Tag Archives: multi-channel retailing

Demise of Loyal Retail Customers in the Digital Age

Loyal retail customers have for long now given Bricks and Mortar (BM) retailers an advantage over their competitors. However, the advent of the internet and the subsequent development of the online shopping channel have changed the shopping behaviour of retail customers.

Although BM retailers have invested millions of dollars in customer loyalty programs, the convenience, speed and assortment of products customers enjoy online lured many loyal customers away. This is apparent with the closedown of thousands of retail stores, and the vanishing of well-known retail brands over the last couple of years.

The big challenge for BM retailers is to the get customers back to their stores. Thereafter, the retailers should have a strategy in place to keep them coming back. In other words, making their customers loyal again…

What are loyal retail customers?

Customer loyalty is according to PR Loyalty Marketing both an attitudinal and behavioral tendency to favor one brand over all others. This may be due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.

Loyalty is formed in four stages 1 – cognitive, affective, conative, and action.

  1. Cognitive loyalty – in the first loyalty stage, consumers develop value expectations and preference for one brand relative to other available alternatives.
  2. Affective loyalty – here the consumers begins to develop a liking or attitude towards the brand based on an increasingly satisfying experience with the brand.
  3. Connotative loyalty – the third stage, which is confined to consumer’s behavioral intention. The consumer has deeply held commitment to buy the brand.
  4. Action loyalty – is where the desire and intention in the previous loyalty state has translated into realistic loyalty actions or behaviour.

It takes time, money and commitment from retailers to get loyal retail customers. This process, mostly took place at the BM retailer’s store in the local shopping center. However, retail customers in the digital age can shop anywhere, at any time, at the best price.

So, BM retailers need to rethink their customer loyalty programs. They need to find out what “delights” their customers. How has the internet and the online retail channel affected their shopping behaviour in the retail stores?

Loyal retail customers in multi-channel retail

Retailers can nowadays rely only on more than one channel to do business with. As a result, most BM retailers adopted eCommerce to become Bricks and Clicks retailers. Online retailers, on the other hand, started to open physical stores to serve as showrooms for their products. Indeed, loyal retail customers need to be found outside the traditional retail channels.

“In the digital age, your customers have apps that let them search for products, compare products, review products, check prices, compare prices, and even buy the product without ever stepping foot in your store “says Tiffany Marshall. So what must retailers do to get their loyal retail customers back?

Media Genesis suggests that retailers do the following to get back loyal retail customers:

  • Build an emotional connection – whether it’s through exclusive content or rewards, making your consumer feel special is an important part of brand loyalty.
  • Personalize – you have your customer’s data; use it to your advantage! Make your content relevant and engaging by making sure that it is (almost) custom-made for your consumer.
  • Use your data – use data, analytics, and your digital business capabilities to go beyond just rewards. Use the information you’ve gathered to really analyse how your consumers want to engage with your brand and build a strategy to do it.
  • Create an active online presence – forgoing a good website and a strong online presence is essentially a death sentence in today’s digital marketplace. Most consumers prefer to shop online and not having an easy to use website is like excluding your brand from the conversation. It’s not enough to just post on social media. Create conversations, respond to customers, and help make customer service a 360° experience.
  • Merge your worlds – make the online to offline experience completely complimentary by identifying all of the crucial touch points you may have with your consumers. You might even see a return in foot traffic if the consumer consistently sees your brand attached to good prices online. When they need something in a pinch, your brand will be at the top of their mind.
  • Make it easy – as a business, you now have to prioritize delivering quality, enjoyable interactions with your consumers. This is the best way to build a lasting customer relationship in the digital age. If your web presence does some of the heavy lifting for your consumer, making it easier for them to reach their end goal, the quality of the experience will resonate and they’ll be back for more.

Concluding

Online shopping caters to the busy lifestyle of modern people, and its prevalence manifests the rise of the stay-at-home economy 2. Also, the internet, big data, the internet of things and social media has revolutionized the way customers interact with their retailers. I wonder, however, how loyal retail customers can be towards a chatbot?

Lastly, has the demise of the loyal retail customer started?

Read also: Personalization of Marketing Communication – not just for your Customer’s sake

Have look at this video: “The role of customer loyalty in the small business”

Notes

1 Kursunluoglu, E. 2014. Shopping centre customer service: creating customer satisfaction and loyalty, Marketing Intelligence & Planning, 32(4):528-548.

2 Wu, M.Y. and Tseng, L.H. 2015. Customer satisfaction and loyalty in an online shop: an experiential marketing perspective, International Journal of Business and Management, 10(1):104.

Image and video

Flickr.comlynda.com

Crossing the digital threshold – adding Clicks to Bricks for sustainable retail outcomes

Retailers should start crossing the digital threshold to survive and grow their business.

The word ‘normal’ no longer has a place in the vocabulary of retailers around the world. The advent of the internet has caused a revolution in the retail industry with customers doing their shopping online at the expense of their neighborhood retailers.

As revolutions go, it started out slowly, but the adoption of innovative digital technology and the rolling out of broadband mobile connectivity have caused the retail revolution to spectacularly, and exponentially get out of control.

Big and small retailers are closing shop and shopping centers stand empty because of the online migration by their customers. The high street in London has an oversupply of retail space and shopping centers have run out of ideas on how to lure customers back. “For retailers, the space race is over!

Because of the multi-channel landscape, ‘clicks’ are just as important, if not more important, than ‘bricks,’” says Robert Chapman Chartered Surveyor and Director, Robert Chapman & Company. In spite of the perceived threat that the online channel poses to traditional retailers, it may offer a huge opportunity.

There is a saying, ‘if you can’t beat them, join them’.  The key to this in the retail sector lies in multi-channeling. Traditional retailers or ‘Bricks and Mortar’ retailers who added an online channel to their business, becoming ‘Bricks and Clicks’ retailers, are surviving and doing well. But what exactly is multi-channel retailing and how can retailers communicate with customers online?

Crossing the digital threshold by reaching customers in different ways

Multi-channel retailing is the use of more than one channel to sell products or communicate with customers. The channels can either be physical such as ‘Bricks and Mortar’ shops, catalogs, and/or kiosks; or virtual, such as online shops, mobile app stores and online catalogs.

Vanheems and Kelly investigated consumer behaviour and found that the use of multiple channels in retailing is effective for reaching more customers. They sell more products, and are making more profits (International Journal of Integrated Marketing Communications, 2009, 1(2):44-56). Research by Kwon and Jain found that consumers in the retail industry value multi-channel retailing since they have more options where they can shop and make purchases (Journal of Marketing Channels, 2009, 16:149-168).

Although multi-channel retailing is not a new business practice, the online retail channel has revived it. Digital innovations, broadband connectivity, mobility and computer savvy consumers have revolutionized retail industries globally.

Meet your ‘new’ customer – the online shopper

The internet has helped to empower traditional retail customers to become what we now call ‘online shoppers’. Online shoppers are dynamic, hands-on, mobile and interactive users of the internet.  The internet offers them quick access to a variety of products and prices, anywhere at any time. They find it easy to pay for products online and the delivery is conveniently at their place of choice.

It is therefore unsurprising that online retail continues to grow exponentially. The exponential growth of online retail sales in the United Kingdom from 1998 to 2015 is shown in Figure 1. A staggering 20% of UK retail sales for February 2016 were online (Internet Retailing). The customers have crossed the digital threshold, but what about the retailers?

uk-online-sales

Figure 1. Online retail sales in the United Kingdom from 1998 to 2015 Source: (http://www.statista.com/statistics/315506/online-retail-sales-in-the-united-kingdom/)

 

The impact of online retailing on ‘Bricks and Mortar’ retailers

 As shoppers are entertained with more innovative apps to enhance their online shopping experience, many ‘Bricks and Mortar’ retailers are still in the denial phase of their self-imposed digital nightmare. Some commentators are, however, seeing the writing on the wall: “The fun of going to shopping malls, department stores, and stand-alone locations may soon be a thing of the past.”

Bricks and Mortar stores are in danger of dying out completely and it has been happening little by little over the past decade,” says Danny Cox in reaction to the closure of 15% of the giant retailer Macy’s physical shops in the United States as they move their business online. It is not only the big retailers that close shops and move online.

Adding an online channel to their physical business has helped small retailers to remain open. According to Lawrence and Schiller, local people or people somewhere nearby use the small retailer’s website as a tool. They consult the website to see if products are in stock and how the prices compare with that of other retailers.  It is critical that ‘Bricks and Clicks’ retailers know how and where to communicate with customers in the online channel.

Communicating with your customers online

Nothing can be more frustrating for Bricks and Clicks retailers than having spent thousands of rand and many hours creating a website only to realise that nobody is finding you on the internet. Adrienne LaFrance, writing for The Atlantic, puts the vastness of the internet in perspective: “Although there are more than one billion websites on the internet, the vast majority of them are never seen”.

Once a visitor has found your website, she should enjoy the experience and then click to buy something. She may also be an online advocate for your business by telling her Facebook friends about her great shopping experience. She may however do the opposite if she had a bad experience. Retailers can reach their customers via different digital marketing channels.

Digital marketing channels

Communicating with your customers in digital marketing channels is rather different than doing it the traditional way. While most traditional mass media outlets provide audiences with scheduled content, digital media usually function as a gateway to a variety of information, entertainment content and communication tools.

Retailers can measure how effective their marketing communication is in the digital channel. The digital marketing channel offers retailers the opportunity to target conversations with their customers, and to create better relationships with them.

Drs Dave Chaffey and Fiona Ellis-Chadwick from The Open University in the UK have identified and described digital media channels such as affiliate marketing, e-mail, social and search engine marketing that retailers may use to attract visitors to their websites.

Affiliate marketing – is a commission-based arrangement where referring sites receive a commission on sales or leads by retailers. It is an opportunity for retailers to become more ‘visible’ on the internet since each time a customer clicks on the link of your site, search engines may give their site a higher ranking.

 Opt-in-email marketing – is a valuable digital marketing tool for conveying short, simple messages that call for action on behalf of the recipient. It usually involves sending advertisements, to request business, or solicit sales and to build loyalty, trust, or brand awareness.

Social media marketing – millions of people use social media to discuss, review, recommend, and give feedback about an organisation. As result, social networking sites such as Facebook have become one of the most popular and fastest-growing internet activities. Therefore businesses find them useful for connecting with customers, contributing to customer learning and getting customer input.

Search engine marketing – search engine marketing is an important digital marketing channel for acquiring customers. Customers use search engines such as Google, Yahoo, and Bing to find information on the internet. Search engine marketing can be ‘organic’ or ‘paid’. Organic search results are listings on search engine results pages that appear because of their relevance to the search terms. Organic search is free for retailers.

Paid search, by definition is not free for the retailer. The ranking that a retailer’s advertisement achieves on a search engine result page depends on the bid price, the content of the advertisement, and quality score of the landing pages.

Your business need to be found online in order for you to communicate with your customers online.

Have you started adding Clicks to your Bricks?

If your answer is ‘no’, then there is a real possibility that your retail shop is already losing business. Your customers have started crossing the digital threshold a long time ago. If they can’t find your business online, they will stop buying from you. The choice of crossing the digital threshold remains yours…

Image: flickr.com