The Art of Cultivating LoyaltyJanuary 8, 2018
Consumer loyalty isn’t what it used to be. Today’s shoppers have more choices than ever when it comes to products, retailers and even channels. They’re also increasingly brand agnostic, thinking nothing of switching to a competitor for a better deal, a better product or a better service. But that’s not to say that consumer loyalty doesn’t exist. Look no further than the cult-like following behind brands like Apple, Starbucks and Trader Joe’s. These icons of success have continually managed to stand out in a rapidly changing and ever-more competitive retail landscape.
Why have they succeeded where so many others are faltering or have failed? And what can those other retailers and brands—large or small, national or regional—do to reverse course?
To find out the secrets to cultivating loyalty in today’s new retail landscape, five Daymon experts, who together have more than 65 years of combined retail industry experience, share their insights and recommendations.
THE NEW CANVAS OF CONSUMER LOYALTY
As when solving any problem, it’s important to look first at the cause. According to Jim Holbrook, Daymon CEO, one of the main drivers behind the decline of consumer loyalty is increased commoditization. “More things look the same than look different. That’s because it’s easier to copy than to be a pioneer,” he explains. “Take supercenters, for example. The first [combination grocery/clothing/drug store was debuted] by Fred Meyer. Then Meijer started replicating the model. Then Walmart caught on, and then Target and Kmart and so on. So what was once a novel idea becomes pretty generic pretty quickly.”
Holbrook goes on to explain that this transformation has changed the basis for consumer loyalty. “As a consumer, when you’re faced with more of the same rather than more different and interesting choices, the calculus you use to be loyal changes. It moves from a personal or emotional choice to something more rational—for example, that a particular store is more convenient or that they have lower prices. That’s not really loyalty.”
The only way to reverse course and to offer a new canvas for consumer loyalty, says Holbrook, is to create points of differentiation that resonate with consumers on a deeper level—turning rational decision making into a true preference for one brand or store over the other.
“Beyond the economic value of having loyal shoppers who spend more and shop more, there’s also a psychological value to having people who like your products or your store,” he explains. “That’s because of the indirect effect of loyalty, which is the most powerful thing—word of mouth. As a consumer, the more loyal and satisfied I am, the more vocal I am. And the more vocal I am, the more I’m doing the work of the [retailer or brand] to attract customers.”
INNOVATION BY DESIGN
So just how can retailers and brands differentiate themselves and build loyalty? Ultimately it comes down to creating a better shopping experience. And for many retailers and brands, that starts with rethinking product development, innovation and assortment.
“If you’re busy copying the guy down the street, then you’re not offering a better experience. If you’re in the private brand business and all you’re doing is creating national brand equivalents, you’re probably not creating much of a satisfactory experience,” says Holbrook.
“Consumers have become disappointed with brands for their lack of commitment to quality and continuous decline of the brand promise,” adds Vipon Kumar, Chief Sourcing Officer for Daymon.
Both Holbrook and Kumar’s observations are backed by recent research from the International Council of Shopping Centers, which found that 79 percent of shoppers cite product quality as a key factor in determining loyalty and 71 percent point to the importance of variety/selection.
But no matter how high-quality or unique they are, it’s not simply a matter of putting more products on the shelf. “Retailers need to understand that the ‘be everything to everyone’ mentality isn’t going to work for going forward,” says Ryan Dee, Creative Director for Daymon’s consumer experience marketing team. “They have to truly get to know their customers so they can deliver on their needs and even exceed their expectations.”
“Today’s consumers are looking for products, brands and retailers that reflect their lifestyle, worldview, and personal values of fairness and sustainability,” agrees Kumar. “[Many brands that are struggling with loyalty] have failed to follow the changes in our society such as consumer preference for natural, organic, fresh and local, as well as concern for social impacts.”
A 2017 study from digital agency Wunderman supports the power of aligning with consumer values, showing that nearly eight out of 10 consumers say that to convince them to purchase, brands must first “actively demonstrate they understand and care about me.” The upside is that consumers will also reward those who take the time to get to know them—with nearly 90 percent saying they’re loyal to brands that share their values.
BRINGING ART TO LIFE
In addition to having differentiated products tailored to their target consumers, retailers and brands can also cultivate loyalty by providing opportunities for consumers to experience those products in new and engaging ways.
“The emergence of digital and e-commerce has changed the retail landscape quite dramatically and quite quickly. But retailers and brands do still have a variety of opportunities to drive incremental opportunity, trial and loyalty,” says Kyle Patterson, Vice President of National Coverage for Daymon. He goes on to explain that part of that can include expanding their focus into emerging channels. For example, a brand whose products have historically been available only at brick-and-mortar stores might consider e-commerce or meal kit opportunities.
Staying within the brick-and-mortar space itself, there’s also ample opportunity for retailers and brands to set themselves apart. Providing a consistently good customer experience tops many shoppers’ lists of reasons to be loyal—a full 94 percent of them, according to a survey by digital payment provider Blackhawk Network. According to Dee, in-store marketing events like those run by Daymon’s consumer experience marketing team are one way to provide both a consistently good—and unique—experience.
“By talking up the benefits of a product, sharing ideas for what the consumer can do with it and letting shoppers try it out first hand, our Brand Ambassadors and Sales Advisors create a connection and provide an exchange of information that makes the product or brand more than just a commodity,” he explains. “It’s something you really can’t do any other way—traditional advertising and digital marketing aren’t substitutes. Physically getting the product into the consumers’ hands really leads the way in making that meaningful connection and getting that consumer to be loyal moving forward.”
Offering services and solution-based products that up the convenience factor can also be a key tactic. “As time is such an important commodity, anything retailers can do to maximize convenience and give consumers back time can help generate loyalty,” says Patterson.
Even when it comes to on-shelf merchandising there are opportunities for retailers to improve the shopping journey. For example, Michael Bellman, President of SAS Retail Services, Daymon’s retail merchandising and execution team, points out that “consumers want to have new items available as soon as they’re released. They want them in-stock and they want them to be easy to find. That’s a big part of the value that SAS Retail Services provides. In most cases, we’re implementing new items in-store across the country in four days. Our teams help make sure the right items are in the right categories and in the right places so shoppers can find them.”
CREATING A MASTERPIECE
All of our experts agree there are a multitude of ways retailers and brands can build consumer loyalty. But in the end, no matter what tactics they choose, the most effective strategies start from the inside out, says Holbrook. “If you have a strong product and support from your employees, who believe in what you’re doing, you end up with a much stronger proposition. It requires conviction and commitment. It takes being true to the mission.” There are examples in every channel and category that show it can be done. And those who put in the work stand to win perhaps one of the best prizes in the retail game—a legion of loyal, enthusiastic consumers-turned-brand ambassadors.