Maximizing customer loyalty begins with understanding high-value customers and assessing their level of loyalty, according to IRI Worldwide’s Times & Trends Report titled, “The Omnichannel Journey: Translating Big Data into a Prescription for Growth.”
But to move customers up the loyalty ladder, and even acquire new customers, retailers need to shift from the standard category management perspective to a customer management perspective.
Industry experts estimate that it costs anywhere from five to 25 times more to acquire a new customer than it does to retain an old one, the report says. As a result, retailers should consider the following steps to maximize the value of every one of those customers: Reward current customers; grow current customers; activate new shoppers; and reactivate lapsed customers.
“Since attracting new customers is expensive, the key to success for retailers is to get the most out of their current customers, rather than just focusing on attracting new customers, to minimize costs,” the report says. “Loyalty programs are flush with information about members—from category and brand preferences to price and promotion sensitivity. This information is essential to developing programs that target and resonate with a retailer’s best customers.”
Today’s challenge of personalization starts with knowing the shopper.
“Personalization will be the crux of future retail success,” the report says. “This does not mean retailers should abandon mass-marketing programs. Rather, the future will be about supplementing mass efforts with targeted programs aimed at deepening a customer’s relationship with a retailer. Getting this right means that retailers need to know their customers inside-out, so they have the right marketing programs, the right products and assortments with the right prices, and marketing messages aimed at positively influencing customer loyalty and driving activation.”
Targeting these high-value and potential customers, however, is not easy.
“The path to purchase has become a maze of twists and turns, with thousands of points of interaction along the way,” said Susan Viamari, Vice President of Thought Leadership for IRI. “Retailers need to harness the vast sea of big data around shopper attitudes and behaviors and bring it together in integrated and real-time fashion. Only then will they understand what is moving the needle today, and predict and prepare for what tomorrow will bring, so that they can consistently serve their customers in a highly personalized and engaging fashion.”
Retailers are grappling to not only understand consumers’ varied shopping patterns, but also to capture shares of their increasingly fragmented shopping trips, Viamari added.
“Retailers really need a clear 360-degree view of shopper spending to grow,” she added. “This perspective will help them know what their key and target shoppers are looking for, so they can engage the shopper where, when, and how it matters most to them. Those retailers that can personalize the shopping experience move their customers up the loyalty ladder, increasing the lifetime value of those customers and supporting growth along the way.”