THE CLARUS Blog

Webinar Recap: The State of the U.S. Shopper and Customer Loyalty With Guest Forrester

So many things in the world have been significantly impacted since the pandemic hit the U.S. in March, including customer loyalty, retail in general, and consumer behavior.

To find answers, we hosted a webinar titled, “Post Covid-19: The State of the U.S. Shopper & Customer Loyalty,” with special guest Forrester on Aug. 27.

The webinar speakers were Sucharita Kodali, VP, Principal Analyst, at Forrester; and Carlos Dunlap-Beard, VP, Loyalty Solutions, at Clarus Commerce.

Let’s dig deeper into the eye-opening content from the webinar.

 

Consumer Behavior Has Shifted … And It’s Not Going Back to Normal

Consumers are not flocking back to stores and there has been a major shift to online shopping.

According to Sucharita, pre-pandemic conditions will not be restored which has created a new reality. This new reality, she added, could last at least for the next year.

This is a key point since consumers have found how easy it is to buy a variety of goods and services online, including groceries, furniture, and prescriptions.

This reality has truly leveled the playing field for all retailers, large and small.

This means that it’s easier than ever for your customers to price shop, find the fastest shipping, and access a huge assortment.

That’s why it’s more important than ever to build customer loyalty.

 

Consumers Like Loyalty Programs Which Can Serve as Brand Differentiators

Loyalty programs, if built correctly with instant and attractive benefits, can be a major differentiator for your brand.

Consumers enjoy loyalty programs that offer discounts, but there are other key elements that help lead to success.

According to Forrester, 65% of consumers will join a loyalty program that offers instant discounts.

Other key incentives for a loyalty program include:

  • Enhanced customer service
  • Ability to earn special status
  • An opportunity for members to offer feedback to the brand
  • Alternative bonuses that can enrich benefits (cash back, daily deal vouchers, charitable donations)

Consumers value convenience, transactional benefits, and saving money. They have sought ways to achieve these things during the pandemic.

They also want to be in a loyalty program that lets them talk directly to the brand about their expectations, pain points, concerns, and desires.

For members, being able to offer feedback to a brand is a win-win because they disclose key insights that company officials can leverage to optimize the program.

 

Retailers Will Be Nimbler and Have Fewer Smaller Stores

Retailers should always listen to customer feedback and make appropriate changes based on those insights.

Now, this becomes even more important for retailers to act on customer feedback when customer loyalty has becoming more challenging to acquire and retain.

This means not only listening to customers, but truly understanding their thoughts and expectations.

Being nimbler and having fewer smaller stores will allow retailers to focus more on customers and their feedback.

If retailers take this more personalized approach, they will form stronger customer relationships that will be sustainable.

Consumers aren’t eager to visit stores and curbside pickup has exploded.

Now is the time for retailers to try new things and find new ways to spark customer engagement.

Make it easier for loyalty members to do these things via online ordering and curbside pickup.

 

Loyalty Was Hard … Now It’s Even Tougher

As many consumers have shifted their buying online, we’ve seen a similar pattern from our own internal data across client platforms.

Comparing April-July 2019 to the same period this year, the number of consumer purchases dropped 26%; but average order value is up 44%.

Translation: Make every customer interaction count!

It also means that customer loyalty is more important – and harder –than ever.

“You have to make sure your program drives value to your members every time they shop,” Carlos said.

Consumers want a superior value proposition that includes instant benefits, free shipping, and exclusive experiences.

For example, look at Lululemon.

It is all about a healthy lifestyle and that flows directly into their loyalty program.

The program offers transactional benefits like free shipping and a free pair of pants, but also offers experiential benefits like workout and yoga classes, yoga studios, cafes, and smoothie bars.

But a benefits mix like that won’t work for any brand.

If you’re a hardware store brand, could you offer a premium loyalty program where customers pay a fee for an enhanced experience? People are doing more work to their homes now.

If your customer was doing landscaping work at home, a hardware retailer could offer a VIP line or chat where an expert would recommend the right types of flowers or grass seed or mulch?

And if the member ordered 12 bags of mulch, could that be delivered with the store’s existing fleet of vehicles? Or could that fleet vehicle be loaded up with the order and ready to go for program members to bring home?

But experiential benefits are obviously tough during a pandemic – even if it “might” be easing up on us. Everyone is talking about experiential, but people still value transactional benefits.

Which means retailers need to make sure their brand is top of mind so that every engagement counts in their favor.

Every customer interaction will become more crucial than in the past.

 

This Could Be a New Beginning for Retailers

Since the pandemic has evened the playing field for brands, loyalty has become more difficult to grasp.

According to our 2020 Premium Loyalty Data Study, two thirds of consumers say their loyalty is more difficult to attain now than ever.

Brands that once could use their physical locations as a competitive advantage find themselves now competing with everyone.

But one thing is certain: Consumers want convenience and brands need to be mindful of this now more than ever.

A brand’s shopping journey should be simplified, accentuated, and engaging.

Now is the time to test various incentives with your loyalty program and make achieving and redeeming rewards easier.

Although loyalty might be more difficult for brands to attain now, it also signals a kind of new beginning for retailers looking to get loyalty right.

And premium loyalty could be a key differentiator for brands.

Retailers must remember that when consumers order something, your brand is top of mind.

 

Having a Loyalty Program Isn’t Enough

Who are your best customers?

That has become increasingly difficult to gauge, considering the mass consumer migration to online shopping.

COVID-19 has forced people to shift their habits to buying more and more online.

That’s why it’s more critical to differentiate.

But is your loyalty program helping you achieve that point of differentiation?

Now, it means recalibrating your mindset

Most consumers belong to about 15 different loyalty programs, but are only active in seven of them. Clearly, just having a loyalty program isn’t enough.

It now is about your brand’s customer loyalty mindset.

Loyalty programs that feel similar won’t be enough to build real loyalty as we emerge from the pandemic.

You must make sure your program drives value to your members every time they shop.

 

Don’t Just Listen to Your Customers

It’s not enough just to launch a loyalty program and leave it alone.

Walmart+ is a good example because company officials have worked hard to enhance the experience post-pandemic.

The scheduled Sept. 15 rollout of Walmart+ will make it even easier for people to buy groceries and general merchandise without having to visit a store.

Target updated its loyalty program recently to reward more often and allow people to vote on what charities the company donates to.

Soon, Starbucks will roll out additional payment options that customers can use in the Rewards app – one of the most requested things from customer feedback.

Listening to your customers is one thing. Executing against their desires is another thing that can totally differentiate your brand and loyalty program.

 

Your Customers Are Willing to Pay for a Premium Experience

Premium loyalty offers incentives and instant benefits that attract consumers to be long-term members and brand advocates.

Sixty-six percent of consumers said free shipping would motivate them to join a premium loyalty program; 60% also like instant discounts.

Also, 70% of consumers not in a premium loyalty program would join if their favorite retailer offered one.

People are willing to pay for a premium experience.

But will consumers be willing to join as we emerge from this pandemic?

All we do is premium loyalty and our retailer partners saw a 21% increase in member enrollment over this time last year.

People want a premium experience and are willing to pay for it if a program’s benefits are attractive to them.

So, members get a lot of value out of these programs, but what about the brand?

Eighty-eight percent of consumers are likely to choose a retailer whose premium loyalty program they belong to over a competitor offering a lower price.

That’s a significant barrier to any competitive threats.

If you can differentiate enough and offer enough value with your loyalty program, consumers will stay with brands they love and trust.

 

Change Your Loyalty Mindset

When your customers love to talk about you and your loyalty program, there’s no better outcome.

Nearly 90% of consumers would recommend a brand if they found true value in the premium program’s benefits.

That’s true loyalty. Real brand advocacy.

Consumer behavior has shifted.

The move to ecommerce has leveled the playing field for everyone.

Loyalty was hard and now it is even tougher, so you must make every engagement matter.

Thriving in the post-pandemic retail environment will require changing your loyalty mindset.

Listen to your customers and act.

You must make every engagement count to become top of mind.

Whether it’s through a premium loyalty program or not, it’s not going to be enough just to have a loyalty program. You need to use your program as a differentiator.

What new things have you done with your loyalty program since the pandemic began to increase loyalty and engagement?

Check out the full webinar recording for free here.

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