The pandemic has had many impacts on the retail sector. From supply chain issues and labour shortages to the boom in e-commerce as stuck-at-home consumers turned to online shopping during national lockdowns, retailers have had to navigate choppy waters. Patrick Mareuil, managing director EMEA at Airship discusses the art of creating customer loyalty under the new normal.
One overlooked impact of the pandemic is consumers’ changing attitudes towards loyalty. More brands are offering digital shopping online, which is convenient for customers but also creates more competition as rivals are just a click away instead of being on the other side of town.
The pandemic only accelerated this, with McKinsey finding 40% of consumers said they tried new brands or made purchases with a new retailer between March and June 2020. Loyalty was particularly vulnerable in the US, where 46% of consumers made the switch, followed by 44% of their UK counterparts.
Many brands offer loyalty programmes to try and increase customer retention, but on their own they are insufficient: in fact, while the vast majority of consumers belong to some form of loyalty scheme, more than half of memberships are inactive, according to Mintel. Back in 2016, Airship found consumers weren’t using loyalty programmes in-store most commonly due to not bringing the loyalty card (43%) or forgetting they were a loyalty member (40%).
Brands are well-positioned to boost loyalty, as more of them are adopting mobile apps as a centrepiece of their strategies. Mobile apps are the key to a smoother, more optimised loyalty member experience. In fact, app users produce 3.5x more revenue than other shoppers and are 3x more likely to make a repeat purchase.
So how can brands use their apps to build loyalty?
The first step is to understand that this is not about pestering customers with a barrage of push notifications, adverts and promotions. Getting customers to opt-in to notifications is key — users that get them have 3x greater 90-day retention rates on average compared to those that don’t.
Additionally, earning immediate discounts or loyalty reward points is the top reason consumers opt-in on their smartphones. However, over the long haul, that kind of hard selling is a sure-fire method to reduce loyalty and turn audiences off.
Loyalty is a value exchange
Instead, mobile apps can be used to strategically gather customer data and enable personalised exchanges wherever customers are, uniquely blending digital and physical experiences to create mutual value and offer streamlined conveniences. The best mobile apps create the kind of value exchange that’s essential for any sustainable relationship, building reciprocity into the very fabric of the customers’ experience. For example, hagebau Connect, one of the largest DIY retailers in Germany, enables its customers to monitor product availability and make reservations for store pick up via the app.
With a good app onboarding strategy in place, instead of asking users to fill out a long form to join the brand’s loyalty scheme, brands can set micro-goals around the important information they are looking to get from customers and ask for it in separate, progressive steps across messages, app & feature tours, and surveys triggered at just the right time.
Mobile apps also offer brands real-time behavioural data, which is a powerful tool for growing customer loyalty by personalising offers and rewards and tailoring the customer experience to the user. Behavioral data can also help you identify app users or loyalty members who are inactive or at risk of churn based on specific criteria. Once identified, brands can pull out all the stops to re-engage them.
According to KPMG, 69% of millennials say that it is too hard to join loyalty schemes or earn rewards. With 9,000 survey respondents, we found that millennials lead all generations in using retail apps and in using their smartphone while shopping in-store across eight different activities.
Apps can make being a member of a loyalty scheme much easier and more convenient for customers, proactively managing and communicating rewards earned, offering greater redemption choices and even gamifying the experience. Chipotle for instance recently reported 24.5 million Chipotle Rewards members, a 40% increase year-over-year.
Many brands are shifting away from a purely transactional loyalty relationship with their customers and towards programmes that use richer customer insights and data. Programmes that balance monetary rewards with experiential offerings such as exclusive events, early access, and unique discoveries can make consumers feel special and recognised, appealing to their head and heart. For example, the DIY giant, The Home Depot, now allows its “Pro” customers to rent tools on credit, knowing they may not have all the tools needed for every job.
Looking ahead, the key thing brands must remember is that the more ways they can interact with their customers, the better they can orchestrate the customer experiences and the more valuable those shoppers become. That may mean starting with SMS text clubs or mobile wallet loyalty cards to gain the gravity necessary to become a core focus of the app.
While the pandemic has been difficult, it has also accelerated the consumer’s move to digital shopping and e-commerce. Brands need to capitalise on this and capture greater value more quickly. They can do so by continually optimising customer journeys, app onboarding tours, opt-in prompts and messages themselves, finely tuning executions and gaining more customer insights. Brands that focus on relevancy and offering customers genuine user-centric value will earn their trust and build durable and valuable customer relationships.
Patrick Mareuil, managing director EMEA at Airship