Forget the shiny projects – customer loyalty starts with nailing the fundamentals

6 Dec 2021

by Staff Writer

By Simon Evans – CTO of Amido

Loyalty isn’t just about apps and points, says Simon Evans, CTO of cloud-native consultancy Amido, it’s about understanding what your customers need for a frictionless journey, and delivering it to them consistently.

Brands need loyal customers, and retail brands need them now more than ever before. Loyal customers cost at least five times less^[1]to retain than acquiring new ones, and existing customers spend around 67% more than new customers^[2]. While post-pandemic retail decision makers rush to invest in loyalty programs, apps, and AI projects to create a differentiated proposition, if the retail basics aren’t in place, then you’ll be losing customers faster than you can say ‘virtual changing room’.

Although bauble projects – those shiny endeavours so loved by CEOs and Digital Directors – can attract PR inches and draw potential customers in, their returns will be short lived without the basics in place to support the surrounding shopping journey. These are the fundamentals common to all retail channels, the basics that answer the questions ‘can I find it, can I pay for it, can I get it, and can I return it?’.

A 2019 Gartner study^[3] showed that the negative impact of friction points in the customer journey far outweigh the benefits from ‘delighting’ customers with stand-out experiences. Their research data shows overwhelmingly that avoiding disloyalty hinges on offering a low-effort experience, where the customer doesn’t have to ask for support such as, for example, needing to contact the company to find out where a delivery is, or asking a member of staff where a product is. In the study 96% of customers with high effort experiences were disloyal compared to only 9% of those with low effort experiences.

Creating loyalty is a long-term activity and can’t be easily bought with experiential nuggets. ASOS, who have won multiple awards for end-to-end customer experience, make a point of making it easy for young, low-income consumers to buy and return products knowing that, as they do, they are building a sustaining loyalty that will reap rewards as the income of this target group grows. Although these are the basics known to all experienced retailers, for a modern business looking to retain customers as they move between channels, devices and brands, the fundamentals are becoming increasingly complex. The basics are far from basic now. Technology underpins it all, from stock management to payments services, from returns processing to self-service in store. And that technology can be expensive.

Take inventory visibility. Where a pureplay like ASOS may have a fast-fashion ‘sell to zero’ approach, multichannel fashion retailers – that tend to enjoy a greater stock density and a slower seasonal range churn – will rely on a latent stock view at one end of the funnel with live stock calls at checkout. Both come with their own experience pitfalls, and neither can confidently deliver a frictionless journey for all customers, but the right technical design smooths the edges, making calls to live data more efficient, and providing opt in ‘back in stock’ alerts.

One well-established multichannel fashion retailer chooses to utilise technology to underpin an excellent, channel agnostic returns process with any product bought in any channel being returnable in store – with minimum paperwork. This no-quibble, customer-centric approach nails one of the key fundamentals and – as a result – this retailer has seen online sales boom over the ten years to 2020, with little to no negative impact to store sales.

For high street retailers there is an inevitable contraction of physical store space ahead as the mass pandemic-led migration to online retail shows little indication of reversal. But using that space to create excellent tech-led experiences that complete or improve the fundamental journey – like endless aisle access through kiosks and staff tablets supported by ‘just walk out’ payments – can only cement those new retail basics and further encourage loyalty. There’s plenty of opinion out there about how loyalty can be bought with personalised rewards and a solid sustainability programme and, valuable as these may be in the short term, they won’t retain a customer who can’t see what products are in stock, finds the returns process impenetrable, or must queue for ten minutes to buy a product they could have secured in a third of the time with Amazon ‘Buy Now’.

Few retailers can compete with Amazon on price or range, but opportunities abound for any retailer to build loyalty – and enjoy the returns – by delivering excellence of experience across the fundamentals and differentiating their proposition with investments that build on these basics: with unique ranges, great customer service hooks, or a store estate packed with tech-augmented physical experiences. Delight is expensive, but the fundamentals are the path to loyalty.