Gaining Loyalty in Retail Stores

Is Loyalty Dead? How Do I Gain Loyalty in My Retail Store?

customer loyalty
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We can still make customers loyal to us, but we must gain that loyalty in a different way. What I am saying is “blind” loyalty is dead. We can no longer expect customers to be loyal to us just because we are the only show in town. We have the internet that is full of well-trained marketers that are hunting for business. Having said that, the local merchant still has certain natural advantages that can create loyalty.

The biggest advantages are they know the market better, they know their customers better, and they generally know the other merchants better. In other words, they know how to experience engineer their business. So let’s breakdown those three natural advantages.

1. Knowing the Market Better. 

How many buyers from a chain store truly know who they are buying for? The independent retailer knows the marketplace because they are from the marketplace. But let’s not have a false sense of superiority about this. The chains still talks to its customers, does focus groups and asks questions to better understand the marketplace. So you might have the natural advantage, but the issue becomes what are you doing with this advantage to better serve your customers? Do you schedule your own focus groups just to ask your customers their opinions? Just asking your customers their opinion is a form of flattery or a compliment because you are saying their knowledge is important to you and how and why they like the products we sell is valuable to us.

Plus it’s important to learn products you don’t carry and could or should. This is a very valuable tool. 

In my stores, we reviewed our competition and market on a regular basis, but we did a deep dive every year as part of our strategic planning process. During the year, we met with select customers in a customer advisory board.

These people would meet with me and look at the merchandise I was looking to buy for the upcoming season and "speak" into it. Often times, they hated what I was considering and they saved me a lot of money. I would have bought those products and eventually would have had a lot of markdowns on my hands. 

2. Knowing the Customer Better. 

Again the local retailer might have gone to school with a particular customer or even be a neighbor down the street — but that’s just the tip of the iceberg. We need to dig deeper and get as much information about that customer as possible. This is where our employees become gatherers of valuable pieces of information about the customer. A CRM system in your POS is only as good as the data that's in it. 

The following categories of information are the types we need to collect from each customer:

The Vitals: Name, address, phone number and mobile phone number for texting messages, & email address

Products: What categories of merchandise the customer prefers to buy.

How Do You Reach Them: The preferred method of communication. Some people love to text while others like a phone call. The best message is worthless if no one is there to receive the message.

Their Preferred Price Level: There are four price levels:

  1. Regular Price: They see it they like it and then they buy it. The problem is there is a real shortage of this type of customer!
  2. Incentive Buyer: These folks just need a reason to come to the store. It might be just a phone call or a text or email them. They will even respond to a 10 percent incentive First Markdown or 20 percent off offer. These are the smart shoppers. They want good quality and timely merchandise. But they want a little extra if they are going to spend any of their hard-earned money with you. They want an edge.
  3. Clearance Customer: This is one of the two types of customers we aren’t overly fond of. They only shop when the store is 40 to 50 percent off. However, they believe they are your best and most loyal customer.
  4. Less Than Clearance: These folk are easy to recognize. They are wearing striped shirts and plaid pants (think Cousin Eddie from Christmas Vacation). They have never paid full price for anything in their entire life. They usually shop “Going Out of Business Sales,” flea markets and auctions. They will come out in droves if you are having a “Down-and-Dirty-Must-Get-Rid-of-it-sale." But don’t forget they also think they are your best and most loyal customer.

    Customer Personality Types

    In addition, knowing the customer’s personality types can pay giant dividends. The Retail Sales Bible outlines the four basic customer personality types. It is a tremendous advantage when selling, to identify the customer type you are selling too: it allows you to adjust your sales process and better serve your customer. This improves the customer experience in your store dramatically. 

    Demanding Type: They want to be in control. Don’t fight them: let them just have their way and compliment them for doing a good job

    Analytical Type: These are all the engineers and accountants of this world. They love facts and figures. They want data.

    Socializers Type: These folks want to buy from someone they like. They want to buy from a friend. Facts and figures don’t impress them. But a smile and thank you will go a long way.

    Belonging Type: These are the people that love to use the word “MY” a lot. My garage, my store, my lawyer, my, my, my. They think they own the store and you just ask their opinions.

    3. Knowing the Other Merchants Better. 

    This comes in two different varieties:

    Know your Competition. Don’t let your customer know more about your competitor than you do. Today there is no excuse for not knowing everything about your competitors. We can go to their websites, get their emails, frequent their Facebook sites, and get their Tweets. No excuses for not knowing.

    Know the other Merchants in your Community. Why? Because they will refer you more than almost any other source. Not to mention there is also a community pride that goes along with supporting your neighbors. Yes, loyalty is dead, but there are ways to avoid the normal pitfalls retailers tend to find themselves.

    The last area is the most obvious. Constantly plan events. Make your store a place to go to for more than just buying stuff. Have classes, have celebrations, and bring people into the store and you will be surprised how they can end up being customers and even loyal customers

    In my stores, we were big on DIY holidays. We started this practice because we learned that if we had an event — no matter what it was — it generated excitement in the stores and extra sales. We had a lot of loyalty from customers who just wanted to know what wacky DIY holiday we were going to come up next.