The retail sector is constantly evolving, driven by factors including changing consumer behaviours, technological advancements and global market trends. Because of this, the sector can be extremely competitive and brands have to be ahead of the curve to ensure their customers remain loyal.
For smaller retail brands, especially SMEs, there’s a lot to be learnt from the big, multinational companies that we all know and love. Although it will take a lot of work to build up to their level, the basic principles of customer loyalty remain the same.
So, what can we learn from these successful, multinational brands? And how can smaller retailers adopt the same techniques?
Perhaps one of the easiest ways to build customer loyalty in retail is to make customers feel valued and reward them for shopping - and creating a membership platform is a great way to do this.
Retailers can encourage customers to sign up for membership by offering them exclusive deals and perks, which will in turn encourage them to spend more and choose a certain brand over its competitors. And not only will this help to increase sales and revenue, it will also allow retailers to gather valuable customer data for other targeted marketing strategies.
Tesco has become well known for its member discounts and rewards which have gradually evolved over several years. By becoming a member, shoppers gain access to Clubcard Prices - which can sometimes be up to 50% cheaper - and they also gain Clubcard Points every time they shop. These points can then be used to pay for future purchases, or used with Tesco’s Reward Partners to gain access to their products and services.
This is more elaborate than most reward schemes, but even simple strategies whereby members get sent exclusive discount codes or early access to sales can be inexpensive but rewarding for both customers and retailers alike.
Encouraging customers to work towards a free item by shopping with them a certain number of times is also a great way for retailers to build customer loyalty. The appeal of a free item will not only encourage existing customers to buy more, but it will also draw in new customers who are looking for a good deal.
There are a number of big brands that do this well, especially food and drink retailers such as Costa Coffee, Starbucks and Just Eat, which offer free coffees and discounts off takeaways when customers collect a certain amount of stamps.
When adopting this technique, retailers need to think carefully whether it’s the right strategy for them. It’s only suitable for businesses that sell things that people regularly buy - like food, drink and household supplies - so high value retailers likely won’t benefit from this type of customer loyalty strategy.
A key element of customer loyalty in retail is creating a convenient and seamless shopping experience - both offline and online. And with over four in five UK consumers being digital buyers (Statista) it’s never been more important to focus on online transactions - especially through apps.
Retail apps give customers a more personalised shopping experience, allowing them to create shopping lists, receive notifications when their wishlist items come into stock and save their payment details for easy purchasing. By personalising their shopping experience in this way, retailers make their customers feel recognised which in turn makes them want to make purchases more often.
And for retailers with apps that don’t offer in-app purchases - make sure your app still has a purpose. If all an app does is offer customers the ability to browse products which can only be bought in store, take-up of the app will likely be very low. Retailers need to make sure their app gives people a reason to leave the house and make those purchases.
One retailer that does this well is Lidl - although this supermarket brand doesn’t offer online shopping or home delivery, its app still serves a purpose. For example, it offers customers a daily ‘spin the wheel’ opportunity where they can win discounts on certain items or even free items from the bakery. And by putting expiry dates on each offer, it encourages people to make a trip to their local store before the offers run out.
No matter how many customer loyalty techniques retailers adopt - whether it’s discounts or a personalised shopping experience - brands still won’t maintain strong customer loyalty without having good customer service.
It’s unfortunately often true that customers will only contact a brand if something has gone wrong and all they want is for the issue to be easily resolved in a way that means they don’t lose out. With this in mind, retailers should be easily contactable through a variety of channels and should train their customer service representatives on how best to speak to customers and resolve their issues.
Making customers’ lives easy is vital for building customer loyalty and Next does this really well through its returns process. The retailer offers customers the option to return their items via post or in store, and when choosing to return in store they require no paperwork or proof of purchase. By using an online system - known as Next Total - to record all transactions for customer accounts, items can be easily traced to the person who bought them and their payment method, making returns as easy and hassle-free as possible.
When it comes to business success for retailers - whether small online shops, bustling stores or multinational brands - customer loyalty is key. Failing to bring on new customers or, worse still, losing customers is sure to lead to the failure of a retail brand - after all, their sole purpose is to sell.
By adopting the techniques used by some of the most successful national and international brands, smaller retail businesses can soon build up a loyal customer base and increase sales and revenue across the board.
If you're a retailer who needs the support of an expert adviser, please get in touch with one of our retail and wholesale team.
