and what value it brings to your members.

79% of consumers said personalized service is an important factor in determining where to shop, yet many retailers don’t currently feel equipped to deliver on customers’ expectations on an omnichannel level.

Remember, 93% of businesses with advanced personalization strategies increased their revenue last year.

How can you blend technology and humans to give your customer a more personalized, valuable experience?

 

Retailers Have a Lot to Defend From

Let’s face it.

It’s harder than ever to protect your customers from these constant retail threats.

Between unlimited choice, direct-to-consumer brands vying for their attention, and the need for more human touch, retailers have their work cut out for them.

But if you can add value to your best customers’ lives and build emotional connections, offer an amazing in-store experiences, and add a human element to your personalization strategies, you’ll build emotional connections with your customers.

And that leads to true loyalty.

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