Retailers Lack Holistic Thinking Around Customer Engagement
Fact: most retailers simply aren’t doing enough to keep their customers engaged.
While many retailers have taken significant strides toward optimizing their appearance and sales channels for omnichannel shoppers, when it comes to increasing customer retention, their strategies are largely still behind the curve.
Before providing perspective about what organizations should be doing to increase retention, it’s important to acknowledge some "home truths" about today’s retail environment:
- Customer expectations around omnichannel retailing are higher than ever. Whether fair or not, most shoppers will vote with their feet or clicks if these expectations aren't met
- Competition is fierce, particularly online, where business rivalry isn't restricted by geographical location.
Today, 80 percent of adults in the developed world own a smartphone, which makes it incredibly easy for shoppers to compare offerings – and go elsewhere if their experience isn't optimal. This (understandably) makes it difficult to connect with consumers in the first place, let alone build on that initial interaction to foster a long-term relationship.
Therein lies the problem: shoppers just aren’t turned on by current loyalty programs. Loyalty360 research notes that most retailers experience less than 50 percent active participation and reward redemption within their loyalty offerings.
What's causing this behavior? Part of the problem is attributable to the mechanisms that companies use to attract and engage loyalty program members. Loyalty360 notes that its annual award winners use 11 components on average within their strategies, compared to the market average of 7.5.
The most critical element to solving customer retention challenges is unquestionably mobile.
One of the big disconnects in current retailer-customer relationships is the experiential role of mobile. Most businesses have made their websites mobile-friendly, especially following Google’s search engine algorithm update. However, the same cannot be said of their loyalty programs.
At the forefront of industry technology leadership, we’re talking about the use of geo-location technology to target shoppers’ mobile devices in-store based on their location. However, the reality is that most retailers are still fighting to align online loyalty schemes with points and offers collected and redeemed in-store.
The dramatic influence mobile has had not only on retail but on all daily personal activities is going to continue to increase. Therefore, building a mobile-first loyalty scheme will prove critical to customer retention strategies.
By channeling offers, managing points and posting communications through an application such as Apple Passbook, retailers and brands have the opportunity to make value-added interactions central to shoppers’ favorite devices.
Consumers will soon demand that mobile drives the majority of their digital transactions, and is the main transactional device in their physical retail experiences, too. Early adopters of mobile loyalty technologies (or programs) will be able to overcome any initial challenges in this current educational phase, ensuring that they have a market-leading loyalty scheme when mobile-first becomes a must.
Retailers need to focus on the customer as an individual, and seek to provide them with an experience that's both seamless and gratifying in light of their individual needs. It’s no longer sufficient to "blanket target" shoppers with generic schemes and incentives. Today’s consumers crave tailored, consistent, convenient service, and retailers must find the omnichannel loyalty tools to meet those expectations.
Richard Kolodynski is senior vice president at CitiXsys, a provider of a complete omnichannel retail applications suite for midsized retailers, including POS, mobile, e-commerce, analytics and customer loyalty.