The State of Retail: Brand loyalty. How to earn it and keep it

by Bita Taghavi-Stevens

The retail and eCommerce space has never been more cut-throat.

Winning customers and keeping them is a Goliath challenge. And if your brand image, values, and messaging are off-point, tone-deaf or just a bit ‘meh’, don’t even bother turning up for the fight.

For every purchase, customers have tens – if not hundreds – of choices. And then there’s the amount of information available to them.

According to Google Think, 53% of shoppers say they always research before buying so that they know they’re making the best possible choice. What does that mean for you?

It means you’re under the microscope.

Customers are looking at everything from price, quality, reviews, how fast they can receive their goods, all the way to customer experience, sustainability, and your brand identity and ethos.

If you don’t tick the boxes, it’s simple: they’ll buy elsewhere.

In our second part of The State of Retail series, we’ll take a look at the challenges facing brands in the current landscape – and how, with the right approach, you can harness the power of brand and win at the loyalty game.

 

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What’s the problem?

 

Consumer demands have changed – massively. Supply is high, choice is plentiful – and buyers have a more global, ethical mindset. Oh, and then there’s the digital factor: good PR travels fast, and bad PR travels even faster.

If you produce your goods in a sweatshop in Honduras and pay your workers $1.50 an hour, people will care. If your brand or workplace culture is perceived to be non-inclusive, sexist, racist, or toxic, people will care. If you don’t work to make your customers feel seen and valued, people will care.

And they’ll speak with their wallets.

Customers used to focus on the end product, price, and customer service. For the most part, that was what shaped their perception of your brand and influenced their loyalty.

Now, brand identity, and making your customers feel valued, are key. And it begins behind the scenes – with the stuff that customers traditionally didn’t see or care about.

If you want to create a brand image that people like, connect with and stay loyal to, you have to start with these fundamentals. In other words, you need to care about what your customers care about. You need to show that you’re listening.

 

The cost of getting it wrong

 

We’ll let the figures do the talking:

Reducing churn by just 5% can increase the overall profitability of a business by between 25% and 125%.

Recruiting new customers is 5 times more expensive than holding on to existing ones.

In a highly competitive environment, improving your brand loyalty is crucial if you want to survive. So what does it all come down to?

 

Word on the street: emotional loyalty

 

Even if you’re a big household name or luxury brand, the kudos of your name simply isn’t enough anymore.

When it comes to Gen Z, there are plenty of things they care about more than price, quality or convenience.

McKinsey’s True Gen report found that 81% said they’d stop buying (and spread the word) from brands that they perceived to be ‘macho’, 79% would stop if they thought the brand and communications were ‘racist’, and 76% would boycott brands that they thought were ‘homophobic’.

These are consumers with a whole new set of drivers: authenticity, truth, community, and ethics.

Brand loyalty is moving away from rational or transactional loyalty (loyalty based on hard metrics such as value for money and convenience) and more towards ‘emotional loyalty’ (feelings over traditional metrics).

If you want your customers to come back for more, they need to feel an emotional connection. They need to like you.

 

Rational loyalty vs emotional loyalty

 

If you get it right, emotional loyalty can be a big advantage in retail and eCommerce – especially now.

During the pandemic, this type of loyalty became much less relevant. People needed convenience and affordability – the pillars of rational loyalty.

Even before Covid, most brands focussed their efforts on rational loyalty because it’s easier to quantify. Reward schemes, offers, keeping prices competitive, and convenience – you can easily measure the effectiveness of these tactics.

However, if your loyalty program is based on rational loyalty alone, what happens when a competitor offers better value or more attractive rewards or better convenience? In such a crowded market, it’s almost certain that someone will eventually outshine you on these differentiators.

But how do you outshine emotional attachment? It’s much harder.

With emotional loyalty you’re still vulnerable to external, environmental factors (like a pandemic), but you’re less vulnerable to things like other brands beating you on price or convenience.

 

How to earn loyalty and keep it

 

In 2022, brands that achieve the highest customer loyalty know the importance of having a strategy that combines rational and emotional loyalty. Here’s how to capture both.

 

Content is king

 

If you had a pound for every time you heard that phrase, you’d be reading this on a private island. But it’s true. Content is a powerful tool. And it isn’t just about your sales funnel and converting leads.

Good content is a vehicle for communicating your brand ideals, values, and message.

One of the main purposes of branded content is to increase your credibility. When you increase your credibility, you naturally increase how much people trust you, and… In 2022, trust is one of the best ways to improve your customers’ emotional loyalty.

A recent Salsify study found that 46% of US consumers said they’d pay more money to purchase from brands they feel they can trust.

Whether it’s blogs, video or social media posts, make sure your content is clear, engaging, and on-point. Offer something of value to your audience, communicate your message and brand identity, tell them what you care about – and, above all else: be authentic and human. Let them see who you are and why they should trust you.

 

Make them feel special

 

Ever noticed how special you feel when you get a generic email or completely irrelevant offers and rewards?

If you want to emotionally engage your customers, personalisation is paramount. It’s a key part of your customer experience – and it works for both rational and emotional customers.

Sending personalised offers, ‘thank you’ rewards, and communications based on customer data is a great way to boost engagement. To do this, you need to be able to segment your customers in real time, and react accordingly.

For customers towards the rational end of the spectrum, they’ll view this as excellent customer service. For the more emotionally influenced customers, they’ll feel seen and valued. Either way, you’ll be boosting your brand image and customer loyalty.

 

Sustainability and Corporate Social Responsibility

 

Most brands are investing in sustainability or Net Zero initiatives, but do your customers know what you’re doing? Do they know what you believe in, what you’re striving for?

Sustainability and CSR are big drivers for Gen Z – 75% of them say they make purchases based on sustainability rather than brand name – but you’ll only build emotional loyalty if people know about it. 

If you’ve created a zero emissions supply chain or you’re investing in innovation to become greener, make it a core part of your brand messaging.

Way before it was best practice (back in 2012), Stella McCartney implemented EP&L reporting (Environmental Profit & Loss) to measure the environmental impact of every aspect of their business. Then they published it on their website. This is something they’ve continued to do each year.

In addition to this, they have circular and social sustainability initiatives, and they’re active members of the Ethical Trading Initiative (ETI). All of this is shared through their web and digital content. It’s a consistent brand message: ethics and sustainability above profit – and it works to build emotional loyalty.

 

Reward for referrals

 

If you want to build customer loyalty, referral rewards should form a key part of your strategy.

According to SemRush, 90% of people are significantly more likely to trust a brand that’s been recommended – even when that recommendation comes from a stranger. So how do you make sure your customers recommend you?

You need to recognise their referrals by giving them incentives and rewards. This works for customers at both ends of the rational-emotional loyalty spectrum. You’re giving people something tangible, and you’re making them feel acknowledged and valued.

Brands like Tesla know the power of referral strategies. When they first launched, their entire brand marketing was grown through word of mouth. Instead of traditional advertising, they chose to focus on advocacy – and it worked.

Their referral reward scheme was so attractive that one customer, the ‘World’s No.1 Tesla Referrer’, referred more than 1200 people to buy a Tesla, earning himself $500,000 worth of Tesla cars in the process. But that was many iterations ago.

Now that their brand is established, their referral program looks very different. And just like Tesla, you need to keep evolving your referral strategy. What you need now might not be what you need in two years’ time; changing up your strategy will keep it sustainable, up to date with tech trends, and cost-effective.

 

 

The 2022 retail and eCommerce landscape may be fiercely competitive, but for brands that are agile, it's the perfect time to gain an advantage. Developing loyalty strategies that work to drive a more long-term, emotional connection between your brand and customers, gives you the best chance of keeping your customers happy, engaged, and coming back for more.

 

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With special thanks to:

Bita Taghavi-Stevens