By Richard Nicoll, chief strategy & capability officer at Liquid Retail
In today’s commerce climate, shopper loyalty seems to be in short supply. Was it always like this? Well, it’s
debatable just how loyal shoppers were to brands and retailers before a shift took place when the pandemic hit.
Nowadays, shopper loyalty has become something of a myth, and competition for shopper spending is higher than ever. Shoppers have much more choice in terms of channels to shop or buy, leading to actual promiscuity in their buying behaviour. Even if they intend to be loyal to retailers and brands they love, with so many options being presented to them, it’s easy to get distracted.
The labyrinth of understanding your customer
The truth is, shoppers have five needs or want when deciding what to buy and where to shop – quality, convenience, availability, safety and, of course, value. When these needs are met, data shows they simply no longer care where they buy or from who.
This unintended shopping promiscuity was highlighted by the recent GCC Talkwalker report, which found that while 75 per cent of surveyed GCC customers expressed some loyalty to brands they currently or have used, 70 per cent of the same shoppers stated that they are equally open to trying new brands or retailers if the quality of products is worth buying into. So, I’m afraid past purchase is no longer a guarantee of future purchases and this doesn’t look like a trend it’s the future of retail reality.
So then, It’s no surprise that brands that lead in customer-centricity grow nearly three times faster than the industry average. Nowadays, shoppers are willing to pay a premium for relevant shopping experiences, services, and products. Brands that continually invest in understanding shoppers’ motivations, channel-by-channel, stand the best chance of remaining part of an ongoing consideration set while being able to charge more for products that shoppers want to buy.
In a crowded sector like retail, success hinges on your ability to create relevant customer engagement at scale. Achieving this requires data, cutting-edge analytical tools, and deep-dive analysis of every bit of data pertaining to shoppers’ shopping behaviour. That being said, it’s easier said than done in reality.
Collecting usable shopper data has become easier with shoppers moving to online channels. On the other hand, what brands can effectively do with that data to generate future sales remains a considerable challenge. Even if you can re-target successfully, there’s no guarantee that this will inspire loyalty.
So, perhaps retailers and brands should stop focusing on loyalty programs and instead concentrate on being as relevant to the five needs and wants as possible.
Shoppers are significantly less forgiving than ever and certainly have higher expectations.
‘Brands and retailers are ‘only as good as the last sale’. Quality and service have become vital differentiators of retail channels and play a massive role in deciding where to shop and shop again.
It’s evident in UAE that shoppers like to keep their options open. The take-up of subscription models like Amazon ‘subscribe and save’ is lower than in other regions. Loyalty cards exist, of course, but they are not as crucial in determining shopping location as in other markets.
According to a KPMG survey on consumer loyalty, product quality emerges as the top factor that inspires loyalty among UAE consumers (77%), while the value for money, customer service and product consistency all place second at 66%.
So, the key question shoppers are asking on pretty much every shopping-spree being, ‘what’s in it for me?’ today remains relevant. This explains why the same KPMG report found that 45% of UAE respondents identify points and rewards as an important factor in earning and keeping their loyalty.
While value will remain important, we will inevitably see a re-imagined innovative, more joined-up approach to ‘value-based’ shopper loyalty. For example, we are already seeing how the recent acquisition of Q-Commerce aggregator El Grocer, which Etisalat acquired, has enabled the joining up of established loyalty programs with shopping missions. By enabling the earning and, more importantly, redeeming of ‘Smiles Points’ from broader lifestyle transactions when you shop for groceries on their platform, El Grocer effectively give shoppers incremental value without them having to do anything else!
For now, the simple truth is that shopper loyalty is scarce, but to stand any chance of winning repeat sales, the first experience must be good, if not great.