Customer Loyalty is Everything (But Not in the Way You Might Think)
"Quality in a service or product isn't what you put into it," according to the late Peter Drucker, esteemed management consultant and business scholar, "it's what the client or customer gets out of it."
This customer-centric ethos is certainly central to retailer success, particularly for agile web-based companies. As they try to compete with online pure-plays, many traditional retailers view the customer relationship in the same way: meeting the changing needs of the customer is the best way to inspire loyalty. Ever since digital technology revolutionized the shopping experience, retailers have been looking for ways to deliver a more consistent service across all the channels that customers use to reach them — omnichannel strategies for web, mobile and point of sale.
But how far is this innovation aligned with the needs of customers? How successful is it in driving loyalty? Together with Accenture and SAP, hybris commissioned Forrester Consulting to identify how the omnichannel tactics of middle- and large-market retailers are meeting the expectations of their customers. The research — which included in-depth surveys with more than 250 larger U.S. and European retail and manufacturing decision makers, as well as more than 1,500 multichannel shoppers — revealed some interesting conclusions.
Redefining Customer Loyalty
The report showed that customers can be loyal to traditional retailers, even as online pure-plays are redefining the shopping experience, as long as the retailers in question can offer a comparable standard of convenience and even enhance the options available to their customers. Cross-channel fulfilment is central to this. Nearly half of consumers (47 percent) use in-store pickup to avoid online shipping costs, a quarter pick up in-store to avoid the wait, and a further 10 percent simply find in-store pickup more convenient than having items shipped to their home.
Furthermore, 71 percent of customers said that the ability to view in-store inventories online was important or very important; a similar number (73 percent) were likely to visit a store if inventory information was available on the retailer's site. This is a clear differentiator for traditional retailers, yet only a third of those surveyed have operationalized this basic omnichannel principle. Most significantly, only 15 percent of consumers wouldn't feel an obligation to pick up an order they had reserved online — evidence that the widespread fear of layaways is somewhat misplaced.
Moving the Needle Through Mobile
To no surprise, mobile is significant, but mostly as a tool for keeping up with customers, rather than the competition. We see mobile as the customer's self-fulfilment channel, through which they can browse and research while on the move. And the research supports that view. More than a third of consumers use their mobile devices to check inventory en route to a store (38 percent) and to research a particular product when inside the store (34 percent).
In addition to being able to find out more about your products, this naturally means customers can find similar information from your competitors, and transfer their loyalty elsewhere. However, the report found that customers are actually more likely to buy in your store and pick up from another local branch if an item is out of stock (44 percent), rather than using their mobile phone to buy from another store altogether (29 percent).
The opportunity to enhance the in-store experience via mobile is another potential point of difference for traditional retailers. More than two-thirds (69 percent) of customers expect in-store salespeople to be connected to a mobile device. Consumers expect those salespeople to use their mobile device to look up product information (50 percent), inventory information at a nearby store (44 percent) and check additional in-store inventory when a shelf is empty (43 percent). Mobile offers an opportunity for traditional retailers to improve their customers’ experiences both face-to-face and online, as well as introducing a less welcome source of competition via "showrooming."
Retailers are already aware of the speed at which their industry is evolving and, yes, the agility with which online pure-plays can respond to and drive these changes will continue to put pressure on their traditional counterparts. However, our research shows that by understanding consumers’ needs across the various touchpoints, retailers can help to maintain and maximize their customers’ existing loyalty instead of simply battling the competition.
Stefan Schmidt is the vice president of product strategy at hybris, a provider of e-commerce and omnichannel software solutions.
- People:
- Peter Drucker
- Places:
- US