Experience is the New Loyalty
An increasingly competitive U.S. retail market and reports of store closures demonstrate how tricky it can be to adapt to the evolution of global e-commerce. Recent research conducted by Klarna shows that to survive, savvy retailers need a seamless cross-channel experience — creating an inspiring and fun experience across the entire customer journey, while maintaining frictionless convenience.
Loyalty is no longer just a "points" program. In today’s world of e-commerce, retailers need to play a meaningful role in enhancing people’s lives and demonstrating a commitment to their needs. Modern consumers want to align themselves with brands that offer them a deeper connection and understand how they want to shop — whether that’s payment options that fit their lifestyle or greater personalization. In fact, 55 percent of U.S. shoppers polled by Klarna said that just one bad experience with a brand would stop them from returning. Clearly, when it comes to the holistic commerce journey, the stakes are high.
A decade ago, brands would have focused on instilling loyalty through things like rewards schemes, but Klarna’s research shows that the drivers of loyalty amongst today’s shoppers run much deeper than a transaction or offer. Brands are now forging loyalty by creating experiences that engage customers on an emotional as well as a transactional level. Nearly one-third (29 percent) of consumers say shopping with a brand today isn't as fun as it used to be. Consumers want an engaging experience that connects them to a brand. While cost and convenience are important, shoppers still want to have fun and feel inspired. Retailers need to think carefully about how they engage with customers and put the excitement back in their shopping experience.
The convenience of a fast and seamless checkout experience remains a key driver for loyalty as well. Aligning your values and inspiring customers is important, but shoppers also demand an easy and convenient checkout experience. Time-saving ranks in the top three benefits customers value most when it comes to checkout, with 28 percent saying a long and cumbersome checkout process is one of the biggest drivers of disloyalty. Furthermore, 27 percent of consumers say flexible payment options — e.g., enabling purchases to be made in simple interest-free installments — would make them more likely to buy more from a brand, and 35 percent said it would make them more likely to shop again with that brand.
Retailers are feeling the effect of this loyalty shift, with 69 percent saying they must work harder to retain customers, and 39 percent recognizing that loyalty is no longer driven solely by rewards or discounts. It's encouraging to see that, based on Klarna’s research, over the next 12 months retailers are looking to invest in the areas of experience customers want to see more of. The top channels for investment this year are better online user experience (60 percent), social shopping (39 percent), flexible payment options (34 percent), brand content (34 percent), and a good mobile experience (33 percent). Retailers today must invest in creating a valuable experience for customers that aligns with their values, evokes emotion and maintains convenience. Otherwise, they risk damaging their bottom line in the long run.
Laurel Wolfe is vice president of marketing at Klarna, a flexible payment technology solution.
