Omnichannel commerce | Marketing
Six Loyalty Killers...
October 09, 2015
If you've heard it once, you've heard it a thousand times: It's cheaper to keep a customer than it is to obtain a new one. But according to Naomi Kasolowsky, global capability managing director at consultancy dunnhumby, too many businesses engage in at least one of the six behaviors she dubs "loyalty killers."
In a white paper titled (you guessed it) "Loyalty Killers," Kasolowsky looks at six of the most common and how you can avoid them:
Insufficient information. People shopping online for a big-ticket item such as a sofa want to know more than how large it is and what color the upholstery is; since they can't try it out in a store, they especially need to know about its construction and how comfortable it is. People shopping in a store need to be able to quickly find the location of the products they're looking for. And regardless of venue or channel, shoppers need to understand return policies, special offers, and the like—not to mention what your company stands for and why they should make a repeat purchase from you rather than from your competitor.
"Help your customers think less about the decisions they have to make by actually making things simple and clearer. Simplifying and clarifying while retaining your brand identity means having clear principles about the strategy that underpins the customer experience," Kasolowsky writes. "Every sign, piece of literature, content, and call center script needs to be overlaid on top of the experience you wish every customer to have with you."
Needless barriers. Lack of knowledgeable staff on the shop floor. Interactive voice response systems that require callers to go through a 20-step programme before being put on hold. On-site search engines that don't take into consideration common typos or synonyms. We've all encountered them, and even if they didn't prevent us from completing a purchase, they certainly discouraged us from repeating the painful experience.
"Customers know whether you prioritise them by how easy and pleasant you allow your interactions to be," Kasolowsky notes. "If they feel forced to comply with your rigid systems and processes, rather than enabled to give you their money without undue friction, chances are they won't be back—and they'll try to save others their hassle by telling their friends and family to stay away, too.
Getting rid of products or brands—what Kasolowsky calls "delist dramas." Retailers can't continually offer the same products and services in perpetuity. But a retailer can be proactive when deciding to delist items. For instance, it could look through its shopper data (no doubt the same data that guided the decision to no longer stock the product) and contact loyal buyers of the item with the news. It could recommend similar products, in-store and online, and even offer to fulfil the item as a special order.
Public displays of disagreement. Unhappy employees make for unhappy customers. Nobody wants to hear workers griping on the shop floor while having an order rung up. If your staff aren't loyal to your company, your customers certainly won't be.
"Companies need to listen to their employees and give them the opportunity to vent their frustrations to management rather than in front of shoppers while engaging in [public displays of disagreement]—and get involved in the process of making things better for them and for customers," Kasolowsky contends.
What's more, "Big numbers, percentages, and obscure key performance indicators (KPIs) are tools that are often steering the ship. Our experience is that people respond better to small numbers—meaningful metrics that are relevant to their role and are accompanied with specific actions."
A lack of information about what customers want and why they frequent your business... or why they don't return. "Businesses must create a clear line of sight between what customers want (that which motivates their willingness to visit, to buy, to connect) and the experience you offer them," Kasolowsky writes. "The devil is in the detail, and it requires triangulation between what customers tell you is important and what they actually buy or do when they are researching, browsing, buying, and using their purchases."
A questionable value proposition. "Evidence suggests that whilst price is often on the mind of many customers, it tends to take the backseat if the overall value perception is strong," Kasolowsky says. Price-matching and special pricing for members of loyalty clubs can help you use pricing as a competitive advantage. At the same time, you don't want to rely too heavily on promotional activity: Frequent sales and discounting trains consumers to wait for deals while undermining the value of your offering.
Competing on price can have a scorched-earth effect for all involved; before deciding whether you can afford to lose margin by engaging in a price war—or whether you want to improve your margin rate by boosting prices—you need to analyse which product categories and which customer segments are most price sensitive. Emphasising the value of your goods and the superiority of your customer service and your brand can help price remain in the backseat where it belongs.