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Marketing has shifted towards the most disruptive environment professionals have seen in their entire careers. Because of this shift, marketers have moved away from the constant acquisition of new customers, and customer loyalty and retention have gained traction in all verticals.
The challenge of executing strategies effectively merges with the need to understand new technologies, techniques, and processes. In addition, marketers must remain abreast of the thousands of disruptive technologies that surface each day, all of which have the potential to revolutionize business. Nowhere is this need more acute than in the retail space.
It has been said retail hadn’t changed for hundreds of years prior to the onset of the current disruptive environment. Due to rapid technological innovation creating the current marketing landscape, customers still yearn for the “corner butcher store” mentality of decades past.
Customers still want the retailer to know every person by name, to know their favorite products, and how they like to be served. They want retailers to be cognizant of birthdays, special events, and to take community activity seriously. They want retailers to be socially involved and responsible. At the same time, they want brand interaction to occur through the convenient channels afforded by modern technologies.
A huge opportunity exists for retailers to interact with customers through their preferred channels and to drive unique, in-store experiences. Brands can take advantage of this opportunity by offering differentiated customer experiences and relevant loyalty programs. This will engage customers in the personalized manner that they want while still utilizing disruptive technology.
Still, the cacophony surrounding changing customer preferences and behaviors grows louder, and brands and marketers struggle to understand and keep pace with these changes.
To help organizations take advantage of the challenges and opportunities for driving customer loyalty and increasing revenue in the midst of an evolving customer base, Loyalty360 speaks with senior-level marketing representatives from a range of industries to identify best practices for adapting to a disruptive environment.
In one of our recent discussions with such representatives, we noted several concepts emerging that are of special importance to retailers.
First, we found that customers want to emotionally connect with the retailers from which they purchase. Second, the proliferation of data has made data usage, not data collection, a priority. Third, the advancement of technology has made customers more aware of options, making competition more intense. Lastly, customers want brands to commit to some form of social responsibility. Here, we present an overview of these concepts and the quotes from brand representatives that led to this overview.
One: Emotional Connections
Customers stick with brands for a host of factors, but all of these factors should converge into one thing: connection. Jane Doe may purchase Adidas products because she likes the brand’s style, because the merchandise is affordable, it fits her needs, etc.
However, she wants to feel using Adidas makes her unique or exceptional in some way. She wants to voice her feelings of uniqueness in whatever way she can, whether through informal brand feedback, more formal surveys, or social media. In turn, she wants Adidas to recognize her loyalty and love of the brand through membership perks and experiences. This is how the emotional connection is cemented between the customer and the brand she frequents.
Lisa Erickson, Senior Director of CRM and Loyalty, Sleep Number: So the one thing about our product is, the people who have it really love it and feel very emotionally attached to the brand. Now, with all of the different social channels and social communities we offer, there’s really a way for them to voice that love of the brand. That’s one way [customers have] changed.
To read the full article with Lisa, click here.
Jackson Jeyanayagam, CMO, Boxed: If you’re a customer, how cool is that? Because you’ve opted in, and we know you love Pepsi products, and Pepsi has a new innovation product, a new flavor of soda or a new chip, who better to test with than your most loyal fans, right? So now the customers get early access and even gets to provide insight. They get deals that they wouldn’t otherwise get. It’s kind of a win-win-win for all parties.
To read the full article with Jackson, click here.
Two: Data Usage
Even as regulations surrounding data acquisition and usage get tighter and tighter, the trouble isn’t acquiring useful information. Rather, figuring out how to look at it and finding the right insights from it are the main challenges that retailers now face. When customers opt in to loyalty programs, they engage in an explicit value exchange. They provide brands with purchase histories, demographics, and other information in return for discounts, rewards, tailored experiences, and exclusive offers. So, given that this exchange changes customer expectations, making them want personalized offers and perks, retailers need to act in a certain way. The way they need to act is segmenting and then individualizing their marketing tactics. If they can do this, their customers will be more satisfied and more loyal.
Helen Pan and Jackson Jeyanayagem, Director of Loyalty Marketing and CMO, Boxed:
Jeyanayagam: If you think about where we are as an ecommerce company, we have all the behavior data you can imagine on you as a customer. You come in, you browse, you buy, you do things, and we see that. We know that about you, so we pretty much have all of the data we need on you as a customer. We try not to be too intrusive and ask you 20 questions about your household income and marital status and how many kids you have. We do things like that every once in a while, but we’ll do that very smartly, where we’ll say, “Hey, tell us more about you so we can customize your experience, and we’ll give you a promo of our coupon code.” But that’s not our day to day MO. So, it won’t be so much about the data collection. It will be about finding the customers who are buying the most Nestle products or a lot of P&G products, and working with the CPGs to create really cool experiences.
Pan: It’s less about data collection as it is about data usage. There’s just so much data, it’s just a matter of figuring out how to use it. Once our customers opt in, that makes a huge statement that you want to participate. I think that will allow us to really hone in on this segment of customers, and then do really cool things—perhaps offer them cool experiences or partner with our suppliers. We can go to them and say, “We’ve identified this group of Boxed customers that we think will be great if you want to increase penetration of this product or move them from one category to another.” That’s something that we’ll now be able to do because we have this segment of customers that have opted in to this.
To read the full article with Helen and Jackson, click here.
Marci Gerbstein, CMO, JCPenny: We, along with other retailers, have a tremendous amount of data, which is great. The challenge is always turning this data quickly into actionable tactics, but we are getting better and better at doing so. Being able to understand what [customers] love, what are they buying, how frequently are they buying it, and how do we serve her up categories, items, and offers that are going to reflect her.
We have to be relevant and know what they like. If I’m a customer that buys Alfred Dunner, and I love the brand, it has been part of my core wardrobe offering for ten years, then we will tell her when we get that in. If you’re a different woman who really likes our Belle & Sky line, which is more on the contemporary space, we will know that too. How do we speak to her differently? The direct mail pieces she gets, the emails she gets.
To read the full article with Marci, click here.
Three: More Options
While customers want to feel appreciated on an individual level, which requires retailers to maintain (at least in some sense) the corner butcher store mentality, customers also have more options than they’ve ever had. This makes the personal touch provided by older practices harder and harder to provide. Still, as hard as it is, balancing the corner butcher store method of customer interaction with the convenience of modern technology is a necessity. Customers don’t actually want to return to older practices because they’re extremely time consuming, but they still want the retailer (who now deals with 100,000 customers instead of 100) to remember who they are and what they like. This means that retailers need to adapt to customer behavior by employing disruptive technologies that enable them to both understand customers individually and meet an endless variety of desires.
Lorraine Medici and Justin Roisman, Senior Vice President of Marketing and Communication and Head of Loyalty and CRM, Perry Ellis:
Roisman: One of the things that is important to note is that, while it seems like for the last 10 years there’s been this hyper focus on the possibility that retail is fading or failing or anything along those lines, I don’t believe that’s necessarily the case. What’s happening is the customer’s expectations are shifting, and companies like ours are looking at customers in a different way. That we are able to adapt and face those challenges in a way that benefits the customer is how we all win. When Piggly Wiggly opened the first grocery store, all of the general store operators probably started freaking out. But the reality is, it was better for the customer to go and grab their products off a shelf, fill their cart, bring it to the front and check out, as opposed to having to stand there and wait for the clerk to go fill the bag with rice one pound at a time.
Medici: Fashion has always been an influence across multiple age segments and consumer types. Consumers recognize that they have more choices, and they like this notion of what’s new, and “I kind of want it now.” That’s universal, and we’re, of course, responding by giving them more options, such as our men’s brands or our swim brand or ladies brands.
To read the full article with Lorraine and Justin, click here.
Four: Social Responsibility
Finally, customers have changed because, with the advent of the Internet, they’ve become much more aware of international and global issues. Massive hurricanes, droughts, heat waves, tsunamis, and earthquakes have all appeared with more regularity in news cycles around the world, and because communication has become near-instant, nearly every world citizen has knowledge of these climate issues. Many companies have taken advantage of the opportunity afforded by such events to make social commitments such as going green, donating to charities, and offering philanthropic services. In fact, such commitments have even become a part of many customers’ expectations. For this reason, retailers can achieve some success just by adding a charitable mission to their value statements.
Dave Finnegan, Customer Experience Officer, Orvis: What’s interesting is, if you look at the demographics, conservation is a shared value that slices through demographics. When I was at Build-A-Bear before I came to Orvis four years ago, one of the things that we knew was really important to kids was making a social difference. In fact, that’s what they believe they can do—they can change the world for the good. So, whether its supporting the World Wildlife Fund, recycling or doing things that make a difference in their communities—giving back really resonates with this next generation of kids. Social responsibility connected with millennials. It’s not just about revenue and gross profit and earnings and contribution. It’s about, Do I believe in a cause that I’m associated with? What’s interesting is, we’re continuing to learn as a country to get better and better at this. We’ve got a strong foundation as a nation to build on with the likes of work of Teddy Roosevelt and John Muir, these leaders who have established important milestones for our country. My hope is that we honor that legacy.
To read the full article with Dave, click here.
The fact that customers have changed, and will continue to change, can’t be avoided. In previous decades or centuries, customers may have been satisfied with the basic services that retailers could provide: reasonably priced wares offered in a convenient location. Disruptive technologies have shattered this type of satisfaction forever. So, retailers can either adapt by improving their products and services, or they can see their revenue decline.
We would prefer that retailers choose the former option, rather than the latter, and to this end, we’ve tried to identify some of the ways in which customers have changed that are of specific relevance to retailers.
We’ve seen that customers have begun to expect emotional connection from brands, that they want personalized perks in return for data, and have more awareness of the brand options within an industry, increasing competition. We’ve also identified customers now coming to expect social responsibility from retailers. While these are certainly challenging expectations to meet, they are also excellent opportunities for brands to increase their revenue through differentiation and product novelty.
This article is derived from a larger feature on how and why customers are changing across all industries. To view it, please click here.
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