5 Effective Ways Retailers Can Build Brand Loyalty7 min read

5 Effective Ways Retailers Can Build Brand Loyalty7 min read

Reading Time: 6 minutes

The decade starting from 2010 changed the retail landscape dramatically. Millennials and Gen Z changed the rules of fashion. Direct-to-consumer brands and resale platforms challenged the status quo. And, technology and digitization emerged as powerful drivers of growth. This changed the key drivers of customer engagement and loyalty. 

As customer loyalty drives business growth, let’s take a look at the five ways retailers can achieve that in 2020 and in the years to come. 

Invest In Brand Personality

Over the last ten years, the number of customer touch-points has increased. Besides the conventional retail and media channels, retailers can now interact with their end-buyers on social media, resale platforms, subscription platforms, mobile platforms, and websites. Being present on all these platforms increases the opportunity to engage with the customers. But it also increases the risk of losing them if the brand messaging across all platforms isn’t consistent. A strong brand identity, which is unique and memorable, inspires loyalty. 

Here’s how retailers can build a clear brand identity:

• Identify your brand’s values, vision, and story. Review all communication channels to discover if the messaging matches the identity and is accurate. If any gaps are discovered, chalk out measures to fill the gaps along with your team
• It is important to define your target customer base. Find out who are your customers, what they need, what is the best way to reach them and which factors influence their purchasing decision
• Determine your unique selling proposition and position your brand in a way that amplifies the USP
• Leverage social media and invest in platforms that produce the best results for your brand, as opposed to following the general trends
• Engage with your customers actively and personalize your engagement

Bank On Tried-and-Tested Strategies

An age-old strategy that is still relevant and effective is loyalty programs. Companies can greatly benefit from offering rewards and loyalty points as incentives. Take, Starbucks, for example. The Starbucks Rewards program’s active member base in the US swelled up by 15% YoY and has over 17 million members. In China, it grew up by 45% compared to last year with 10 million members. 

“We have seen improved engagement with the loyalty program. We’ve attracted more occasional customers into the programs… which creates significant opportunity… We know when customers join our rewards program, their total spend increases meaningfully,” revealed Starbucks CFO Patrick Grismer.

Another classic strategy that can help retailers to promote loyalty is coupons. 

Here’s how retailers can build a good reward program:

• Enhance your loyalty program by personalizing the coupon deals and rewards with the help of data and machine learning
• Lay emphasis on creating exclusive experiences, be it in the form of an early preview, premium products, special discounts/coupons, member-only sales and special services like priority/free/express shipping
• Build a multi-level program to increase loyal engagement across all platforms
• Offer rewards at multiple and integrated touch-points for a seamless shopping experience
• Improve the program with geolocation data for precise targeting
• Move beyond the hard sell and partner with brands, retailers and other companies across other industries to develop coupons and rewards that would appeal to your customer base. This would also enable you to cross-sell and up-sell while increasing your brand reach

Offer Experiential Retail In-store Experience

The new-age consumers demand a unique physical shopping experience – not just from the traditional brick-and-mortar retailers but also from the modern online stores. Brands that offer an experiential retail experience gain a loyal customer base. In the digital world that values omnichannel retail and which is moving towards an experience economy, the physical and online world is no longer restricted to their designated space. 

The store designs have undergone a major transformation because of social media. So has visual merchandising with the help of the Internet of Things (IoT), artificial intelligence (AI), augmented reality (AR), and virtual reality (VR). From Lego’s Snapchat clothing store to Clinique’s NYFW pop-up store, technology has completely changed the retail in-store experience. 

Here are the ways retailers can offer experiential retail experience:

• Introduce technologies that provide conveniences, such as cashless transactions, self-checkout, and express store pick-up service (for online buyers)
• Enhance customer experience by focusing on community retail, which is expected to be retail’s next evolution
• Work towards building a personalized tech-driven in-store experience, like using mobile technology and advanced analytics to curate personalized product recommendations for customers that walk into the store
• Invest in immersive retail solutions like chatbots, AR, VR, and AI

Personalize Digital Experience

In this digital age, personalization is the most effective tool to stand out in the retail industry and drive loyalty by truly capturing customers’ attention. The online retail space can be personalized for every customer that leaves his/her digital footprint with the help of technology.

Personalization powered by AI has the ability to transform businesses when used efficiently. For example, retailers can improve customer engagement by deploying chatbots with sentiment analysis to handle customer grievances and inquiries during offline hours. Similarly, product discovery can be improved through catalog tagging and visual merchandising. The same theory can be applied while setting up billing and payment options, shipping & returns, shopping cart abandonment, holiday strategies, and marketing strategies. 

McKinsey’s The State of Fashion 2020 report states, “In a world of choice, customer loyalty drives economic advantage. In that context, technology can be a critical enabler of the knowledge, empathy and operational efficiency needed to create a winning edge with the customer… While this may require substantial investment — and likely re-platforming of the tech stack to accommodate larger volumes of data — brands that opt not to engage may find themselves left outside the room as relationships become increasingly personalized.”

Katie Baron, Head of Retail at Stylus reiterated McKinsey’s point about the close links between personalization, technology, and loyalty at the R-VUE conference held in London.

Baron asserted, “A brand’s ability to personalize the online journey—even if it means using 3D sampling so a customer can do a trial online—will be a game-changer in the years to come because customer loyalty is closely linked to the website’s potential to show them exactly what they are looking to purchase!”

Here are the ways to get personalization right:

• The amount of data generated by tech-savvy consumers can be overwhelming. Deploy measures to segregate good data from bad data, which is relevant for your business. Refer and feed only good data into the system to gain insights into customer behaviour as relevancy is the key
• As investing in this technology is an expensive proposition, select the right AI subsets and tools that are tailor-made for your business goals
• Collaborate with reputable technology partners who can address all the pain-points and explain measurable benefits

Earn Loyalty By Taking A Stand

This brings us to the first point – brand identity. According to Edelman Earned Brand report, 60% of consumers want a clear view of a brand’s values and positions on important issues before making the purchase. Be it social causes or environmental causes, millennials and Gen Z offer their loyalty to the brands that stand up for the things that matter. 

“Younger consumers are seriously concerned with social and environmental causes, which many regard as being the defining issues of our time. They increasingly back their beliefs with their shopping habits, favoring brands that are aligned with their values and avoiding those that don’t,” averred McKinsey’s The State of Fashion 2010 report. 

Here’s how retailers can build an authentic CSR program:

• Integrate social and environmental themes into your product, services, operations, and brand messaging 
• Avoid indulging in token activism
• Take a clear stance on social issues
• Champion great causes; especially the ones that directly impact your target audience
• Follow ethical business practices

These five strategies will help retailers to not only build a lasting relationship with existing customers at every touch-point but also engage with new customers. The core characteristics of millennials and Gen Z are quite different from the generation that came before them. They are a diverse group that thrives on constant connection, individualization, exclusivity as well as inclusivity. Therefore, it could be difficult to earn their loyalty. But one of the advantages of operating a retail business in a tech-driven world is that customer data has an answer to every question and a solution for every roadblock. Study this valuable resource to design your own brand loyalty strategy.

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