Last updated: Improve customer loyalty in retail: Forget the sale, focus on experience

Improve customer loyalty in retail: Forget the sale, focus on experience


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On a recent walk in central London on a sunny beautiful morning, I was caught off-guard by a large gathering of people in the distance. Most stores hadn’t opened yet, so I was puzzled. The closer I came, the more I realized that the kerfuffle was a long queue of shoppers waiting their turn to shop at a popular clothing retailer.

What was the hubbub all about? Two magic words: clearance sale.

Everyone loves a good sale. Yet no matter how steep the redline discount, enticing the buy-one- get-one deal, and motivating the sign screaming “Everything Must Go,” such promotions only fuel short-term customer loyalty.

Improving customer loyalty in retail: Why a seamless shopping experience matters

In theory, the purpose of promotions is rewarding customers who have the potential to spend more and more often. However, decreasing prices for the sake of offering low prices has the opposite effect. Price-sensitive shoppers become the beneficiary, which tightens profit margins and burns the brand’s reputational value over the long run.

Customers who exhibit loyal behavior are most likely looking for something more than just a low sale price.

They want a bond with a retailer that understands their needs, provides the products they want, offers a seamless and convenient shopping experience, and runs a sustainable operation that aligns with their values.

According to PwC, the quality of this relationship is so critical that 59% of people will walk away following several bad experiences and 17% will do the same after just one – even if they love the brand or product.

On the flip side, the benefit of rewarding loyalty is dramatically more advantageous than a good promotion in both the short and long term. Increasing customer retention by as little as 5% through loyalty programs can boost revenue between 25% and 95%, according to Annex Cloud research.

Plus, loyal shoppers are more likely to recommend the brands when asked by friends, family members, and acquaintances. They’re also more apt to share their experiences, serving as the perfect vehicle for free, word-of-mouth marketing.

3 trends driving customer loyalty in retail

Over the past few years in the retail industry, we’ve seen the rise of three trends designed to take  customer loyalty programs to a new level:

  1. A shift away from buying products toward delivering experiences customers desire
  2. 360-degree view of customers to predict and anticipate their behaviors
  3. Adoption of intelligent technologies that collect and analyze customer data in real time

Each of these trends is helping retailers build unprecedented levels of trust with their customers – they’re better equipped to fulfill and deliver orders consistently and on time.

By focusing on these as priorities, they also help ensure every product is high quality and sourced ethically and sustainably.

More importantly, brands are beginning to unify their brick-and-mortar stores and online sales channels to create one seamless customer experience.

While physical stores will remain an integral part of the shopping experience, their function is changing considerably along with the customer journey as they become more integrated with digital interactions. For example, augmented and virtual reality give customers the ability to try on any color, style, or size, while capturing that information to update their profile.

Additionally, beacons, RFIDs, and mobile devices provide real-time product information, inventory availability, and other services to enhance the overall encounter.

Getting closer to the customer via seamless experiences

Virtually everything that happens in retail tends to be adopted by other industries. The concept of catering to two separate worlds – offline and online – is undoubtedly one of them.

And the reason why this approach is taking off is clear: Extending the web experience to the store allows brands to get closer to the customers – anytime, anywhere, and on any device.

By meeting customers on their terms and providing them with seamless, personalized experiences, retailers can build relationships that last.

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