Securing the loyalty of omnichannel customers

Securing the loyalty of omnichannel customers © ICLP 2014

Consumer behavior has changed drastically with the widespread adoption of new technology and social platforms. The generation and availability of peer-generated content along with the multiplication of brand touch points and channels, have served to disrupt what was previously a relatively linear path to purchase for the majority of customers. As a result, it is more important than ever that retailers continue their quest to develop a 360° view of the customer in and across countries and better connect customer transactions and interactions (digital and social) across all channels.

With research1 reinforcing that customers engaging via multiple channels are more profitable, it is logical that any retailer will want to further encourage this behavior. Developing the capability and generating insight to encourage customer interaction across multiple channels and creating a brand relevant, seamless experience in each and every channel and geography will increase loyalty and business performance.

As a result, retailers are evolving their strategies to be more omnichannel with the desire of intelligently and seamlessly engaging with shoppers regardless of location or channel. For those with an international presence, achieving a unified customer experience can be more complex as while consistency is desired from a brand marketing perspective, some markets have customer, channel and cultural differences beyond the obvious language considerations that specifically affect their individual path to purchase.

Added to all these considerations is the importance of having a customer relationship strategy or loyalty program that complements and commercially maximizes the omnichannel retailing strategy. Providing a relationship framework that can work domestically, internationally and motivates customers to share data, purchase, participate and influence (or even lead) their peers, will result in brand differentiation, business growth and increased profitability.

1. Retail Systems Research: Omnichannel 2013: The Long Road to Adoption 2013 Benchmark Report

Executive summary

“ Generating insight to encourage customer interaction across multiple channels and create a brand relevant, seamless experience in each and every channel and geography will increase loyalty and business performance.”


Challenges for retailers in the new tech-age

“ Retailers have the opportunity to better utilize customer data and insight to evaluate how they can enhance brand engagement at every touch point.”

Recent advancements in technology have revolutionized how consumers shop – they can now choose where, when and how they interact with a brand. This creates new challenges for retailers in ensuring they are present in and work across as many channels as possible to ensure they can attract and maintain the attention of a consumer through to purchase, and delivery in a way that maximizes profitability from every purchase.

Some examples of the disturbances now impacting the path to purchase include:

• Amazon – impact on pricing, competitive recommendations and showrooming

• Google search – commoditization, impact pricing and channel control

• RetailMeNot – dilution through mass distribution of discount coupons

• MyPoints – shopping through an online store to earn points and cashback

• Tripadvisor – peer-generated reviews and ratings.

As a result it is imperative that retailers look to create a customer journey that not only incorporates the point of purchase but also includes both pre- and post-purchase considerations for differentiation and effective engagement.

To achieve this, retailers need to gain a better understanding of their customers, their intentions as well as the paths they may take to purchase. An individualized engagement strategy can then be effectively applied to influence these customers across all the relevant touch points and stay with them through to purchase and beyond.

Being able to offer customers more choice, flexibility and personalization is not a new strategy, but many retailers are adapting their businesses and operational infrastructures to deliver an integrated and seamless omnichannel retail experience that customers can easily browse, buy and share with peers. It’s not just about in-store, online and mobile channels but combining and optimizing these with offline opportunities including catalogues, traditional direct mail and personal channels using sales staff and peer to peer recommendations, as it is these latter options which have the potential to foster a greater emotional brand connection.

Retailers have the opportunity to better utilize customer data and insight to evaluate how they can enhance brand engagement at every touch point. The more ambitious retailers are planning how their omnichannel strategy can seamlessly integrate with their loyalty strategy to improve the overall customer experience.


The international dimensionOmnichannel strategies create both significant opportunities and challenges for retailers, particularly those working internationally, as the shoppers expectations do not change. Consumers still expect a seamless and value added experience, relevant to their relationship with the brand, irrespective of within which channel or market they are engaging – this also extends to the consumer who purchases with a brand across country borders.

A key aspect of success is to develop knowledge on customer segments within the different markets so as to validate commercial growth and marketing assumptions such as stock levels of sizes and ages of customers and evaluate how these are different from other key geographies.

Market and customer insight can also determine the most relevant channels for communicating with customers in a way that drives high levels of engagement and commitment to repeat purchases. For example, while US consumers commonly interact with brands on social media platforms such as Facebook, Twitter and Whatsapp, Chinese consumers prefer to use their local equivalents of Weibo and Wechat. Beyond channels and communication, international retailers also have to consider how their customer relationship and loyalty strategies can be successfully delivered at both a global and local level.

The skincare and cosmetics brand, L’Occitane identified differences in customer behavior across all channels and time zones, reinforcing the need for a more localized approach. The loyalty strategies they had employed internationally also varied by region with point programs prevalent in Asia and a more savings and promotional approach being adopted in Europe and the US. With more than 2,500 stores in 100 countries in Asia, North and South America, and Europe, their global approach is not only to centralize the collation and analysis of customer data but enable local operational marketing teams to access and utilize this insight so they do not have to reinvent the way the brand interacts with each customer in each market.

This example highlights the importance for each retailer of identifying those activities that should be managed at a global level in a centralized manner and those that should be managed and delivered locally on the ground. Whatever the individual approach determined by a retailer for their international business strategy, connectivity across systems wherever they are located must be achieved to enable the intelligent use of customer insight globally and locally. While this may seem daunting if retailers are operating with a single channel and legacy retail and customer management systems, loyalty and reward solutions offering innovative commercial models are available to reduce the need for significant investment in IT and systems.

“ Beyond channels and communication, international retailers have to consider how their customer relationship and loyalty strategies can be successfully delivered at both a global and local level.”


Purchasing on the basis of recommendation of friends and family is well acknowledged, however today this information is more immediately accessible. At the push of a button, customers can view reviews from both professionals and peers at a swipe of a screen, and share, promote or detract with a “like” or a post.

For retailers, understanding social platforms, participating as a brand, and having an effective strategy to leverage peer power is vital.

While some marketers look at mobile as another channel, it is the only channel that customers have with them virtually all of the time and has the ability to pinpoint where they are (and in many cases, what the customer is doing) at any time. It can be used anywhere to access information, create interaction, discover discounts and even act as a payment mechanism. This is quickly differentiating mobile as a channel and making it an increasingly key element in any omnichannel customer experience, loyalty and communications strategy.

Through Starbucks Rewards, Starbucks has truly focused on the customer experience as customers through their mobile application have the ability to check and reload their balance using the phone, website or in-store. Any profile changes, earned rewards or balance updates are made automatically in real-time and irrespective of how payments are made, either with a physical rewards card or using their phone, the balance will be updated across all channels.

No matter what the channel; digital, social or offline, customers want to receive the same service, quality and personalization from retailers delivering an integrated, omnichannel experience. Customers want retailers to make it easier and more convenient for them to do business wherever they are and how they want to interact.

While retailers with physical stores can appear to have an advantage in meeting customers multichannel needs, Amazon as an ecommerce pioneer and pure-play online retailer, has long been a leader in this approach. It launched its Click and Collect program to offer a greater range of offline delivery options in the US back in 2011 with Amazon Lockers now being available across the country and also in key locations in the UK. More recently, it has been working to integrate customers’ social interaction via Twitter with their Amazon account so that products added to their cart can be purchased later simply by tweeting a link to the Amazon product using a special hashtag - #amazoncart in the US and #amazonbasket in the UK.

Key expectations of the omnichannel shopper

“ Customers want retailers to make it easier and more convenient for them to do business wherever they are and how they want to interact.”


Five core needs of shoppers across channels and markets1) The mobile experience matters. While a significant number of customers still buy in stores, mobile has

the greatest ability to alter the experience, adding value in-store, being a source of information while shopping and a channel for delivering contextually-relevant offers and location-based promotions.

2) A consistent and added value customer journey. A brand relationship is built on a lifetime of added value and trusted content that is delivered consistently and seamlessly through interactions across all channels.

3) Engagement through participation and interaction. Retailers need to package content in a way that customers can share and engage with both the brand and their social networks in a way that makes it a fun and exciting experience. Peer interaction plays a critical ‘positive affirmation’ step in the new digital purchase process and can attract new customer audiences.

4) Relevant content creates value. Any message must be contextually relevant to a customer’s current situation. For example, location, time of day and even the weather can change the value perceived in the information being provided. Leveraging curated content will be important in delivering relevance and valued messaging.

5) Personalization and customization. Personalization prevents blanket offers which can dilute rather than generate incremental revenue and create a higher level of engagement between the brands and the consumers.


If retailers know who their shoppers are, they can influence basket value and higher margin items through targeted suggestions and incentivization. This will also help avoid revenue dilution and cannibalization from ill-targeted promotions when the customer would have bought at full price.

What is most important is how retailers can access and bring together as many sources of customer interaction and transactional data as possible to create a central database and the potential for a single customer view across channels. From this, insight can be derived to identify how individual customers and shoppers behave and can be targeted with the right messages as they engage across various touch points to create a more integrated and motivating brand experience.

i-beacons and similar proximity-based applications are good examples of enablers which should be deployed ideally as part of a holistic omnichannel strategy rather than as a singular, unconnected touch point. For example, if a customer walks past or into a store with a location-enabled device, real-time communication of relevant services, price or reward offers associated with a loyalty program, based on their history and preferences can be initiated. Real-time contextual information can either be sent to them or to the sales agents or service teams on the shop floor to drive better tactical, short term responses to marketing, sales and service efforts.

Retailers should also evaluate the sales growth opportunity presented by consumer advocates that are highly active and influential in social channels whether they may or may not be actual customers. Consideration should also be given as to how to reward interaction behavior in social channels as this will amplify levels of engagement and drive advocacy in these channels. Furthermore being able to connect behavior in social channels to transactional shopper data and loyalty initiatives has the potential to provide immense value in identifying those customers with high commercial value and high social influence.

Using omnichannel data to create more profitable customer relationships

“ Being able to connect behavior in social channels to transactional shopper data and loyalty initiatives presents significant commercial opportunities.”


Creating a 360° view of omnichannel customersUnlike twenty years ago, the consumer now holds a fountain of information in their hands, wherever they go. They search online for the best deals, styles or looks, using a myriad of sources including recommendations and blogs even while standing in the middle of a shop floor.

From the perspective of a retailer, deciding what information to collect and use can be difficult with the volumes of data being available. In an ideal situation, social and mobile interaction with a brand and peers should be detected throughout the journey to get the complete understanding of the consumer dynamics in all markets and geographies. The creation of 360° customer insight will aggregate data across the entire shopper journey so that the approach to segmentation will not purely be based on transactional purchase behavior.

Deriving and building customer personas, i.e. profiles of attitudes and interactions, provide the ability to stay flexible to customer needs and the way in which they want to engage with a retailer, as this may change from one channel or one day to the next.

For example, the time poor office worker needing immediate help on recommendations for grabbing something quickly in a lunch break can be the same person that was enjoying an immersive rich media experience while browsing the brand’s site on a tablet in front of the TV the night before.

With a 360° customer view and intelligent application of this knowledge, there are significant opportunities for brand differentiation, conveying and delivering on a real brand promise, influencing the customer’s buyer behavior at a host of new touch points and also using this audience as a source of acquiring new customers for that retailer’s brand.

“ Deriving and building customer personas provide the ability to stay flexible to customer needs which may change from one channel or one day to the next.”


Winning through omnichannel – five key strategies for success1) Understand customers in this new light. Consumers are not only defined by the products in their

basket or their previous purchase history but also by their needs for interaction which can vary from moment to moment. These differing customer personas need to be mapped and understood to identify shopper needs at critical stages of the buying process and the key characteristics that reflect the persona being adopted.

2) Create value for engagement. Changing needs means that consumers will look to brands to do more than just sell. They need to create new experiences via contextually relevant content and interactive tools as well as enable other interactions which happen ‘off domain’ in social and digital channels or wherever customers are which might not be brand controlled.

3) Connect the dots. Legacy systems and customized solutions may run customer interactions today but connectivity is critical to be able to gather, analyze and flow customer information across touch points to deliver a relevant and added value customer experience. A master datamart and intelligent solution is required but this does not require significant IT investment and resources.

4) Data as fuel, not just oil. Driving the customer experience towards increasing relevancy and added value, data needs to be collected, refined and used to flow communications, offers and content to customers in a way that recognizes them as individuals. Knowing what interaction data to capture and how to use contextual insight along with transactional data creates a true and powerful 360° customer view when applied using a set of business rules to optimize profits.

5) Standing still is not an option. The rate of customer adoption of new technologies and the fragmentation of the channels being used to consume media continues to change the retail landscape. The winners in the new omnichannel world will be those that are agile, and adapt swiftly to meet evolving customer needs which positively impacts commercial performance.

Changes in shopper behavior and the adoption of new technology are changing the face of retailing today. The move towards being able to deliver an omnichannel customer experience is now a mandatory strategy for any retailer operating internationally or domestically.

Added to this is the challenge for retailers to ensure that they develop a brand relevant, seamless customer experience across all channels that importantly integrates and supports their relationship strategy to drive high levels of engagement, repeat purchases and ultimately customer loyalty, irrespective of the consumer’s geographic location.

This evolution might involve making small steps along the journey to achieving a 360° single customer view across the multiple customer touch points by aggregating all sources of data and information into a simple datamart. This will enable retailers to start driving a more relevant relationship with targeted messaging and personal propositions to encourage more multichannel behavior.

Even if this is not in real-time initially, using the available data insights intelligently can positively influence behavior, increasing customer engagement and loyalty while generating incremental revenue for the retailer.

Summary


With over 25 years’ experience, ICLP is recognized as a worldwide leader in loyalty marketing and customer relationship management. As leaders in loyalty, we understand what motivates customer behavior and can help retailers generate actionable insight and encourage customer interactions across multiple channels to increase engagement, loyalty and revenue.

ICLP offers a full range of B2B and B2C loyalty services – determining strategies, uncovering insights, engaging customers across multiple touch-points, and delivering and operating loyalty programs.

ICLP has offices in 16 key locations in 12 countries across six continents. From these worldwide locations, ICLP supports clients in their international expansion and has created and managed customer relationships at a global, regional or local level. With a unique mix of experience, innovation, expertise and passion, ICLP works across multiple industry sectors including retail to develop greater loyalty and more profitable customer relationships.

ICLP is a Collinson Group company. Collinson Group is a global leader in shaping and influencing customer behavior to drive revenue and value for clients. The group offers a unique blend of industry and sector specialists who together provide market-leading experience in delivering products and services across four core capabilities: Loyalty, Lifestyle Benefits, Insurance and Assistance.

To find out how we can help you create more loyal and profitable customer relationships, please contact:

Nevra Cihan, Planning Director, North America Email: [email protected] Tel: (+1) 212 600 2281 iclployalty.com

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Securing the loyalty of omnichannel customers

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