5 CX retail trends that can build customer loyalty

Despite the difficulties the volatile pandemic is placing on the world’s retailers, shoppers have been signalling that they are more willing than ever to churn in reaction to bad customer care, according to upcoming CX Network research. Retail brands cannot, therefore, afford to deliver sub-par experiences to customers and prospects.

By investing in better customer experiences, retailers can also enjoy financial benefits. As shown by Bain & Company, a five percent increase in customer retention has the potential to generate a 25 percent growth in profits.

To retain or grow market share, retailers need to be aware of the new expectations shaping the buying behaviors of today’s customers, be that curbside assistance, contactless payments, ecommerce accessibility, store capacity limits or frictionless channel integration. This is especially the case as governmentmandated store closures and stay-at-home orders have seen e-commerce shapeshift from an optional channel to a survival requirement in retail.

In this CX Network guide, we explore how retailers can capitalize on new customer expectations and their sustained desire to shop. We asked our panel of retail customer experience experts as part of the upcoming 2021 Global State of Customer Experience for their insights and the results revealed five customer experience trends to watch for in retail.

“Consumers enjoy the experience of being in store. Yet technology has meant that consumers now expect ultra-personalized experiences, both in their real and digital lives, and expect those worlds to be seamlessly connected.”

Farfetch

1. Identity marketing and personalization 

Studies from Segment have shown that, on average, 71 percent of shoppers get frustrated by impersonal buying experiences. Retailers are recognizing the value of personalizing customer communications to their identity. By engaging buyers based on meaningful aspects of their identity such as their profession, life stage and affiliation, retailers can create experiences that demonstrate to these customers that they are genuinely valued and understood.

Identity marketing empowers brands to create exclusive gated offers for customers. In turn, organizations are not only able to attract new, loyal customer segments, but they also collect zero-party data to further enhance customer journeys. Athletic shoe brand ASICs drove 26,000 purchases within a month of launching its identity marketing campaigns that offering discounts to the pandemic’s frontline workers, such as students, teachers, medical staff and the military.

To get started, why not create gated content tailored to a key customer segment and deliver relevant promotions?

Case study

Using ID marketing to unlock a 30 per cent boost in conversion rates

In its mission to nurture the loyalty of the students in its customer base, Back Market, a marketplace dedicated to selling high-quality, refurbished electronics and reducing e-waste, launched a student-only offer via an affiliate marketing initiative. It soon realized, however, that the program could not provide the data it needed to continue marketing to students in the future and nurture long-term loyalty.

As a result, Back Market partnered with SheerID, an Identity Marketing Platform r, to launch its global initiative to reach students with bespoke content and offers. As well as influencer campaigns on YouTube and Instagram, the omnichannel program involved a dedicated landing page so students could opt in to receive their five percent discount without needing to leave Back Market’s website to get verified as an active student. This verification provided the team with peace of mind and the confidence to promote the program globally, while collecting zero-party data that could be used to nurture students’ loyalty and increase their customer lifetime value in the future.

In comparison to the initial campaign, the program saw a 33 percent increase in conversions, a 22 percent reduction in discount abuse, and 18,000 students gave Back Market zero-party data they could use for loyalty efforts such as promoting their online community and personalizing customer experiences with exclusive offers.

With SheerID, Back Market can now reach 235 million university students in 191 countries. The company is now planning to roll out personalized programs to other consumer communities.

2. Digital customer experience

The pressure the pandemic placed retail business under caused many beloved retailers to go under. In a 2021 CX Network survey, 54 percent of the CX experts in retail admitted they were worried about the impact of store closures on their business. A large portion of these are turning to digital as a result. Our panel of retail experts flagged digital CX as their biggest area of investment in 2021 as brands aim to encourage revenue growth.

These investments will enable websites to perform faster, reduce page load times, improve search engine optimization and prepare capacity levels to cope with key dates in the retail calendar. Some of the improvements customers should expect in their journeys include clearer delivery times, clearer expectations on stock levels and frictionless channel integration, as well as enhanced messaging capabilities to get the consultative service that is inherent to retail.

Shoppers are seeking convenient, multichannel experiences, so they can shop in ways that fit their needs. For instance, 33.6 per cent of shoppers browsing in stores check price comparisons online using their mobile devices, many retailers are looking to reduce friction points between channels in the route to an omnichannel model.

Omnichannel customer experience models involve a number of implementation challenges. One of the toughest issues faced is the integration of new technologies with legacy systems to create connections between contact channels and inventory management, which generally require sufficient budget to deploy. The complexity can discourage brands, however, Bernard Slowey, worldwide support leader for digital customer support at Microsoft, believes that omnichannel is still worth pursuing as long as brands hold the “right” perspective. Instead of viewing omnichannel as a tool to drive the volume of support burdens down, it should be considered as a method to improve customer loyalty by giving customers choice and freedom in how they can interact with your brand.

As retailers embrace their digital estate, this opens up the opportunity to truly customize journeys across website and apps to provide personalized experiences at scale, driving revenue up through improved conversion rates.

3. Privacy regulation changes

Personalizing website experiences continues to be a top priority for retailers. Great care, however, needs to be taken to ensure privacy regulations are upheld and consumers have control over their data experience. Successful retailers need to carefully architect their first party and zero-party data collection strategies so that shoppers can see the material value exchange in how their data will be used to improve their shopping experience. This includes the whole journey, from initial authentication to purchase and the post-sale experience.

If GDPR caused lengthy debates, sleepless nights and change pains within your organization, get ready for round two. The EU is set to have the 2002 ePrivacy Directive replaced by a new ePrivacy Regulation 2021, a draft legislation that is more expensive than its predecessor.

The ePrivacy Regulation 2021 covers every channel of online communication including the usual social media channels, collaboration tools such as Discord and Slack, and even new solutions yet to launch.

Data collection and monitoring will become an explicit opt-in process rather than opt-out (which GDPR already did for email marketing) and cookies will need explicit consent. In addition to this, Google has also announced it is stopping third-party cookies on user devices, creating major challenges for targeted advertising and a new requirement for brands to collect their own data.

The regulation is still under discussion and once all EU member states agree on it, there will be a two-year window before the legislation comes into effect. While there is still time, retail brands should start planning for these changes and reduce reliance on third-party data for personalization efforts.

4. Lowering acquisition costs and boosting customer satisfaction levels

With some rare exceptions, the last financial year was full of surprises. One being that the global retail market was hit by a three per cent decline in sales ($23 trillion).

Once again CX practitioners are finding themselves in a position of ‘doing more with less’. To make matters worse, our retail experts report that on average customer satisfaction was damaged to some extent due to the impact of the pandemic.

Falling customer satisfaction levels represent a risk of customers either switching or at least transferring a portion of their share of wallet to competitors. The combination of lower budgets and reduced satisfaction means that the retention of existing customers and lowering acquisition costs are even more crucial to meeting revenue targets.

Behind these imperatives, hide opportunities. For instance, the need to be more precise and cost-savvy in acquiring new customers can be met by better identity marketing and personalization, which was one of the key trends highlighted earlier in this guide.

Existing loyal customers who are willing to continue with the retailer will not only help in retaining revenue, but if approached with meaningful experience upgrades, they may even increase their share of wallet with the brand and thus overall brand revenue. These value-led enhancements will require visibility on the moments that matter to shoppers.

In her quest to boost customer retention rates and lifetime values, Cynthia Tang, senior manager of customer experience at Sunway Malls, a Malaysian based mall operator, maintains that loyalty-winning experience upgrades require passion from CX practitioners along with persistence and perseverance to see the changes through.

“It was the persistence and perseverance to enhance our CX that actually led us to where we are now.”

Cynthia Tang

Senior manager of customer experience, Sunway Malls

“I have passion for what I’m doing, because I enjoy problem solving and dealing with customers,” Tang remarks. “But it was the persistence and perseverance to enhance our CX that actually led us to where we are right now.”

One thing is certain: necessity is the mother of invention, and we are looking forward to seeing how creative brands get to meet their revenue targets by catering to and communicating better with their customers.

5. Immersive in-store experiences

Since the seminal book The Experience Economy was published more than 20 years ago, bringing the idea of showbiz to customer interactions, few organizations have successfully embraced its teachings on immersive experiential design. However, now is an ideal time for retailers to seize the opportunity to leverage brick-and-mortar locations to provide a truly differentiated, memorable and distinctive signature store experiences to shoppers.

Immersion is one of the few advantages retail locations have on their digital counterpart. One inspirational example is Farfetch’s Store Of The Future based in London, UK, which uses technology and data to enhance interactions and productivity between shoppers and sales associates through the likes of connected clothing racks and touch-screen mirrors. In explaining its motivation for building this immersive shopping experience, the luxury retailer said: “Consumers enjoy the experience of being in store, building a relationship with the sales associate and experiencing merchandise in the luxury store setting. Yet technology has meant that consumers now expect ultra-personalized experiences, both in their real and digital lives, and expect those worlds to be seamlessly connected.”

Final remarks

If there is anything to take away from these trends, it is that the rules of the game in business have changed since the start of the Covid-19 pandemic. The reality is there are more financial pressures on retailers to deliver and they need to do so with fewer resources while coping with increased regulation.

The winners in retail will be those who are able to understand and tap into the unique advantages of each channel for maximum results. Online, harness first-party data to create personalized and segmented user journeys and recommendations. In store, go experiential and create a signature experience that is only possible in the physical world (that includes bringing the digital in too). Maximize the value you can deliver through both channels and your retail brand should be on track to recover, before building for a brighter future.

Read the full report here

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