In today’s challenging business landscape, where profit margins are shrinking, supply chains are slow and uncertain, labor shortages are prevalent and inflation is a concern, it is crucial for retailers and brands to differentiate between understanding customer habits and fostering customer loyalty in order to succeed.
Many retailers struggle to cultivate genuine engagement that builds lasting relationships and delivers frictionless customer experiences. If customers feel your efforts are merely transactional, they won’t hesitate to go to your competitor looking for the next best deal.
The 2023 Omnichannel Retail Index demonstrates that understanding what customers value and using that information to build long-term customer relationships is essential for survival. This annual study of commerce trends benchmarks how 120 retailers and brands perform against more than 200 criteria across web, mobile, in-store and cross-channel experiences.
Building a relationship beyond just transactions will prevent customers from purchasing based solely on discounts, which can ultimately hurt a retailer’s bottom line. While several retail outlooks predict consumers are looking for deep discounts this year, retailers should strive to offer more than just deep discounts and focus on providing value in other ways to achieve long-term loyalty and keep higher profit margins.
Advertisement
Companies with loyal customers understand their customers’ needs and deliver personalized experiences. There’s an art and science to using customer data to capture shopping behaviors and trends and activating that data along with the right shopping features. Doing this successfully will create unique and memorable experiences that lead to long-term customer loyalty.
Loyalty Beyond the Price Tag
In our hyper-connected world with increasing distractions, retailers and brands struggle with high acquisition costs. Optimizing customer loyalty is essential for improving the lifetime value of current customers. To thrive, communication and engagement tailored to each customer is critical.
The Index reports that 89% of retailers and brands offer loyalty program members special benefits in their loyalty program. Leveraging rewards or discounts has been a solid retention strategy and a top priority for many. Today loyalty programs are evolving beyond discounts offering experiences, early access and rewards for interactions with the site and stores beyond just awarding points for purchases and discounts. But how can you stand out in a world of limited customer attention?
Tip 1: Offer deep customer support to help with conversion and enhance loyalty. Instant answers about product sizing or shipping details can greatly influence the shopping experience and make or break a sale. The Index reveals that 33% offer help via SMS, 63% send cart abandonment reminders and 64% offer customer service assistance during checkout, including live chat, phone, email and click-to-call, which can convert an ordinary experience into a pleasant and helpful one that a customer will remember.
Did you know 88% of customers believe a company’s experience is as important as its products or services? That’s why 40% of brands use guided selling as a discovery tool, fit guides and in quiz-type format for gift finding.
Tip 2: Simplify the cart and checkout process. While most retailers offer live chat on their websites, only 48% offer live chat in the cart — a critical step in conversion. Fewer retailers (21%) included customer service information on empty search results pages last year. With improved customer service and streamlined checkout processes, retailers can continue building loyalty while mitigating customer irritations. To enhance the order completion process and boost conversions, it is important to streamline reorder capabilities and provide a seamless experience for customers by offering easy access to the mini-cart, cart and checkout. This is especially crucial as it was identified as a weak area in this year’s study, and addressing this friction will optimize the overall ordering process.
Tip 3: Optimize navigation and search. Easy search functionality and navigation make it easier for shoppers to quickly find what they want. While 95% of retailers in the Index use auto-suggest search terms and 88% offer suggestions for empty search results, those that can pre-populate autosuggest can help simplify the shopping experience.
Tip 4: Provide better product detail for customer ease. Offering shoppers more information can increase the likelihood of engagement and create a more holistic omnichannel experience. Information on inventory can greatly impact if and how a shopper completes a transaction — especially when it instills a sense of urgency and fear of missing out. Providing shoppers with greater visibility regarding delivery dates would have a significant impact on their decision-making process when selecting a shipping option or considering the use of BOPIS (buy online, pick up in-store), which offers the convenience of same-day pick-up at no additional cost. Today, 59% of brands allow shoppers to filter and refine their selection to show store inventory availability and have “complete the look” features. Ratings and reviews will also provide information to help drive purchases.
Tip 5: Communicate on a customer’s schedule and preferred method of communication—not yours. Email is a top communication channel to reach customers, and 72% of brands allow customers to manage personal preferences. However, only 34% allow shoppers to manage how often they receive emails. There is no better way to turn off a new customer than by assuming you know when they want to hear from you, so give them the power to choose. SMS has been rising in adoption over the past few years, and one-third of benchmarked companies are using tactics to incentivize SMS signups.
Tip 6: Allow customers to shop where they are. Social influence continues to show opportunities as U.S. consumers spend more money on Tik Tok than any other social platform. More than half of brands show user-generated content from social media. Using personalization to ensure customers have a unique experience — whether on social media or not — will continue to engage customers and remove friction. The new focus is ensuring shoppers can engage with your brand no matter where they are — on a video game, at an event or pop-up or online.
Tip 7: Focus on delivery: Fast delivery is still a priority and 79% offer free shipping. However, 49% provide specific delivery dates during checkout, providing confidence and transparency, up from 37% in 2022, an option increasingly important to shoppers. Although there was an increase in same-day delivery to 33%, only 44% today offer next-day delivery (61% in 2022). Recent consumer studies have revealed that next-day delivery is no longer as important as previously assumed, which could explain why some retailers are cutting back on next-day delivery. Retailers are testing and measuring the impact of delivery options, speed and cost, on conversion. With freight costs as a top expense in digital, making decisions on shipping offers that drive meaningful conversion is a necessity.
An optimized digital and omnichannel strategy will increase customer engagement, average order value, repeat purchases and loyalty. Retailers should remember that a bad or even a neutral experience will drive away customers quickly as shoppers understand another store is a mere click away.
Building a customer and brand connection when delivering engaging and unique experiences involves genuine thoughtfulness, which generates trust and inspires reliance and loyalty. You can only win customers for life when you build trust, loyalty and high-touch relationships. Armed with the data of years of study, the OSF Digital Strategy team can help you plan and prioritize your 2024 roadmap. Learn more about the latest trends in omnichannel shopping and download the 2023 Omnichannel Retail Index.
Kathy Kimple is the Executive Director of OSF Digital’s Strategy group. She leverages 25+ years in omnichannel retail, focusing on brands, covering digital strategy and store operations, registry, marketing, tech selection and organizational design. She can be reached at [email protected].
