As the COVID-19 outbreak continues to unfold, its impact on the behavior and expectations of customers will become more apparent soon. However, what is clear now is that retail businesses will have to settle into a new normal and make adjustments to cater to the changing customer behavior.
With spiraling new customer acquisition cost, it becomes important for retailers to identify their loyal customers and get repeat business out of them. Here are few reasons why customer loyalty in retail is important:
Regain your lost customers: Due to the COVID-19 pandemic, there has been a paradigm shift in the customer spending behavior which essentially limited these customers to buy essentials only due to unavailability of items during the lockdown. This resulted in a severe impact on sales of those goods/services which typically witnessed a huge demand in the summer season, goods Like ACs, Refrigerators and other appliances. Once the economic activity resumes, merchants will have to start reaching out to their existing base or target new customers. While reaching out to new customers will lead to high customer acquisition cost, a good loyalty program may play a pivotal role in regaining lost customers and also help in new customer acquisitions.
Propensity of lesser or no discounts: Since markets have been bleeding due to COVID-19 pandemic, merchants may now offer very less discounts on goods & services which again can lead to stiff competition on customer acquisition. What merchants can offer at the very least are loyalty points to their customer on repeat purchase which essentially will be a good strategy to increase customer frequency at the store because of the points redemption incentive.
Customer spending potential: Considering the job losses/salary cuts/loss in business, customers will be spending wisely and therefore products like PaybyPoints where customer pays from the rewards balance of his credit/debit card will see growth. Hence merchants should opt for such programs where multiple bank point redemption facility is offered to the customers. The customer does not have to pay from his credit/debit card directly as he is only consuming his accumulated reward points.
Targeted communication: Considering the channel cost of communications merchant would be wisely spending while reaching out to their target audience. The days of mass targeted marketing strategies could be over because of the cost factor. Instead an approach of targeted communications based on location, geography, or even leveraging geotagging to reach out to customers within close proximity of the store could be adopted. This raises a need for a robust analytics and campaign management tool, which can reduce the customer outreach cost and ensure a good ROI. Thus, a good loyalty program should support complete analytics and help merchant in making result-oriented decisions.
Award points irrespective of payment mode: A good loyalty program should not differentiate between the customer's preferred payment mode. Whether customer pays through card, UPI, wallet or even cash the loyalty points should be awarded to the customer.
Simple loyalty solution: Points should be sent directly on the customer's mobile number with no requirement of any physical loyalty card. Customers should have the convenience to redeem points directly from their mobile number via OTP authentication. This will improve customer experience and build their loyalty towards the brand.
Lesser infrastructure cost: Merchants adopting loyalty programs will not have to shell out huge sums of money for running the program. At Pine Labs, loyalty program can be integrated with the payment product and Point of Sale (PoS) terminals can be equipped to handle transactions via loyalty reward points with no additional infrastructure and set up cost.
Access to reports: Access to automated reports in understanding the customer spends pattern, campaign delivery & conversion reports , customer point balance reports, enrollment reports, point expiry shall be provided to the merchant on a daily basis or can be viewed from the easy to use dashboard which is also mobile-friendly.
Review your marketing and advertising spends: Merchants will continue to recalibrate their approach in the post COVID-19 world, and therefore an investment in a robust loyalty program is the need of the hour instead of relying on paid search, digital and social media targeting as well as traditional paid media.
The disruption caused by the pandemic will make merchants prioritize a major process overhaul. Customer touchpoint experience will change overall with a marked shift away from cash to digital modes of payments.
This is a time for you to look ahead to the future
It is important to remember that we have faced crises like this in the past as well and will continue to face them again in future. Retail businesses want to return to growth and continue providing excellent customer experience in the process. What moments in customer's lives can you improve via your offerings? What new, improved, and innovative offerings can you launch in the market now that will give you momentum in expediting recovery? Now is a time to look at these questions and factor it in your future offerings to the customers. Let your customers know how important they are to you by keeping their interests first and foremost. You will be rewarded by customer loyalty and trust.