Retail

Why Retailers Must Focus On Retention In Post-Pandemic Economy

shopper

When there’s less competition and an unforeseen number of customers, it’s time to step up customer strategy. That will be the case in most every category of retail. Big retailers have declared bankruptcy, malls have reported widely varying foot traffic and Main Street retail faces an uncertain future. Customers, in short, are more valuable than they were pre-pandemic.

Along with customer safety, acquisition, retention and loyalty should be top of mind for retailers as the pandemic economy reopens.

“Retailers need to keep taking stock of what that real customer journey is,” says Sean Claessen, chief strategy officer at Bond Brand Loyalty. “Because I think it’s changing and morphing and some of it will be changed forever, not just in this moment. Challenge every assumption you have that says you can rest on your current customer strategy. Every time I hear somebody say that they haven’t worked harder to automate their customer loyalty effort or their segmentation strategy, I tell them they need to stop thinking in absolutes … and find ways to stay nimble and connect with your customer.”

From Claessen’s point of view, loyalty is the strategy to double down on post-pandemic. And loyalty is best executed via data, customer relationship marketing and eCommerce. He says he understands that keeping the lights on is the first priority, but urges retailers of all sizes and stripes to take advantage of loyalty platforms. Merchandising and promotions are taking a back seat to staying as close as possible to the customer.

“We’re going to wake up somewhere between a recession and a depression,” he says. “I think holding on to the customer is going to become a necessity. Up until this moment there was still this like debate about how worthwhile it is to like conquest strangers out in the wild of the internet, or calculate the cost that’s acceptable for the amount of waste that lives in that system in order to get new customers in the door. So the first place that many marketers are going is asking who are my current customers? What can I count on that’s real? What is growth potential in that group? If I’ve got customers who know me and love me and who have already brought me into their homes, presumably that’s a place to double down and focus on. And so I think there’s a lot of curiosity about what loyalties are sticking and which loyalties are being challenged.”

One of the loyalties being challenged is the attachment to brick-and-mortar stores. The most recent PYMNTS COVID-19 tracker shows that among those who are now shopping more online, only one-third say they will go back to physical stores to shop when they reopen. More telling, perhaps, is that only 40 percent of those who used to shop in a physical store say they will resume their normal shopping activities when those stores reopen.

However, the situation begs the question: If customer loyalty is so important, why are sophisticated retailers slashing prices rather than offering those prices only to their loyalty members?

“I think honestly, some of the difficult customer work has not been done,” Claessen says. “And the work is still quite manual for many retailers and they’re refactoring to decide what would need to go into that analysis. I think so many of them were just kind of keeping the lights on and doing the basics and worrying about distribution centers, and shipping and their analytics teams were largely focused on doing some of that kind of work. And so, nobody was thinking about or nobody was even able to act on what this will look like on the other side of it because they were just so consumed with reacting in the moment.”

How to tackle the customer retention issue? Jordan Olivero, director of customer success at Swimlane, goes to the basics.

“We also look at the ideal customer profile, and then we try to assess each customer against that ideal profile, [giving us] a health score that’s dynamically calculated by different factors,” he tells customer strategy blog BuiltIn. “Based on that health score, we engage or prioritize our attention. A lot of times, there will be certain groups of customers that are at risk. So, once a month we’ll bring the entire executive team together and the customer success manager has to speak to what’s going on, why the customer’s at risk, what the plan is to bring them from red to green and what help they need from the rest of the company to achieve that plan.”

While Claessen and others advocate for retention, Google is advocating for acquisition. It has added a customer acquisition capability to its Smart Shopping campaigns. In those, a retailer’s products are combined with Google’s machine learning to show a selection of ads. Google’s systems test combinations of the associated image and text and then show the most relevant ads across all Google networks, including search display and YouTube.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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