Chris Fields is the managing editor of Retail Connections magazine and a longstanding retail journalist and analyst. He is currently retained by the National Retail Federation and is the go-to retail commentator for Sky News.
He has written for publications including the Financial Times, Retail Week, Drapers, and plenty more. And he has worked for many years advising retailers across both the US and the UK.
In his Keynote talk at Loyalty Connect, Chris discussed how the philosophy around loyalty has developed over the years and the significant loyalty challenges facing brands today and in the near future.
Watch the YouTube video of his talk below or keep reading for a summary.
The pandemic has cast a long shadow over retail but it has the potential to positively transform loyalty. Today, it’s tougher than ever to win and keep customers. But, the changes that have been brought about by the pandemic are actually the best opportunity that has been presented to retailers and brands for a long time.
It won’t be easy. We were all talking about how to win greater loyalty through personalization before Covid struck but now the urgency to act has never been stronger. Let’s take a look at what’s in front of you today and what’s coming down the road.
Essentially, loyalty is about trying to win more customers, retain the ones you have, get them to spend more, and help you attract more customers. However, in practice, securing customer loyalty has never been this easy.
It feels like we’ve been having the same conversations about loyalty for years. Instead of making progress, we seem obsessed with repeatedly trying to redefine what loyalty means.
Most of these definitions were created at least fifty years ago and they still apply today. For example, “Customer loyalty describes an ongoing emotional relationship between you and your customer manifesting itself by how willing a customer is to engage with and repeatedly purchase from you versus your competitors. Loyalty is a byproduct of a customer’s positive experience with you.”
But, loyalty is often more complicated than that. Businesses with very loyal customers can make mistakes without losing those customers. For example, Marks & Spencer, which has put a foot wrong on many occasions over the years, has nevertheless retained a fiercely loyal customer base.
There is increasing professionalism to loyalty through. Particularly when it comes to measurement. Loyalty marketers everywhere are tracking the long-term ROI of highly-engaged, highly-valuable customers returning and engaging with a loyalty program.
In a recent study conducted within the automotive industry, a number of large car manufacturers found that over 80% of customers who said they were delighted with their new car, chose another brand within three years.
What happened during those three years? There must have been a disconnect but this information was never fed through to marketing so they didn’t realize that the company was brewing disloyal customers.
This type of disconnect is more common than you may think. For example, I’m a big fan of the road cycling brand Rapha. I’m on record with Rapha as a long-standing, loyal customer when actually I’m nothing of the kind. I only buy their products through a discount website called SportsPursuit. I’ve never paid full price and will tell anyone who asks that their stuff isn’t quite as good as it used to be. They should be investing in trying to shut me up but instead, thinking that I’m a loyal customer, they regularly invite me to their special events.
One of the key ways brands can solve this disconnect is to improve the way they receive and use data. There’s a chance now to really move things on using deep customer data and by managing each channel appropriate to its capabilities and reach. Progress will require whole organizations to work together in new ways. Teams can be quite protective about their territory and their current ways of working. But we can’t keep saying that we all need to be customer-centric if we’re not rolling out the structures and mindset to do that and collaborate across our organizations.
Loyalty is far more of a technical challenge than it used to be. You need the right software and data that can be presented in usable ways through apps and data. (Not spreadsheets. Let’s get rid of spreadsheets!)
Today, consumers are being tempted in every direction. It is easier than ever to lure shoppers away from their trusted brands. Indeed, digital has opened up a new world.
Now there are an infinite number of channels from which we can extract products and value. Research has shown that the shift to digital, which varies from country to country, is around 10% to 30%.
Increased digital accessibility combined with global lockdowns has caused consumers to look for new products and solutions. During the pandemic, McKinsey discovered that 75% of consumers tried new brands. In addition, research by the software company, Bazaarvoice showed that 4 out of 5 global consumers vowed to stick with the new brands that they moved to during the pandemic. This significant shift is a challenge to loyalty.
Another challenge brought about by the pandemic is the idea that the service or the experience has become more important than the product. What if getting your groceries delivered to you in ten minutes becomes of greater value to you, the consumer, than where the groceries came from?
If so, who’s in charge here? The brand or the third-party fulfillment company? For example, some supermarkets us third-party q-commerce company for fulfillment of all of its online orders but they currently receive none of the customer data. This is not ideal. Data is everything. If you do not have that data you cannot begin to confront the many loyalty challenges.
The consumer trends we’ve all been observing over the years have gone haywire. It is a challenge to the way we all do things from a cultural perspective and from a systems and data analytics point of view. As we attempt to make progress in loyalty, it’s helpful to layout the many hurdles in front of us today and in the years to come.
Here are a few of the key industry-wide challenges to look out for in the next ten years:
On top of these challenges, there are broader concerns including:
There are also a number of challenges relating specifically to customer expectations, that are worth paying attention to in the world of loyalty, including:
The more you know about customers, the harder it is to market to them in the right way. How do you find a middle ground during a time of extreme polarization?
One of the key ways to overcome these challenges is by investing in and optimizing your software, data, and analytics. Today businesses of all sizes can benefit from cross-compatible solutions and a wealth of data. This should enable you to be free to focus on the fun stuff in loyalty.
What is clear is that however, we define loyalty, it is more important than ever. Someone’s coming to steal your customers. So make sure you hold on to them!
To learn more, download the 2022 trends ebook.