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The consumer loyalty imperative

In the ongoing battle for consumers share of wallet, smart retailers strive to drive not just repeat purchasing of products but actual loyalty to their brand. That is emotional loyalty which drives behavioural loyalty, helping the retailer to differentiate themselves and rise above the noise of the competitive arena. How can this be achieved? By focusing on customers, what’s important in their lives and integrating loyalty programs across experiences that meet their demands of more for less. On a digital front this means providing useful and engaging solutions across relevant channels, solutions that are relevant to the individual consumer. Just take a look at the way Tesco in the UK really gets this change of focus and how to leverage digital with loyalty programs.

Garth Hallberg suggested a measurement of the emotional state of loyalty through what he describes the stages of consumer loyalty, shown in the ‘Loyalty Pyramid’ below. Consumers are assigned to one of five levels on an emotional loyalty scale from ‘No Presence’ meaning no awareness’ of a brand through to ‘Bonding’ where consumers believe that the brand’s benefits and properties are unique or shared by few other brands.

Loyalty Pyramid

Loyalty Pyramid (Hallberg, 2007)

His quantitative research further found that the average shopper (first column below) spends more as they move up though the pyramid,   a super loyal ‘bonded consumer’ generally buys four to ten times more than a consumer way doen at the presence stage of loyalty. When segmenting the customer base heavy or high-value category buyers, defined as the top third of all buyers in terms of category consumption, generally buy at least 50 per cent more than the average buyer in the category. Basically in many cases the sales value of a bonded heavy category buyer or user is 15 times more than the average consumer at the base level of emotionally loyalty.

Brand sales at each level of emotional loyalty

Brand sales at each level of emotional loyalty

It is no surprise that more loyalty equals more revenue, but just paying lip service to loyalty though behavioural drivers such as discounts is likely not enough. Retailers need to be asking themselves at least three key questions. Are we really focused on the customer experience? How can we tap into our loyalty program and deliver relevancy? What technologies both existing and emerging can we utilise to drive engagement and value enabling utility?

Digital commerce revolution

ecommerce


Grocery is facing one of the fastest growth projections in the digital commerce space, with some analysts predicting a share of up to 10% of what is a $550 billion dollar market  in the USA alone. Underdeveloped with blunted innovation and adoption since a series of failed investments in the 90’s, a nexus of forces have arisen to make digital commerce not just an experiment that retailers need to undertake but a necessity in order to meet customer expectation and retain every cent of their share of wallet. Some of the most important trends and opportunities that make this next step in digital engagement so different are:

 Consumer technology innovation & adoption. More useful and innovative new devices and digital products are being released to the market at what seems an ever increasing rate. The latest quad core smartphone, Vine to share bite size video, or even ‘smartwatches’. But what is equally as important to appreciate is the increasingly rapid consumer adoption of this technology, we live in a time  where 1 million iPads sold in one day. We have become an always on, mobile and global community.

– Rising digital consumption. Today’s shoppers are more digitally influenced and making purchasing decisions across a huge variety of touch-points. According to a Nielsen survey over 57% of North Americans spent more than 25 percent of their total research time on a connected device and over 30% purchased a product online. We’re not just putting new solutions on the shelf of creating profiles and forgetting the password, we recognize the value and are prepared to try out new solutions that promise to help make our lives better.  And if that wasn’t enough to contemplate, don’t forget changing demographics and the increased digital fluency exhibited by the next generation of shoppers.

Consumer expectations. Its well known that in the still fragile economic climate, the majority of consumers have adopted a preference of more for less. That is more quality, convenience  and service, while spending less time, effort and money. New solutions like integrated digital commerce are needed to meet these consumer expectations, harnessing new technology  to offer new service channels and providing retailers a way to achieve competitive differentiation.

- Data. Quite simply there is access to a wealth of customer data which can be leveraged to personalize the experience meaning a more relevant and enjoyable offering for the consumer, while maximizing the shopping basket size. This level of relevance and personalization provides clear value to the consumer that numbs the potential disadvantages of not being in the brick and mortar store. Equally, the systems and technology that enables us to deliver relevance to the consumer enables retailers to deeply understand these behaviours and preferences to optimise pricing, product mix and service offering to name a few.

Ecommerce excuses

I often hear one of the key reasons for the lack of ecommerce in Canada is due to the spread of the population all over what is the worlds second largest country. However this argument makes less sense when you look at the map below. It is true that there are relatively large gaps of low density and the size of  the country of course factors into achieving an efficient national distribution network, but the reality is the majority of us live closely packed along the border.

Canada population density

Customer happine$$

Change is afoot and the stakes are high. Technology driven disruption is causing a seismic shift in the way we interact with one another and the way organisations engage their customers. The explosion of new technologies like mobile devices and social media is transforming how we connect and how we make buying decisions. Shoppers can make informed decisions with access to product information, price comparisons, and user reviews. Those organisations who don’t see this evolution or can’t adapt to this changing landscape face a whole world of trouble.

Clayton Christensen tackles this with his book The Innovators Dilemma, with one key suggestion that organisations fixated solely on financial targets naturally gravitate to the path of least resistance, which means focusing on the status quo. This lack of foresight, tolerance for risk and fundamentally underestimating the value and power of innovation is slowly choking organisations.

In a future that depends on innovation and customer-centricity for to secure share of wallet and loyalty, new priorities need to be set and embraced by the company and to do this organisations need to look beyond their comfort zone. Instead of focusing on making money and shareholder value, real success and longevity will be achieved by getting into an new business – the business of technology fueled customer happiness.

 

Where’s James?

Google Latitude. My every move, every day, tracked by Google. Spooky? Yes. However, also a life saver when you the Government wants you to list every time you have left the country. I think I need to get Tripit back up and running…

Google latitude

Death of print?

Based on research by coupon company Valassis, retailers will continue shifting their marketing dollars from traditional media to digital. It is projected print will see a massive decline down to 17% over the next 5 years, driven by trends like lower newspaper circulation. While I don’t think we will see print disappear anytime soon, as consumers increasingly adopt digital technology smart retailers will adjust their promotional strategies to ensure they are engaging their customers on the right channel.

 

Men spend 26 hours per year outside changing rooms waiting for their partners

A survey in the UK has measured that Men spend 26 hours per year outside changing rooms waiting for their partner. Could be a great opportunity to advertise to a captive audience – interactive screens with video, eCommerce, Xbox Kinekt ?

 

 

 

What is strategy?

Strategy

Smart devices in a connected world

This looks great, I wish I had seen it before I bought my wireless camera although I shouldn’t complain as it has still saved me getting out of bed a bunch of times. As mobile becomes more contextual amongst a growing ‘Internet Of Things‘ I expect we will see more solutions that integrate human interaction and information processing into everyday objects and activities. These can be anything from baby monitors, remote car starters,  home media, alarm systems even lightbulbs. Through mobile, we have become better connected to each other and now we are better engaging the physical world around us. I wonder how long it will be before we see our own IP address on our birth certificate :)

You have to be in it to win it

Interesting article at the Wall Street Journal. Apparently after a study of more than six million firms by two management professors, the majority of companies never make it to their 40th birthday. Firms like IBM that do make it beyond their 40′s have made pretty ruthless changes and acquisitions to adapt to ever changing markets fueled by the rapid pace of technology. Sitting still while the evolving world rushes past can be really bad for business, just ask Blockbuster and Kodak.

 

innovation

 



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