Marketing

Customer loyalty is the key to growth and success in retail

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The retail sector is faced with the challenge that new sales channels are increasing the complexity of logistics and customer communication. Retailers must therefore master the instruments of customer loyalty.

The complexity of both logistics and communication with consumers is increasing in retail due to new sales channels. Against this background, dealers need internal tools to master the various instruments for customer loyalty in order to be able to continue to operate economically. In addition, in view of new business models and competitors, the topic of customer loyalty is becoming more and more important for traditional retail: This is the key to more growth and success.

Increasing number of sales channels

The rule of thumb “Satisfied customers come back” has not only been valid in traditional retail since time immemorial. It also confirms its accuracy in online trading. The number of sales channels through which customers have to be reached and addressed has increased significantly: from the classic stand on the marketplace and the point of sale in the store to the e-shop and on social media sales platforms.

Customer acquisition and customer loyalty using customer cards, vouchers, coupons, promotions and discount campaigns must be able to be integrated into all sales channels and at the same time be able to be implemented efficiently. Because the sales markets are becoming more and more flexible and the competition is on all sales channels, the battle for customers is becoming more and more difficult – and customer loyalty is therefore becoming more and more important.

Customer loyalty through personalized approach

Keeping satisfied customers and gaining new customers – these are the most important goals of retail. Inspiring customers, meeting or even exceeding their expectations and offering relevant advantages – that is the ideal way to satisfied regular customers. And keeping existing customers means less effort than acquiring new customers. At the same time, satisfied customers generate high follow-up sales and serve as multipliers when they pass on their positive experiences. Retailers who want to stay ahead in the battle for customers must address them as personalized as possible and make them individual offers. In order for this to be successful, appropriate data on customer behavior is required as a basis. This data not only has to be collected, but also structured and analyzed. This is the only way to ensure successful communication on customer-relevant channels.

Customer loyalty is part of the omnichannel structure

An individual and personalized customer loyalty program should be an integral part of the trading processes: Only through seamless integration into the systems used in the company can the interaction of checkout, inventory management, self-scanning and web shop be successful and the measures for customer loyalty be implemented across all sales channels.

In order to reduce the effort involved in carrying out customer loyalty campaigns, item and condition maintenance should be linked across all systems. No multiple data entry, quick implementation of concerted actions, fewer interfaces: With efficient systems, ideally with cloud solutions, retailers increase their speed and are thus that decisive step ahead of their competitors.

Implement measures for customer loyalty

And the effort pays off, because loyalty points, bonus campaigns and collecting points are popular with consumers. Almost three quarters of Germans use at least one loyalty program. Customer loyalty measures achieve numerous positive effects, ranging from better repurchase rates to higher recommendation rates and, at the same time, lower price sensitivity. Because the trust bonus also helps, for example, to ensure that customers do not switch to the occasional cheaper offers from the competition.

Loyal existing customers are more forgiving in the event of errors and sometimes even forego complaints. They also have valuable experience and are happy to give feedback to “their” company. They also transfer the positive experiences of such customers more easily and quickly to the overall offer – so retailers can use the trust of their customers to present new and higher-quality offers through appropriate promotions and to sell them with them.

Use customer cards for data analysis

The customer card is a particularly popular instrument for customer loyalty. It promises the customer specific added value, for example in the form of discounts, vouchers, bonus points and rewards. For the retailer, customer cards are particularly suitable for collecting important customer data and for obtaining valuable information about customer behavior. In this way, not only can the offer be optimized, but the data analysis can also be used for personalized offers such as personalized discounts and coupons.

Gift cards and vouchers are also very popular with customers. The large number of providers and the wide availability offer the right gift of the desired value for every occasion. Dealers who rely on an integrated customer loyalty system can easily incorporate the handling of all functions into their daily processes. Because then all processes such as deposit, payment and complaint processing are possible on your own. This offers great flexibility without any intermediate service provider.

Customer loyalty
The customer card is a popular instrument for customer loyalty. (Image: DRS Superdata / Adobe Stock)

Competitive advantage through customer loyalty programs

As an incentive for new customers or to retain existing customers, coupons and promotions are particularly suitable for giving discounts of all kinds. Ideally, all paths and channels can be used for distribution and redemption – online, mobile and stationary. Modern programs for customer loyalty support the processes in an automated and standardized manner by processing all conceivable combinations of coupons and promotions with discounts of all kinds. A specialty are industrial coupons, where the discount is booked as a means of payment and does not reduce sales tax.

Customer loyalty programs secure important competitive advantages for retailers. Regardless of whether it is a customer card, gift voucher or coupon voucher. In order to keep the administrative effort as low as possible and to act economically, the corresponding customer loyalty programs must be automated and fully integrated into the resulting structures. Once this step has been taken, the basis for analyzing customer data about their purchasing behavior is in place. And in the next step, the personalized customer approach can then take place on all sales channels. (sg)

About the author: Roland Kling is a sales representative at DRS Deutsche Retail Services AG and an expert in omnichannel retail. DRS Superdata has been working as a consulting and implementation partner in retail and e-commerce for 30 years, with a focus on business-IT alignment.

Also read: Bonus program for loyal customers: This is how loyalty succeeds in the end customer business