Posts Tagged Customer loyalty
Apple has become one of the world leading brands and one of most profitable in the world. So profitable in fact, that people started to write about how its cash holdings of $76 billion made them richer than the United States government.
Apple’s passion for design and ergonomics is obvious for all to see. Using an iPad or an iPhone is a genuinely enjoyable experience, which in itself develops a strong brand identify and customer loyalty.
However, Apple has also build up its reputation as one of the best retailers in the business. An extensive report by The Wall Street Journal taps into confidential training manuals, a recording of an internal store meeting, and more than 12 interviews with current and former employees to reveal the nuts and bolts of Apple’s retail secrets.
What this treasure trove of information revealed, is a retail philosophy which goes to great lengths to ensure listening to customers comes first and sales are much more of an afterthought. This reflects the quality and faith Apple has in their products. Essentially the iPad and iPhone will sell themselves.
The training manuals and employee interviews conducted by the Wall Street Journal reveal a policy of problem solving, rather than simply selling. The confidential training manual reads: “Listen and limit your responses to simple reassurances that you are doing so. ’Uh-huh,’ ‘I understand,’ etc.” One employee recalls being told that he should never correct a customer’s mispronunciation of a product, for fear of patronising them. The Geniuses working the Genius Bar are taught to say “as it turns out”, instead of the more gloomy “unfortunately” when delivering bad news.
Apple has carefully developed its sales force and chain of iconic Apple Stores around the world as part of a strategy to attract huge volumes of foot traffic. To understand their success a little better the Wall Street Journal offered this stark comparison – More people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year.
There is much which can be taken from the Apple model and used as a platform for UK and other international retailers. In a difficult retail market, where spending for pleasure has been to a large extent replaced by spending purely as necessity, the retailers who offer the best service will win out. John Lewis is a great example in the UK. Known for quality product and service, the customer will make them the first point of call. Deborah Stone of The Stone Consultancy, a leading retail consultancy, says: ‘Once you are top of mind, you are already half way to creating customer spend, but it is the quality of service which will clinch the sale.’
Retail figures out this week have served to highlight the winners and losers of the retail sector in the current depressed market. Those with the right product, marketing mix and customer service do better than those who do not get it right. It sounds like a glib remark, but when consumer money is tight and credit no longer easy to come by, customers will no longer support those stores who were on the edges of their repertoire.
So what seem to be the golden rules:
The right product goes without saying: know your market and make sure both the quality and price levels meet with the expectations and needs of your target audience.
The right sales channels are key. Retailers are learning, some the hard way, that they can no longer rely on customers coming into store. Some don’t have time, some don’t live in the right places and some don’t have the inclination to come to the high street, so an on-line shopping option and correct online strategy is a must. It allows customers to shop when it suits them and allows the retailer effectively to remain open 24/7.
The right marketing channels are crucial, but even before that, knowing your customer is critical. Who are they, what are they buying, when are they buying, where are they buying, are they multi-channel customers, how important are they as individuals to your business? Did they used to spend and have stopped? Can you bring them back? Market research and customer relationship management enable retailers to target their marketing activity as closely as they can to reap the returns on the bottom line.
Customer service is an area which can never be over-estimated. Whether it is the person on the sales floor, at the till or on the phone, they represent your brand to the customer. Good service will bring the customer back and encourage them recommend you to friends. Poor service will encourage them to do neither.
Finally, it’s important to remain positive. The media paint a picture of doom and gloom and this can be self-perpetuating to an extent. Retailers who really believe in their business and take the right steps to reach their target market will thrive and come out stronger on the other side.
Traditional customer loyalty programmes are based on rewarding customer behaviour in order to build up a relationship between the retailer and the customer. However, the established method of collecting points to earn prizes does have a shelf life. As a result, retailers and brands are looking to gamification and how it can be integrated into CRM systems and marketing programmes.
The conventional method of rewarding customers with points does work and has proved to be highly effective for some retailers. However this traditional method does have its limitations, in that it has become commonplace amongst big retailers and therefore, no longer offers a point of differentiation. The competitive advantage of having a standard points loyalty scheme has waned and such systems do not always provide the retailer the kind of in-depth understanding they require to maximise the effectiveness of segmentation and therefore, sales.
Gamification can be defined as the use of game design techniques and mechanics to help engage with audiences. One of the most popular forms of gamification currentlyis FourSquare, which has over ten million users. Users can claim ‘Mayorships’, unlock’ badges’, and on a more standard level, receive special offers and rewards such as discounts to specific retailers, while also tracking against friends via a leader board. All of this makes gamification as a mechanic for a CRM programme much more engaging and appealing to certain users.
It could be argued that not everyone has access to the internet or Smartphone’s and gamification will only appeal to particular age groups and therefore is possibly limited in its effectiveness. However, if you consider how rapidly Smartphone usage is growing and that access to the internet is more widespread than ever, it is impossible to ignore this as a new possible CRM platform.
The biggest challenge faced by retailer with established CRM programmes is how to integrate gamification into existing programmes and to decide whether or not they feel it is appropriate for their target audience and product mix. There is little doubt, however, that retailers who are able to embrace a more interactive CRM mechanic will engage their customers more readily than with the tired points schemes of old. Deborah Stone, Managing Director of The Stone Consultancy comments: ‘Smart technology is changing how people deal with the world across all elements, not just online. Gamification is an exciting development for retailers to consider when moving their strategy forward.’
For well over a decade, customer relationship marketing and their umbrella loyalty programmes have been a cornerstone of successful marketing and retail strategies for many of the UK’s biggest brands. Companies such as Tesco and Boots were amongst the first to establish customer loyalty programmes with sophisticated data analysis, which have grown to become hugely significant elements of their business, maximising sales and profits.
The growth of customer loyalty programs has been matched by the growing expectations of customers for marketing messages to be relevant and targeted. The digital age in which we now live means that businesses really need to understand their customers to a level that facilitates relevant and targeted marketing material to the right individuals. Get this right and not only will brand loyalty increase, but sales will be less volatile during periods of economic downturn, such as the ones we are experiencing currently.
Marketing and retail
The UK has seen customer loyalty schemes change dramatically. At first, it was largely a case of collecting points in return for money off vouchers and other rewards at individual companies. Over time, some companies joined umbrella schemes, which offer customers even more value for their loyalty by sharing set up and marketing costs, as seen with the Nectar card. So have customer loyalty schemes reached their limit?
The answer is certainly not. In fact, customer loyalty and brand loyalty schemes are really only now coming into their own thanks to technological advances, which impact on our daily lives. Of course, the one piece of technology which has revolutionised how we all do business and how we run our daily lives is the smart phone. Indispensible to almost all individuals from the moment they wake until the moment they go to sleep, smart phones, i pads and other similar technology also offer marketers and in particular, retail marketers, the chance to reach their audiences accurately and with immediacy.
To be slightly more specific, it is the location-based software available on a smart phone that will be of interest to customer loyalty scheme providers. The more targeted your marketing messages are, the better your response will be. Customer location becomes a highly valuable piece of information, which enables you to get your message across not only to the right person, but also to speak to them in the right place at the right time, i.e. near to where they can buy from you, the retailer.
Deborah Stone at The Stone Consultancy one of the UK’s leading retail marketing consultancies, believes that companies who embrace new smart technology and more importantly, use it with the right analytics, will be the real winners in the battle to retain customer loyalty and sales. ‘The first stage of customer loyalty schemes was reward – spend your money at our store, get points, get a discount. The second stage was about multi-brand reward schemes – get points, get a choice of rewards. The third stage is all about immediacy– ‘check in’ to my brand now and get your reward now. Instant gratification for an instant sale.’
At this stage, it is reasonable to say that no major retailer has cracked combining geo-location with customer loyalty reward schemes. And it must also be pointed out that it has its sceptics, who rightly point out shortcomings, such as lack of smart phone ownership and concerns over user behaviour.
However, it cannot be denied that the number of smart phone users will only grow and that judging by the success of existing customer loyalty reward schemes, it will continue to grow and shape the relationship between an individual and a brand or business. A decade ago, people queried whether or not investing in huge CRM programmes could ever affect the bottom line. We have seen the phenomenal results from those retailers who embraced the concepts and used them intelligently. So it will be with smart technologies. The retailers who think smart will reap the rewards.