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Customer experience now a key driver for shoppers – and retailers: study

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Four in 10 shoppers now say that one bad experience with a retail brand would stop them returning another time – while 76% of retailers say that they have to work harder than ever to keep customers, new research has found.

The Klarna study, Experience is the new loyalty, questioned more than 2,000 UK adults and more than 250 retail decision makers and found that 32% of consumers say that shopping is less fun than it used to be, while 36% say that what they’ve gained in convenience they’ve lost in experience.

Causes of disloyalty include a bad returns process (30%), and a lengthy online checkout with few payment options (21%). Instead, shoppers want brand values they identify with (40%), human engagement (35%) and flexible payment options (26%). Millennial and Generation Z shoppers are more concerned about brand image (20%) and flexible payments (30%) than value for money.

Many retailers, meanwhile, say that loyalty is no longer down to rewards (41%), and most (76%) agree that they have to work harder than ever to retain customers. One in three (33%) says they struggle to keep pace with consumer expectations around experience and are held back both by outdated technology (33%) and a short-term focus on sales (30%). More than a third (39%) will invest in the user experience, while others will look at extra payment options (38%), a curated experience (37%) and brand content (34%). 

Luke Griffiths, managing director of Klarna, said: “Loyalty is no longer a points programme. It’s clear that consumers want to align themselves with brands who can offer them a deeper connection and understand how they want to shop. Retailers need to be investing in the right drivers of loyalty for their customers – whether that’s flexible payment options that fit with their lifestyle or curated experiences that put the fun back into shopping. As consumer expectations continue to grow and the role of experience becomes increasingly important, getting this right will be vital to success in a competitive retail market.”

Andy Mulcahy, strategy and insight director at IMRG said: “Shopper confidence appears to be in a suppressed state and many retailers are under pressure to enhance the customer experience they offer to keep ahead in a tough environment. The problem is that ‘customer experience’ is a term that can technically cover every aspect of a retailer’s proposition. Identifying where to focus resource is a challenge. This research shows that understanding the drivers of loyalty that will work for a specific retailer is important for keeping ahead today.” 

Beauty Bay head of brand Holly Stewart said: “We’re constantly evolving what we do to ensure we’re hitting the right drivers of loyalty for our customers. For example, being an online brand doesn’t mean only existing in the digital world and we know our customers want IRL experiences that allow them to feel truly connected to the brand. That’s why activations like beauty master classes with pop-up shopping help us create deeper loyalty and long-lasting brand advocates.”

Image: Fotolia

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