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Transforming One-Time Buyers Into Loyal Customers

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Part 2 of the Retail TouchPoints
Customer Loyalty Report (Read Part 1 →)

Due to consumers’ growing interest in mobile and social media applications, retailers are opting to implement tactics within those channels to increase one-to-one communication, drive engagement and increase purchases online and in-store. Retailers such as Sephora and Moosejaw have developed marketing strategies designed to optimize customer loyalty via iPad, smartphone and networking web sites including Facebook and Twitter.

“We are going to continue to be fascinated with technology and new business models, whether it’s Groupon or a type of new start-up that comes along,” commented Rick Ferguson, VP of Knowledge Development for Groupe Aeroplan, Inc. “We are also going to be fascinated by geo-location and check-in technology, as well as using mobile devices to pay the bill.” 

To formulate an efficient cross-channel strategy that increases direct dialogue with shoppers, retailers must first understand the new definition of “customer-centric,” according to Jeff Nicholson, VP of Product Marketing, Customer Analytics and Interaction at Pitney Bowes Business Insight. Nicholson recently shared his views in a webinar titled Customer-Centric Marketing: Making the Move from Campaigns to Cross-Channel Dialogue. In the new age of customer loyalty, “customer-centric” marketing focuses on communicating with consumers in the channels and during the times that work best for them, he noted. “Customer-centric marketing is when you are actually able to execute at the individual level.”

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Currently, retailers can leverage a number of strategies to enhance the shopping experience and in turn, transform one-time buyers into loyal customers.

In-Store Technologies Enhance Customer Experiences

The buzz surrounding Apple’s iPad has increased retailer implementation of tablet technology to enhance the in-store experience. With an average cost of $500 per tablet, the platform facilitates the opportunity for store associates and managers to provide shoppers with in-depth information and a high-resolution, 360-degree view of inventory.

By deploying cloud platforms accessible via tablets, retailers can process payments and purchases, and also receive CRM information such as shopping history and browsing behavior in real time. Retailers also can utilize iPad-embedded, self-service kiosks to run videos, advertisements and brand messages.

According to the Forrester Research study titled Why Tablet Commerce May Trump Mobile Commerce, the average retailer currently is investing approximately $14,000 in tablet commerce tools. Although the study revealed that currently only 30% of retailers plan to provide tablets for store associates to help sell merchandise, the platform and mPOS systems will soon become a vital tool in the retail store arsenal, asserted Larry Freed, President and CEO of ForeSee Results.

“Tablets and mPOS will be essential for incorporating the best features of Internet technology into the in-store environment,” Freed said. “They will also be critical for allowing associates to be more mobile, less tied to registers, more able to focus on the customer shopping experience wherever it is happening in the store.”

Mobility Leads To Improved Customer Service

computer-mobileForrester’s survey results also showed that improving customer service was a top objective for retailers, with 65% of respondents citing it as a main reason for implementing enterprise mobility. To that end, Nikki Baird, Managing Partner, Retail Systems Research (RSR), explained that retailers should formulate an optimal in-store experience rather than focus on deploying a mobile payment system.

“I don’t see tablets primarily targeted as mobile POS,” Baird said. “I see them more as assisted selling, ways for employees to use technology to help customers in ways that customers may not be able to help themselves, or at least in ways that streamline the process. Everyone wants to be like Apple and take the transaction in the aisle, but what they really want is for an employee to help a customer make a decision and then capture the sale before the customer changes her mind.”

According to Aberdeen Group’s On-Premises Mobile Retail: Empowering Deeper Customer Engagement, 38% of retail respondents are in the process of employing mobile or tablet-based technology. However, Ferguson noted that it is easy for retailers to overwhelm consumers by rolling out too many new in-store technologies at one time. “It’s all really exciting stuff,” he said, “but it can easily become overkill and end up being a lot of noise, which I think is a danger. Imagine walking into the retail store and you’re immediately assaulted with all of these visual displays. While it’s a very powerful, potential tool, I think it has to be used judiciously and it has to be very closely aligned with the brand and an opt-in, so consumers can perceive it as valuable.”

SMS Mobile Strategies Boost Brand Awareness

While enterprise mobility presents a prime opportunity to increase sales and upsells in-store, other mobile and social tactics will increase brand awareness and word-of-mouth. Mobile in particular provides retailers with an efficient gateway to consumers directly through their smartphones and also into their digital inboxes.

The mobile conversation has become more prominent during 2011, with the adoption rate of smartphones growing at an astounding pace. Currently, more than 91% of U.S. consumers are active wireless subscribers, according to the 2010 CTIA Semi-Annual Wireless Industry Survey. Research also has revealed that as mobile adoption has continued to proliferate, so has the number of text messages exchanged. The International Telecommunications Union revealed that the total number of text messages sent globally from 2007 to 2010 skyrocketed from an estimated 1.8 trillion to nearly 6.1 trillion.

The widespread interaction with SMS (Short Message Service) has prompted leading retailers such as Target, Macy’s and Victoria’s Secret to deploy text message campaigns designed to build up their opt-in list and develop relationships with shoppers. This marketing tactic allows retailers to effectively reach shoppers by sending them special offers such as news items, sale alerts and coupons directly to the channel they utilize daily to interact with family and friends.

Mobile applications also allow retailers to institute a seamless browsing and buying process. However, to increase downloads and overall use, retailers must create a focused and engaging app experience, Freed advised.

“Customers are already getting wary of having too many apps, and where they might like a dozen retailers on Facebook or follow a dozen retailers on Twitter, they aren’t likely to download a dozen apps for retailers that sell similar products,” Freed said. “The retailers that have good apps and are meeting customer needs are going to have an advantage in terms of mobile phone ‘real estate.’” Mobile applications also can encourage shoppers to make purchases in-store by sending out marketing messages, and allowing customers to research product prices and information at home and in the aisle, he explained.

Geo-Location Apps Reward Customers On The Spot

shopping_cart_with_appsjpgBy becoming active in geo-location services such as foursquare, retailers can reward customers that check in with coupons and free goods. This strategy encourages new shoppers to become loyal, long-term customers. However, Freed advised that retailers should beware of “bought loyalty,” which may create a new purchase, but not cultivate a brand advocate.

“As soon as someone else offers a better price, that customer will switch,” Freed said. “If you have to buy their loyalty, they aren’t really loyal. The best measure of loyalty is their likelihood to choose you as their first choice when looking for a certain product or merchandise. It is their allegiance to choose you first, regardless of location, sales, or anything else.”

Despite the potential of mobile-based loyalty initiatives, a large percentage of retailers have not deployed mobile campaigns, according to research by Hipcricket. While 37% of Hipcricket survey respondents said they would be interested in participating in a mobile customer loyalty program from a brand they trust, approximately 83% of U.S. consumers say they have not been the recipients of mobile marketing campaigns from  their favorite brands.

Tactics To Measure Social Media Loyalty

social_mobile_worldWhile retailers may be slow on the uptick with mobile campaigns many more are working to develop a social media strategy. Increased adoption of social media sites has been attributed to the promise of instant communication and the ability for consumers to share their thoughts, news, photos and videos to a forum of friends and family. For retailers, customer recommendations and reviews are primary channel attributes that can make or break reputations. To that end, it is vital that retailers understand what customers are saying about them through public channels like Twitter and Facebook, and track behaviors intently, according to Baird.

“Even if you don’t plan to do much with it, you should provide a place for customers to engage with you so that at least you can be a party to the conversation,” Baird said. “You can ‘hear’ what customers are saying, instead of finding out about it the hard way — in sales or in customer satisfaction surveys.”

According to industry research, there are a number of tactics retailers currently are utilizing to measure customer loyalty via social media, such as:

  • 74% of surveyed companies are implementing some form of Social Media Monitoring (SMM) (Web Liquid, Marketers and Social Media Monitoring Survey 2011 for May/June 2011);
  • 78% of retailers measure number of Facebook fans, while 61% measure the amount of Twitter followers (the e-tailing Group, 10th Annual Merchants Survey);
  • 53% of respondents track click-throughs from social media sites to e-Commerce pages (the e-tailing Group, 10th Annual Merchants Survey); and
  • 47% calculate average sales accumulated from social networks (the e-tailing Group, 10th Annual Merchants Survey).

While some retailers rely on the knowledge that customers “Follow” or “Like” them, these actions don’t necessary equal engagement, according to Freed. “Creating a presence on Facebook or Twitter, getting a following, even engaging with customers on those sites doesn’t mean you are creating loyalty,” he said. “Many of those consumers are discount seekers who are following you and a dozen other retailers to get the best deal. That is a far cry from true loyalty.”

Top tactics to ignite social media conversations include asking questions, encouraging feedback, posting pictures/videos, and conducting one-day contests specifically for loyal customers. However, message frequency can hinder social media efforts. The ExactTarget study titled Subscribers, Fans and Followers: The Social Break-Up showed that 44% of Facebook users “Unliked” a brand because they posted updates too frequently, while 38% said content became too repetitive.

Once a retailer determines its social media niche, marketing teams can observe how company efforts affect ROI, according to Freed. “What we have seen can be of value to retailers is when they are able to link social media activity, interactions, or engagement to their bottom line,” he said. “This is possible using a pretty simple formula if you have a strong methodology in place to measure the customer experience. What kinds of social interactions are driving customers to your sites, and did they buy? Then you can determine the actual impact in terms of dollars of a social media experience, instead of having to rely on just counting.”

While tracking social media communication among brand fans is important, sales will always be a top indicator of campaign success.

The Future of Customer Loyalty

As digital discovery and interaction increased exponentially during 2011, solution providers are formulating new mobile-based loyalty card programs that are easy to use and don’t require use of a physical wallet. According to Juniper Research, consumer usage of mobile coupons will generate close to $6 billion globally in retail redemption value by 2014.

Motorola ventured into mobile rewards in 2010, with the launch of its Mobile Loyalty Solution at the National Retail Federation (NRF) convention in New York. The program was designed to enable retailers to send offers and incentives to customers directly through their mobile phones. While the initiative allowed customers to discard retailer membership cards and paper coupons, it also allowed companies to efficiently target customers based on shopping behavior.

Similar applications are quickly coming to fruition, including the Key Ring app, which won first place in the Mobile Commerce and Best Online Pick category at the 2011 Wireless Association CTIA Emerging Technology Awards; and Clovr media, a provider of card linked offers (CLOs), designed to bridge the gab between credit/debit card loyalty and digital advertising. Punchd is another app on retailers’ radar. Although the app is in beta testing at press time, and is currently only accepting invitation requests to join, Google acquired the company July 2011 as part of Google Wallet. The app allows customers to scan a QR code in-store to receive virtual punches. Once the digital card is filled out, shoppers receive a free item.

Another trend brewing in the digital loyalty market is gamification. Gamification allows retailers to use game elements for non-game applications to bring new life to a brand, company or product, and to increase consumer interaction. With applications like FarmVille, PioneerVille, Words With Friends and Mafia Wars grabbing attention of social media users, gamification has become a new hot topic of discussion for retailers hoping to increase customer loyalty.

According to Loyalty 360’s 11 Key Customer Loyalty Trends for 2011, social gaming has taken hold of the digital world, “with AllFacebook.com reporting that there are now 200 million people playing games on Facebook every month, and 24 games have more than 10 million users per month.” The company also noted that, “traditional incentive-based marketing does not drive the level of consumer participation that can be achieved via gaming — and it’s this sought-after participation that builds lasting relationships, engagement, brand affinity, and brand loyalty.”

In the next year, Baird predicts that retailers will begin to spotlight localized social media, such as individual store locations creating their own Facebook pages, to create a stronger sense of community. “More exposure of the inner parts of the enterprise through social media channels, like merchandisers tweeting about products that will hit the shelves in the next few weeks,” she said. “I also anticipate that retailers will start segmenting their social customers more, maybe even creating special events or interactions that are designed for their most prolific tweeters or their most influential customers on Facebook.”

Conclusion

As new applications continue to come to the forefront, retailers can implement effective and efficient ways to track customer loyalty initiatives and monitor their successes.

Retailers just entering the mobile and social arena can take cues from their peers and competitors that have optimized the loyalty space through mobile, social and in-store technologies and in turn, have increased customer interaction and overall brand awareness.

While focusing on developing meaningful relationships with shoppers in-store is key, successful retailers also are optimizing and measuring cross-channel strategies to enhance the way shoppers experience brands online and in-store.

“It’s a matter of deciding where you are going to do the most good, where you want to apply your resources and what type of partner you want to work with,” Ferguson advised. “Then you can extract data from customer behavior and use it to really change the way consumers experience the retail environment. That really has a powerful impact and, when done correctly, is a powerful differentiator that allows you to create an experience that your competition cannot match because do not understand your customers the way you do.”

Click here to download Parts 1 and 2 of the Retail TouchPoints Loyalty Report.

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