The face of retail is changing. Retailers are under immense pressure to deliver differentiated products and services, at a time when customer loyalty is dwindling.
Mobile technology has created the “promiscuous shopper”, and customers now have the freedom to compare prices or look for alternative products whilst ‘in the moment’.
To compound this, the growing popularity of retail events like Black Friday mean that retailers are in fierce price competition to win sales and market share with the best deals. Tackling the problem of shifting loyalty is more important than ever before. This trend is going nowhere, so how can retailers ensure they provide the best customer experience when running price promotions?
Our own based on Black Friday 2017 shows that an increase in visitor traffic across retailer sites was made up of both infrequent and more loyal regular customers. But the greatest increase was among less loyal customers, indicating that the promiscuous shopper is searching different websites on the hunt for the best deal, without any degree of loyalty. It’s no surprise then that many retailers chose to slash their prices to win them over and drive sales.
But this is where many are going wrong. By focusing on sporadic price slashes, retailers are running the risk of creating spikes in browser demand and subsequently causing a poor user experience. Our evidence indicates that both perceived ‘site speed’ and observed ‘product availability’ are negatively impacted as a direct result of these spikes in online traffic during retail events.
Loyal customers have their typically good experience impacted at the expense of the promiscuous shoppers who ultimately, are less loyal customers. In worse cases, this can lead to losing share of wallet of your most valuable customers, meaning retailers are reliant on driving short term sales and getting stuck in a cycle of ‘bad profits’ driven by promotions, rather than a strong base of loyal customers.
This is creating a dilemma for retailers that need to drive sales and cater to the less frequent visitors, but without losing their existing loyal customer base due to poor user experience. Retailers need to carefully manage demand, but also reward their most valued customers to ensure they stay loyal.
Many retailers have schemes in place to retain high value customers, but a loyalty card alone won’t save a shopper that has suffered a poor user experience. The problem is that it doesn’t provide the full picture of a customer’s experience. It tells you what happened, but not why and there is little that retailers can do with this information to drive further loyalty.
By combining data a company already knows about a customer with real-time feedback, an actionable picture is painted on what is happening and why. For example, by integrating Voice of the Customer programmes with loyalty schemes, retailers can trigger real-time customer feedback on a known purchase. They can then analyse the feedback through a holistic lens, overlaying feedback with added context such as time of day, day of week and shopper type to provide more actionable data.
The more that is understood about the customer, and the more they tell you about their experience, the more the retailer can attend to these experiences. With this data in hand, retailers can ensure their most loyal customers are prioritised and recovered during events such as Black Friday.
It’s time for retailers to use a variety of tactics to target their most valuable customers. By offering special previews, discounts, or deals before they are made available to the wider market. By offering this ahead of large shopping events (like Black Friday), or peak periods, these high value customers can take advantage of the deals while items are still in stock. This provides retailers with an innovative way to not only manage demand on their website, but also reward a loyal customer base, giving them early access to exclusive offers
At a time where customer experience is such a crucial differentiator for many retailers, gathering insight is key. The promiscuous shopper now has the tools that empower them to make informed decisions in the moment, so retailers must do the same. Investing in technologies and techniques that provide clear actions and priorities can enhance the customer experience and drive loyalty.
Retailers may not be able to reverse the trend of the promiscuous shopper, but they can find ways to better manage experiences and bring their most loyal customers to the deals and offers at an earlier stage. This manages customer demand and will make retail events like Black Friday a win-win for all.