A decade of retail disruption and technological advancement has made the battle to gain and retain customers even harder, with the cost of doing so continually increasing. But does it need to be? Is there a smarter way to ‘hack’ the acquisition process? As retailers look for effective ways to grow during the next decade, let’s look at how leaning on partners like Klarna can change the traditional acquisition model. By using collaboration as a tool to tap into a pre-engaged and loyal customer base at a fraction of the cost, retailers can win, grow and build loyalty for the long term.
The changing landscape
The purchase journey has become complex and non-liner, with both new entrants and technologies shaking up the traditional shopping experience by adding everything from unlimited inspiration to a plethora of new ways to pay. Is this change a threat? Yes, but it’s also an exciting opportunity for retailers to evolve their approach to engaging with consumers and, as a result, to drive longer term loyalty.
So, what do today’s increasingly demanding customers expect? In a recent study, we commissioned interviews with over 2,000 UK shoppers to find out. It transpires that, in the new era of consumerism, emotional connection is a greater driver of loyalty and advocacy than price or product.
The experience economy
Emotional connection comes from customers’ experiences. One in ten of the consumers we spoke to said they are drawn to retailers for the first time by pop-up shops and real-life interactions with brands. This sentiment was felt most strongly among the ‘experience generation’ – almost one in five (18%) of those aged 16-24 – who hold tomorrow’s purchasing power. According to over a third (35%) of respondents, it is even enough for retailers to be associated with fun content experiences rather than executing them themselves.
But it’s not just about pop-ups and experiential. Consumers also place an enormous amount of value on the logistical experience they have with retailers, and with convenience almost as important as cost. 28% of the consumers we spoke to said that a good returns process would encourage them to make a purchase, while 26% rely on next- or same-day delivery options. Meanwhile, 38% are more likely to shop with a brand or retailer that offers flexible payment options.
The power of partnerships
It’s a lot to think about but the good news is that retailers don’t need to go it alone. Help is at hand, though not necessarily through traditional models. While retailers might once have looked to advertisers or affiliates to engage and acquire customers – spending a lot in the process – smart retailers are now forging partnerships with service providers in order to deliver big benefits.
Klarna is one such provider that is pioneering a new approach to powerful partnerships. Not only do our smooth and flexible payment options offer a differentiating service to draw customers in, we are also investing heavily in building our brand – creating a halo effect that helps drive growth for our partners too.
A recent study by consultancy Kearney found that nearly 40% of shoppers (37%) said that if making a purchase costing £250 or more, they would prefer to buy from a retailer that offered a ‘buy now, pay later’ option.
With Klarna, retailers can ‘hack’ the acquisition process by gaining immediate access to pre-engaged and already loyal consumers, at a significantly lower cost than traditional methods of acquiring new customers. This lowers upfront acquisition costs, in turn increasing the total lifetime value by allowing retailers to focus the saved money on nurturing and advocacy. What’s more, the unique combination of convenience, brand appeal and user experience delivered by Klarna significantly boosts engagement, positive sentiment and propensity to spend over time.
If the last decade was about change, this next one should be about collaboration. By actively seeking out partners to join forces with, retailers can create closer connections with customers. It’s the smart way to win the gain and retain game.
With Klarna, customers can shop at their favourite online stores and pay later, getting what they love today. For the last 14 years, Klarna has been connecting major retailers with millions of customers around the world, allowing safe, secure fee- and interest-free payment options.