So far, 2020 has been one of the toughest years in memory for retailers and businesses who rely on consistent consumer interaction and sales. The reason, obviously, is due to the global Coronavirus pandemic that has impacted all our lives. It has changed the way we live, work and socialise as well as is having a huge impact on our travel and retail habits.
This, in turn, has impacted those businesses who rely on and run successful customer loyalty schemes. For some such as the Airlines and Travel industry, the impact has been far reaching and, in many instances, crippling. A recent report from McKinsey highlights the challenges ahead and what it will take to for those industries to recover. However, for other businesses, there are still some opportunities to build on and grow their existing customer base through successful loyalty schemes.
As mentioned earlier, the global pandemic has changed the way consumers shop and interact with brands. If anything, it has made consumers a little more adventurous. Another McKinsey report found that more than 75% of consumers have tried new brands, places to shop or methods of shopping so far during the pandemic.
In addition, consumers have tried to support local retailers with one survey claiming that one in three consumers are more supportive of local business than ever before. Furthermore, according to Paymentsense, nearly two-thirds (62%) of the population plans to stay loyal to the local businesses that helped them through lockdown with almost half (44%) saying that lockdown has made them change their shopping habits and they now plan to shop locally, while 55 per cent intend to consciously spend more money in local shops after lockdown as a show of support.
So, what can we learn from this?
We have written about the customer loyalty before and focused on what business can learn from the best known schemes. But now the landscape has changed we need to learn more from those businesses who are increasing their customer base and maintaining them – be it through a well organised and efficient customer loyalty scheme or simply good business practice. The truth is that either way they are adding value to their customers.
According to the same McKinsey report, Covid-19 has affected consumer behaviour in several key ways – many of which will have a lasting impact. However, the three most eye-catching findings are that there has been a significant shock to customer loyalty and there is far more focus on adding value and access to essentials.
These findings go hand-in-hand along with customer service and choice. We know that online retail has seen a boom as consumers are unable to leave their house and this alone has had a huge impact on customer loyalty. For example, customers who had problems were 35% less loyal than those who conducted business problem-free. They cited poor website navigation, complex payment processes, slow websites and a lack of stock as just some of the reasons.
Adding value increases loyalty
However, on the flip side, a new report from Wharton University of Pennsylvania showed that there has been a 7% increase amongst customer willing to recommend brands where they had a good experience or they felt they had additional value through the customer loyalty scheme. It was this value add that was then looked in to further where they found a significant increase in the overall resilience of the loyalty schemes with customer benefits providing the biggest perceived value add to consumers.
Through this survey, the top seven benefits identified were:
- Free shipping and free returns
- Alerts you when an item you want is on sale
- Insider access to exclusive content and information
- Cash back on each purchase
- Earn points with each purchase to redeem for rewards
- Alexa/Google Assistant notifications
- Access to your personal shopping history
As you can see, none of these are revolutionary benefits and usually form part of the customer loyalty schemes that are traditionally offered today. However, what is clear is that it is all based around good communication and customer service – two of the key fundamentals highlighted by Deloitte in their recent report, Covid-19 Maintaining customer loyalty and trust during times of uncertainty.
Businesses will need continue to work hard to engage and retain their customers as we move towards the back end of 2020 and early 2021. Many, including The World Bank, are predicting the global economy to plunge into the worst recession since World War II. However, there is hope, and if businesses can continue to learn from best practice, maintain transparent communication and add value to their customers lives – no matter how small - they will not only hold onto their most valuable and loyal customers, but increase their numbers.
To find out more about Xexec’s Customer Loyalty offering and how we can help build you a value-added programme, click here. Alternatively, to read more about best practice in customer loyalty, download our eBook – Employee Engagement and what we can learn from Customer Loyalty