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It’s becoming more and more likely that the average retailer is going to be engaging in a battle for their share of the consumer’s wallet. Most industry experts agree that traditional brick-and-mortar retail is going to face nominal growth over the next 2 years, although specific sectors of retail such as online and active wear have a chance to see double digit growth.
When it comes to winning over customers, the retailers who can break through the overwhelming amount of retail noise are going to win. This is likely to translate to businesses that can effectively focus on the likes and dislikes of their customer population. Gallup reports in the retail marketing sector that an engaged customer is one who has formed an emotional connection with the business. Simply stated, the best customers are the ones whose expectations are fully realized and even exceeded. This holds true for traditional brick-and-mortar sales as well as internet-based retailers.
Engaged and loyal customers tend to contribute more value to a retail organization. A Gallup study on retail marketing shows that, on average, an engaged retail customer will spend an extra $20 to every hundred spent in an establishment based on emotions, i.e. loyalty, satisfaction and overall mood, when they are shopping.1
Additionally, there is a connection between recent and future purchases. You may notice this in your own behavior. I’ve had friends refer to this as “being in the buying mood.” Many retail marketers may remember RFM: recency, frequency and monetary. The basis for this approach was predicated on targeting recent purchasers as they would be more likely to make another purchase.
So how do you create this emotion and loyalty? I’d argue it is all about relevancy. You know the feeling when someone is talking your language, and you think to yourself, “They really get it” or “They really get me.” How does that relate to a retailer-customer relationship? When a user opens an email that highlights something that fits their needs and preferences, the user has that same feeling. While at first it might seem a bit aspirational, the reality is that relevancy works. Personalization of the shopping experience and customer retention strategies are an absolute must among retailers seeking significant returns on their investments in today’s market.2
The right strategy
In the battle for share of wallet, companies must be willing to build on a customer retention strategy that is laser focused on increasing consumer engagement. Applying past behavior to serve up related and relevant merchandise to customers is a critical way to win them over. Isn’t it frustrating when you do business with someone and they send you something that makes it seem like that transaction never happened? You receive an acquisition email for a company you’re already a customer of and have been for some time. Not only does that communication touch point dissuade you from wanting to respond to that communication, it can discredit that company entirely in your mind.
Acknowledging the current customer relationship and being able to apply what you know about a customer is essential to building a relationship, and ultimately loyalty; plus, it’s the most effective way to drive revenue, and ultimately maximize your business’s share of wallet. Retail marketing analysts agree that a retailer’s best planned strategy for fending off competitors is to focus on generating an emotionally engaging experience for their customers that no one else offers.
Retailers are oftentimes hesitant to put money into retail marketing programs without a guaranteed return. This is understandable. Unfortunately, measuring retention and relevancy isn’t always easy. Consider focusing on engagement and conversions as an initial metric, assuming that there will be a long-term direct connection between these metrics and retention.
Retailers can also get started measuring performance by evolving their SMS marketing. According to a study Jacobs & Clevenger conducted, one-third of marketers do not have a defined strategy for mobile marketing.