Customer Experience

5 Steps to long-term customer loyalty

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Michael Baker
Smarter Writer

Michael Baker is a retail consultant and vice-chair of the ICSC's Asia-Pacific Research Council

Make sure customers come back. Find out how to build a bridge from individual transactions to long lasting customer relationships.

Traditional, longstanding ideas in consumer-facing industries about customer engagement have become as outdated as Europe’s pre-euro currencies.

For retailers, engagement used to be centred on catching the attention of the shopper with gimmicky advertising or a clearance sale. These forms of engagement are purely transactional – they’re quick plays aimed at snaring the customer in a receptive moment.

Woman passing over groceries to customer

The key to building customer relationships

This transactional form of engagement still has its place, but it is now just one component of a broader relationship-building process, which aims to generate positive brand associations and long-term loyalty.

Building the customer relationship for the long run is taking a front seat for a good reason, namely, it is usually easier and more profitable to increase sales to an existing customer than to harvest a new one.

Consumer research indicates that long-term customer loyalty can be achieved by delivering in five key areas:

  1. Having values that your target shoppers can relate to and share
  2. Personalising the shopping experience
  3. Being responsive and empathetic when problems arise
  4. Offering quality merchandise
  5. Special offers and discounts

These are key implications of an October 2014 SAP/Ipsos Customer Journey survey of 3,000 US adults. Among the stats:

  • 30 per cent of respondents were loyal to a brand because they 'shared its values'
  • 69 per cent wanted information about products to be personalised
  • Almost half of respondents had been frustrated by a lack of responsiveness by companies, particularly when using email
  • 75 per cent said product/service quality contributed to loyalty
  • 41 per cent said special offers and discounts contributed to loyalty

Note: The last point, offers and discounts – is the purely 'transactional' form of engagement mentioned above. It’s a piece of the larger puzzle. While high product/service quality should be a given, the other three – shared values, personalisation and responsiveness by companies to consumer contacts – are now just as important. And they will challenge both the thinking and operations of many businesses.

Know what you stand for

Clearly articulated values have become a strong point of differentiation in consumer products. Companies like Toms and Nordstrom, which are associated with clothing the disadvantaged in developing countries and empowerment of women.

Values to which one’s customers can relate need not just involve giveaways and giving back; it can be as simple as a commitment to backing up in practice what your marketing spiels say you do.

Personalisation and responsiveness

Personalisation is trickier because consumers are very sensitive to the means, frequency and content of personalised marketing. They will tell you they want to have product information and special offers tailored to their particular situation. But they also don’t want to be freaked out with marketers that appear to know a little too much about them. This will be a challenge for marketing based on big data.In the SAP/Ipsos survey, 33 per cent of respondents said they liked it when a company tailored its marketing based on the customer’s purchase history, while 36 per cent said it depended on the company. That leaves 22 per cent who explicitly don’t like it and nine per cent who don’t know.Even responsiveness can have its pitfalls. Customers do want a very quick and effective response from a company when they have initiated the enquiry themselves. However, many – 34 per cent according to SAP/Ipsos – don’t like it when the company offers help before it is requested.

Key takaways:

  1. The five Elements that make customers come back. Transforming a transaction into a long-term relationship is the foundation for business growth and can be achieved through: personalisation, common values, responding quickly to queries, quality product/service and special offers.
  2. Customers are not all the same. Success is in the implementation. What’s fine for one customer (eg. location marketing or purchase history) may be unwelcome to the next. Your technology has to have a way of differentiating.
  3. Business philosophy front and centre. Make sure your customers know what you stand for and how it fits with their beliefs and lifestyles. If you don’t yet know what you stand for, now is the time to figure it out. And when you do – stand behind it with your actions.
  4. Knowing Your Customers’ Psyche. Privacy issues, acceptance of mobile and email marketing. The form information is received are moving targets. Consumer attitudes evolve so keep your finger on the pulse.

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