The Drum Network does retail: Securing customer loyalty

This content is produced by a member of The Drum Network, a paid-for membership club for CEOs and their agencies who want to share their expertise and grow their business.

Has anyone stood in Curry's and used their mobile to see if they could buy the MacBook they are currently staring at cheaper on Amazon? You are not alone. Consumer shopping habits have changed and loyalty is increasingly hard for brands to acquire. Here Carla Heath of Whippet asks if traditional loyalty schemes are enough.

We’re living in a new retail age, where customer loyalty is becoming harder and harder to earn. Advances in technology combined with changes in our working and social lives have dramatically changed shopping behaviour over the last decade, while multiple channels mean that the customer journey is no longer so linear, but fluid and changing. There are more opportunities than ever for customers to buy from a competitor. So how do retailers keep people coming back?

Historically retailers have used traditional schemes such as Tesco Clubcard and Boots Advantage Card as a key weapon in the battle for loyalty. Such schemes provide customers with a perception of added value in the form of discounts and offers (often personalised to the customer). In return, the retailer benefits from access to customer data enabling them to further target their marketing and engagement with customers. Win win.

Waitrose and M&S have recently taken this one step further introducing the My Waitrose card and the Sparks Card respectively. Both these programmes reward customers without the need to collect points and are positioned as being more like a members club, offering freebies and exclusive invitations. But are these schemes enough?

We’ve noticed retailers becoming even more sophisticated in their approach recently, wooing customers with new ways to create loyalty centred around a core theme of trust. Build trust in your brand by delivering everything a customer needs – in a way they want it, when they want it – a true ‘shop your way’ approach – and why would they go anywhere else? So how can retailers build this trust to ensure they capture loyalty?

One of the key areas is convenience. This can simply be a matter of location - a store en route for customers (commuting or on the school run, etc.) will encourage return business simply because of ease. Another, more traditional way to increase loyalty is through ‘giving back’. Today’s increasingly savvy customer is wary of marketing gimmicks, bold claims and over-promising. But retailers who offer genuine added value to customers’ – and others’ – lives through corporate responsibility initiatives go a long way to earn trust.

The Tesco ‘Eat Happy’ project is once such initiative. It promotes a healthy relationship between children and food by educating them on where their food comes from and how it gets onto their plates. It brilliantly places Tesco as the supermarket that customers can trust to look after the health of their family.

The addition of innovative technology is another way retailers are developing a more convenient and personalised customer experience. The best of these innovations ease the shopping process and seamlessly link channels allowing customers to move through the brand experience painlessly. Tesco’s new mobile payment service, Payqwiq, is a good example. This allows shoppers to store their debit card and Tesco Clubcard details and pay for baskets worth up to £400 – dwarfing Apple Pay’s £30 spending limit. Customers simply present their mobile at the checkout to pay, redeem offers and collect loyalty points – all in one.

It’s faster, and has the added trust advantage that everything is kept one secure place. Finally, there’s no escaping the fact that customers constantly modify their shopping routines and will go a long way to ensure they receive a great price (whether this is physical distance or cross channels and brands).

Therefore, a clear and well-communicated value proposition is an absolutely fundamental foundation for all retailers in the battle to earn customer loyalty. Retail brands may have very different propositions, but they are all striving to communicate one thing when it comes to price - that they’re great value (in fact, just as great value as the competition) and therefore encourage customers to keep coming back. It’s a hot topic, and one that keeps us very vocal here at Whippet. It’ll be interesting to see how it will develop over the next year.

Carla Heath is managing director at Whippet.