7 Ways to Build Customer Loyalty in Retail

Man working in retail, smiling
 

By Tricia McKinnon

A business that is constantly acquiring new customers without retaining many is going to struggle over time. Instead of spending money on developing new products or on your mobile app your marketing dollars are eating up your budget. One of the reasons subscription services, for example, have grown in recent years is because they are a great way to get customers engaged with your brand on a frequent basis. 

Is your customer churn high? Are your customers gone as soon as a new competitor in town? If this sounds like you then consider these seven ways you can start building more customer loyalty today.

1. Provide a level of service that stands out. If you are confident you have a great product but are struggling to get customers to make repeat purchases have you taken a look at your service? Poor customer service is often a silent killer. After interacting with a sales associate who is unkind or indifferent customers often decide it’s not worth it to return. They don’t fill out a survey or tell management they just take their dollars elsewhere. 

Many retailers that succeed do so in part by excelling at customer service. Take Chick-fil-A. Its customer service landed it at the top spot on the American Customer Satisfaction Index for many years. 

So what is Chick-fil-A doing that others are not? For one Chick-fil-A empowers its employees to go above and beyond to serve their customers. Take this example. In 2019 a 96 year old WWII veteran entered a Chick-fil-A store in Maryland. The long-time customer was visibly shaken because he was driving to the restaurant and barely made it there because one of his tires was flat. After telling Chick-fil-A employees what happened Daryl Howard, a Manager, quickly sprang into action and began working on the veteran’s car. 15 minutes later the tire was changed, the customer was relieved and Chick-fil-A had yet another example of why its service is legendary.

A key differentiator between Nordstrom and other retailers is its customer service. Nordstrom focuses on having employees use their best judgement in all situations. Employees are also given the flexibility to determine how best to solve a customer's problem. In a classic story of great customer service, a Nordstrom employee noticed that a customer left their luggage and flight itinerary in the store’s parking lot. The employee jumped into their car and drove the customer’s luggage to the airport and found her before her flight took off. Without engaged and impowered employees most employees would be unlikely to go the distance to surprise and delight a customer.

A lot of retailers think they have great service. But how many times in a week do you receive service that is exceptional? It happens less than you think. Try conducting an independent customer service audit to see if your sales associates are providing the level of service that is going to make your customers come back for more. 

2. Sell great products. Think about your favourite retailer. Why do you choose to shop there year after year? I bet they have great products. Apple is the largest company in the world with a market capitalization of over three trillion dollars. Apple did not get there by accident it has great products. Those products keep customers coming back to Apple year after year because Apple has a brand consumers trust. Apple also seemingly pays attention to every single product detail, striving for perfection every time. Do your customers marvel at your products or service?

If you are working hard on retaining your customers but your churn keeps increasing have you had an honest conversation about the quality of your products? Are they good enough? Quality takes time, no business is an overnight success. The better your product is the easier it is to retain your customers.

3. Say thank you. When is the last time you sent a genuine thank you note to your top customers? A handwritten note can go a long way. One of the reasons this is effective is because few businesses do this. Instead when you spend a certain amount with a retailer they often send you a bland email that is simply a template used for all customers. What if you took some time and wrote a personal note to the customers that are instrumental to your business? You could even have people within your senior leadership team help out. 

Everyone wants to feel valued, like they matter. Think about that teacher, friend or mentor that always supports you and consistently tells you that you are doing a great job. Don’t you want to do something nice for them in return? Sincerely tell your customers thank you and you might be surprised by the results.

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4. Respond to complaints. Often retailers, due to the volume of complaints they receive or just the sheer difficulty of managing their business, often don’t respond to customer complaints. A complaint is an opportunity to fix a customer issue and potentially create a better or new service in response to the customer issue. Everyone wants to feel like they are not just listened to but they are heard, that you are empathetic to the problem a customer has. We want this not just in our personal relationships but from the brands we buy from. 

You shouldn’t have to wait until a customer raises an issue before you communicate with them. During the supply chain disruption that occurred because of the pandemic I ordered grocery delivery from Walmart. I ordered many items but nearly everything was out of stock. Walmart proactively sent me an email acknowledging the problem along with a $10 voucher for my next purchase. When a retailer does this the customer doesn’t have to spend their time making a complaint and they feel heard. The voucher then encourages the customer to shop with the retailer again. 

There is often a period where a retailer has time to make it up to a customer before they leave. It’s important to take advantage of the time when a customer might be irritated but isn’t ready to leave just yet.  

5. Be consistent. When you think about the people in your life who you trust one of the reasons why you trust them is because they are consistent. They do what they say they are going to do, every time. Imagine if you went to a restaurant and the cheese burger your ordered tasted great the last time you went but this time it didn’t. All of a sudden you would be unsure if you should go back. If you went back to that restaurant and the food wasn’t good the third time then you are unlikely to make a fourth visit. Loyalty is always based in trust. And trust is based in consistency. Is your business consistent? If you make a hair appointment and you have to wait an hour to get started the trust is broken because your hairdresser broke her word. If this keeps happening eventually you will get a new hairdresser. 

You don’t always have to spend a lot of money to get repeat business. But doing what you say you are going to do consistently over time builds trust and makes people want to choose your business over others. 

6. Develop a meaningful and differentiated loyalty program. Sephora is known as having one of the best if not the best loyalty program in retail. Sephora’s Beauty Insider loyalty program boasts over 30 million members for a reason. It is not your boring old program with only a few benefits. Members have a wide variety of ways for redeeming points. Some of these ways include Beauty Insider Cash, an end of year discount, a birthday gift and free shipping. In the past Sephora has sweetened the deal by allowing members to participate in sweepstakes. 

In 2019 a Sephora Beauty Insider sweepstakes winner won $1 million. Now that doesn’t sound like your average frequent flyer program. "We also know rewards that provide greater emotional and memorable experiences are the most meaningful for our clients, and we want to continue to deliver personalized experiences where our clients can choose what works best for their needs. The emotional component of loyalty is a vital driver of our loyalty program and what really matters most to our clients," said Allegra Krishnan, former vice president and general manager of loyalty, credit card and consumer insights at Sephora.

7. Provide a subscription service. Subscription services are a great way to lock your customers in. Once someone makes an investment in a service they are much more likely to use it. When you pay $14.99 per month for Amazon Prime you don’t feel quite as bad about getting things frequently delivered to your home. If you are subscribed to DashPass, DoorDash’s subscription service, you might think twice about driving to pick up a pizza knowing that you are paying DoorDash $9.99 per month. Speaking about DashPass, DoorDash’s president and COO Prabir Adarkar says: “these subscribers spend more money with DoorDash.” “So if you look at total revenue per MAU for a DashPass user versus somebody that doesn't use DashPass, the total dollars of revenue or total dollars of gross profit for a DashPass consumer tends to be higher than they do for non-DashPass consumers,” 

You want that monthly fee to work for you. You want to feel like you are getting good value for your money. If you have a great product that customers can subscribe to they might  become even more loyal as they are delighted by what you have to offer on a regular basis. The Honest Company which was co-founded by Jessica Alba started out with an eCommerce subscription model where it sold a diaper bundle as well as a bundle of skin, bath and household cleaning products. This model allows your customers to test different products over time and become a more loyal customer along the way.

Tricia McKinnonCustomer ExperienceComment