Is Customer Loyalty Dead in Retail?

Are Retailers in Danger of Keeping Their Customers?

Retail Loyalty
Getty Images

By all accounts it appears loyalty is dead. Customers are choosing convenience over loyalty. Or are they? In a recent study we conducted, we found that over 67% of customers prefer to be loyal to one store; however, they do not feel any one store is loyal to them. Meaning, they want to be loyal, they just don't feel that retail stores today are focused on them as an individual. Customers see retailers focused on the masses and in today's digital world, personalization is everything.

 

I wrote in an article two years ago that if we did not improve the customer experience in our retail stores, we were in trouble. Forrester found that millennials (now the largest shopping population) prefer brick and mortar stores over shopping online almost 2 to 1. But they are still shopping online. Black Friday is not what it used to be. Many customers choose to shop online. While this is fine for a big box store or national chain, is is disaster for independent retailers

So, where did the loyalty go? And why would a customer choose to shop online or at a competitor's store versus you? First, let's dispel a myth - It is not price! Study after study has proven this fact. Yet retailers still want to believe that it is price (something they cannot control) versus customer experience (which they can.) True, sometimes you lose a sale to price, but not a customer. Meaning that a customer may buy 80% from you and 20% from someone else based on price.

That is okay. That is still loyalty. But specialty retailers want 100%.

I get it. I remember running into one of my "loyal" customers buying socks from a department store versus me (where they normally shopped.) I had that moment of "betrayal" and made it awkward for my customer. Versus being understanding and saying "good to see you, hope to see you in the store again soon" greeting, I made some poorly worded comment like "my socks not good enough for you?" I honestly would not blame that customer for never coming back to my store.

 

When surveyed (with a form) why someone would choose online versus in store (bric and mortar) to shop, the top reasons are convenience, price, etc. But when we sit with people in person and talk to them about it, the answers are very different. (Probably because we do not have set answers for them to choose from like the forms.) The bottom line: 'The shopping experience online and in the store are really no different. And since they are not different, why should I get out out of my pajamas to buy?'

That actual quote from a customer we surveyed was eye-opening to me. I decided to chase this idea down. Was it a shift in retail shopping or the opinion of one man who really loved his pajamas. And the more people we asked and the more we investigated, the more we found it to be true. In many cases, customers lamented the local retail store they used to shop in wishing they still did. They recall the glory years when the store "knew my name, met my needs, and made me feel special." 

Customer loyalty is not dead. But it is on life support. You have more control over loyalty than you realize. How many cost-cutting measures have you taken in the last two years that reduced the customer experience?

What changes have you made in merchandising? When was the last time you painted the store or moved the displays? How many customers can your employees list by name and what merchandise those customers specifically like? Is customer experience a term woven into the fabric of your culture? Answers to these questions are tell-tale signs that your store's experience is fading. 

And when the store experience fades away, so does the loyalty. We are creatures of habit. We want to shop at the same retail stores each time. But with so many choices today (including online) and with the customer's time being so valuable to them, it only makes sense that he or she wants to shop at a store that makes them feel appreciated. 

When I consult with retail stores, I often find that many of the things they used to do that promoted and nurtured loyalty, had been "cut" to save money.

While the cost cutting helped with the P&L short term, it hurt the store long term. It always amazes me that retailers never ask their once loyal customers why they left. Instead they call me and pay me money to find out. And how do I find out? I ask the customers. And you can do the same. You don't need an expensive consultant just talk to your customers.

Millennials especially want to be known. What does your store do to make them feel that way? Are they a person or a transaction? Efficiency experts and operational specialists can ruin retail. Retail is about customer experience and not efficiency. Getting the customer in and out quickly may look great on paper, but it will damage loyalty for sure.