The loyal customer divide…Are we engaging correctly?

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There’s no doubt that retailers believe they need to engage better with customers and programs such as loyalty schemes provide a link, but have they been effective at generating goodwill across the customer base while increasing sales or are they just filling up databases?

If we were to make the assumption for the purpose of this discussion that the people that sign up for our loyalty programs are primarily already the converted (or persuaded). We can then assume that they took the time to join out of trust or believing they would benefit from a program. Maybe we can go further and say that regardless of the offers would shop with us anyway. What about those disenfranchised that don’t typically sign up for whatever reason, whether it be they are uncomfortable giving their details, don’t believe they will shop with us much, or haven’t gained our trust. Maybe we just hold our breath and hope they will offer up their money because they had nothing better to do. OK, I’m being a tad factious now.

This might be where we’re missing the point on opportunities at generate good will, increase unsolicited membership and generally make everyone feel that we care about their business. If we look at what’s been happening in the US, there is now a culture of urgency in capturing the retail dollar as if it might not be available tomorrow. This translates into retailers needing to find innovative ways around generating customer spending outside of only offering loyalty programs to incentivise certain customers to feel special.

In a recent trip to the US I had an attendant ask me that should I be interested I could save 15% today if I signed up to their program. I of course said I was not from around there and their response was not ‘oh well never mind’ (translated as: ‘I guess YOU miss out’) it was ‘OK, not to worry, we’ll organise a temporary card for you while you’re in town’. No sign up necessary but if I wanted to (optional) leave my email address they would let me know when there were future events and I could let them know if I was ever in town again to active the card. Of course I said why not and as I’m in the retail industry I started asking questions about the phycology behind this.

It was simple, the retailer in question knew that many customers were not prepared to sign up to programs until they were more comfortable and it was in fact having an adverse effect with many customers. One of the issues was that customers went away thinking that discounts were on offer but they had to commit themselves into schemes. With more exploring I found out that there were a number of ways this retailer was able to offer instant value to the customer to ensure they incentivised them ‘today’ without making it look like a scheme. They would offer special discounts if the customer sent and SMS to the retailer with a special code, they would give away heavy discount coupons on the docket for purchases at a later date and could even use their own staff discount for marginal purchases where they thought the client was going to purchase but needed that little push over the edge. I discovered more at other retailers so I started to discover this was not unique.

Speaking to the salesperson further I found out that all these options were managed in the computer software and could be tracked, authorised if necessary and ultimately reported on. At their sales meeting they discussed the incentives and how they were perceived. This mentality was completely aside to managing and generating sign up to their ‘loyalty program’. These concepts were part of this retailer’s DNA and were designed to ensure that all customers were viewed as valuable with the goal that spending their dollars today was seen as the key driver not just getting more names onto a database. What’s more, because these were based on time and place the retailer was not expected or required to provide the same discount in subsequent visits.

So instead of simply trying to increase membership numbers or incentivising the already converted why not try providing some instant gratification which might lock in more sales today, generate goodwill to marginal customers and ultimately promote a relationship where we’re viewed as prepared to give more than take.  

Happy Retailing!

Stephen Duncan

Stephen Duncan

Stephen Duncan is a Technology Retail Specialist.

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