Great Service is More Valuable to Loyal Customers than Rewards

Posted: August 23, 2023
Category: Spotlight on Business

The shifting retail landscape is growing the disconnect between companies and consumers. Retailers often think providing customers with enhanced rewards and points loyalty programs creates a stronger bond with the company. But it’s becoming more difficult to earn the trust of shoppers and keep them loyal—especially when retailers fall short on convenience and personalized service. Consumers feel stressed because the cost of goods is rising faster than the amount of money in their paychecks. The situation also makes shoppers less forgiving when they have a negative experience.

A recent Salesforce State of the Connected Customer Survey highlights several key points related to why consumers switch brands or retailers.

  • Seventy-one percent of consumers have switched brands in the past year
  • Forty-eight percent switched to receive better service
  • Forty-four percent want more convenience.
  • Thirty-four percent have changing needs and expectations

Although most people have signed up for at least four loyalty programs, almost two-thirds of them redeem rewards once every three months or less. The survey indicates the primary motivation for loyalty is receiving excellent service.

  • 94 percent of shoppers are more likely to buy again
  • 83 percent are more loyal when they have consistent experiences in every department

Businesses with loyalty programs based on rewards may need to reevaluate their programs to place a higher value on measuring customer experience versus redeeming rewards and points. This approach fundamentally changes how companies invest in loyalty and measure results.

Customer Experience Drives Loyalty
Consistent communication and crafting personalized messages based on purchasing behavior is critical.  Help consumers easily navigate the shopping journey to locate products they want or will enjoy. It’s always best to offer shoppers multiple options just to avoid potential problems. When selecting products, factor in age, buying habits, and other demographics. Retailers can still offer rewards and discounts, but finding what they want quickly, fand easy transactions is what will motivate shoppers to return.

Large retailers use a customer data platform (CPD) to collect data from multiple channels. Although these systems are becoming less expensive than a few years ago, the price points still may be unaffordable for the average hardware store. However, many of the insights home improvement stores require can be extracted from the point-of-sale system. Analyze the data to find specific areas of interest for your customers and incorporate the information into the customer experience. Figure out ways to use your loyalty app to keep customers coming back.

Incorporate New Strategies
Measuring loyalty based on consumer experience instead of rewards requires different strategies. It’s essential to review the correct metrics to ensure progress is being made. Retailers should start by identifying their best customers since they are the most loyal. Are they making multiple purchases during a specific time frame? What are they buying? These shoppers have a Customer Lifetime Value (CLTV) that shows what they spend in your store every year. Understanding their buying habits will help you personalize messaging and the shopping experience.

It’s always a good idea to get customer feedback on purchases, delivery, and service. Use your loyalty app to survey customer satisfaction levels. Prompt customers to complete the survey by offering points and discounts on purchases.

Check out competitors to locate the weaknesses in their service. Are the checkout lines long? Is there a shortage of staff? Do the salespeople lack enthusiasm? These shortcomings are an opportunity to differentiate your store by offering shoppers a consistently better experience.

  • Find areas to out compete the competition
  • Build loyalty by providing a more seamless shopping experience
  • Seek alternative solutions to problems that annoy customers
  • Prioritize conveniences that give your operation an advantage

Changing the focus of loyalty program and fine-tuning the metrics that point to service excellence rather than points and rewards takes time. However, every time customer satisfaction scores rise you will know the new strategy is working and you are on the right track.