There is so much discussion these days about how loyalty marketers can better serve the all-important Millennial segment, but often lost in that rhetoric is how retailers can better drive customer engagement among Affluents.
Loyalty360 caught up with Sue Yasav, VP Thought Leadership and Market Insights, Synchrony Financial, to find out more about this segment from findings in the company’s latest white paper, “The Affluent Shopper.”
Why do retailers have a difficult time meeting Affluents’ needs/expectations?
Yasav: Some retailers may not realize how many affluent consumers are shopping at their brands. Affluents shop at a multitude of retailers, not just high-end ones. A robust segmentation strategy can help in this regard. Retailers should devise engagement and retention strategies that specifically delight high spenders. This can be done with special rewards and experiential events. Some retailers send tickets to shows and gifts to their most valued customers. Others set up enhanced loyalty programs to increase the earnings and value of the rewards given to high value customers.
How has this segment changed or evolved in recent years and what can retailers do to leverage this segment in a more effective way that sparks more customer engagement/customer loyalty?
Yasav: The Affluent segment has grown significantly in the past 40 years. According to a study done by Pew Research, the income of this segment has grown by 47% since 1970. As a result, there is an opportunity for retailers to better understand the needs and wants of this growing segment. For instance, nearly 50% of Affluents say they will pay more for convenience, and 39% say they will spend more on travel in the future. Retailers can use this information to maximize their connection to customers by designing products and programs that address these trends. Design experiences that make it convenient for consumers to shop, whether through digital technology or associate interaction. Create shopping experiences for traveling Affluents, working with local hotels or travel agencies.
How can loyalty programs be revised/tweaked to better serve this segment?
Yasav: A loyalty program can be revised to better reward the high spenders. A good, better, best strategy would reward highly engaged customers with more frequent rewards. For instance:
- Sporadic shoppers – reward every nine to 12 months
- Better customers – reward every six months
- Best customers / highly engaged customers – reward every three months
In this way, retailers reward their best shopper, and encourage them to shop more often.
Does this segment want more experiential things?
Yasav: Yes, it definitely values the experience; 76% of Mass Affluents, and 86% of High Net Worth (
household income over $250K+) say they would pay a premium for experiences they feel are valuable. As a result, many retailers have set aside a portion of their stores to cater to the high spender. These special sections provide personalized white glove service and are often physically set apart from the general store environment. It is similar to cruise lines offering a separate experience for high spenders or airlines having separate lines for their premier flyers to minimize their wait time. Setting up a differentiated experience for the high spender can pay dividends in terms of future loyalty and spend.
What were the biggest surprises (either positive or negative) regarding insights gleaned about The Affluent Shopper?
Yasav: The first surprise is the extent to which the Affluent consumer (
defined as household income of $100K - $250K and assets of $250K+) shops across a multitude of retail brands. They don’t just shop luxury retailers. In fact, only 19% of mass Affluents say they always buy upscale brands. Quality, convenience, and the values of the brand are more important in their buying decision. The second surprise uncovered in the research is the extent that
all consumers value experiences over things. This is true across all income groups and age segments. About 70% of all income groups say they would rather spend money on experiences rather than things. This points to great opportunities for brands to create meaningful connections with their customers. We have already seen forward-thinking retailers include experiences like rock walls, restaurants, and cooking classes in order to connect with their customers.
How does mobile technology factor into this segment’s needs?
Yasav: Since affluent consumers show a greater degree of technological engagement, leveraging technology can successfully attract and engage these shoppers. Our recently completed Digital Study shows that consumers are increasingly using digital technology to shop. Retailers who take advantage of geo-location, digital coupons, and loyalty apps are in a position to take advantage of this major trend.
What trend (s) do you see or foresee for retailers as far as trying to better connect with this segment?
Yasav: There are many opportunities to attract and retain the Affluent shopper. The strategies include creating differentiated experiences and devising a brand strategy that reflects the values of the shopper; 47% of Affluents say they like to shop at stores that reflect their values. As a result, several successful retailers are creating content and social media strategies that connect with customers on an emotional level, whether it is eating crackers or running a marathon.
Additionally, retailers can use digital tools and capitalize on new and emerging technology to better connect with customers on a personalized level. Forward-thinking retailers that implement strategies to meet and exceed the needs of the affluent consumer can better fulfill their company goals while cultivating a strong customer base for the future.