Building customer loyalty

How to create a retail experience that allows us to compete against Amazon

As Amazon expands into the grocery business, we can learn great lessons from the companies which are competing effectively, especially Walmart and Trader Joe's. Walmart's success is mostly about distribution power, but Trader Joe's uses techniques which any retailer can copy. 

The Trader Joe's approach to retail:

  1. Make it personal
  2. Make it enjoyable
  3. Make it easy to manage transactions
  4. Make us feel like we are supporting the community.

Harvard Business Review: What the Grocery Stores Holding their Own Against Amazon are doing Right, 2019-Apr-12 by Amit Sharma

The nature of customer loyalty is changing as shoppers get more comfortable buying groceries online — prioritizing convenience, choice, and ease over physical proximity to a store. As consumers become more sophisticated, retailers need to inspire lasting loyalty across their customer base. To do it, they should offer flexibility, proactively communicate about order status and other details, and build emotional connections with shoppers.... 

And people are emotionally connected to grocers, as utilitarian as grocery shopping may seem. For example, Trader Joe’s, which ranked highly in the C Space study, inspires loyalty by creating an enjoyable shopping atmosphere. A 2018 Forrester survey of 287 brands rated Trader Joe’s first in positive customer experiences, and the company regularly outranks other grocery chains in sales per square foot. Trader Joe’s fans closely follow new product releases, request stores in their towns, and have even created their own community on Reddit.

Trader Joe’s doesn’t offer grocery delivery, but it has created such a personal and enjoyable shopping experience that customers actually want to visit its stores. Everything at Trader Joe’s is designed to make grocery shopping feel more friendly, personal, and laid-back, including its flexible return policies, free samples, quirky product labels, fast check-out, and helpful employees.... 

Grocers need to offer their customers more than points-based customer loyalty programs, which are no longer a competitive differentiator. Most grocery chains offer similar benefits and do little to foster an emotional connection between a shopper and a brand. A study by Accenture found that 78% of shoppers abandon loyalty programs after signing up.

By investing in the factors that build long-lasting loyalty instead of transactional programs that most people ignore, grocers can attract repeat buyers and brand advocates.

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Taking the emotional rewards out of loyalty

Loyalty programs developed to reward customer behavior. The idea of a basing rewards on a paid subscription was not invented by Amazon, but many people think Amazon has now 'redefined loyalty.' What they have done is make loyalty a financial relationship. Now we have to evaluate the cost-benefit ratio before we sign up. But more disheartening now, we, the consumers, pay upfront then feel pressured to spend more in order to maximize our reward. That's not customer love. I resent people calling Amazon Prime a loyalty program. 

Loyalty360: The Scoop on Premium Customer Loyalty Programs, 2019-Feb-11 by Duy Nguyen

More retailers are providing membership plans and betting that you’ll pay a fee for the privilege of shopping with them. For example, Amazon charges $119 per year for Amazon Prime and has more than 100 million members who make the e-commerce giant their first stop when they go shopping. In exchange for that loyalty, Prime members get lots of benefits, including same-day and free one-day delivery on millions of items, free streaming movies and music, and discounts on groceries at Whole Foods Market. At least a dozen other chain retailers now offer membership plans, and that’s likely to grow.

“We anticipate more paid loyalty programs will launch in the next few years, including programs at grocery stores and gas stations,” says Scott Robinson, Vice President of Design and Strategy at Bond Brand Loyalty, a marketing and consulting firm.

As more membership plans become available, consumers need to carefully weigh the pros and cons. In addition to the perks these plans offer, the cost of membership and the risk that you’ll turn into a spendthrift could outweigh any benefits.... 

Among the membership plans that may now be vying for your business are Bed Bath & Beyond’s Beyond Plus, which you can join for $29 per year. For that, you get 20 percent off every time you make a purchase online or at the store. You also get free shipping. Others, including Sephora, Newegg.com, Restoration Hardware, and Wayfair, have rolled out or are testing membership programs, charging fees up to $100 per year.

When you sign up, these retailers offer online and in-store discounts, deals on shipping, dedicated customer service, and financing deals with lower interest rates. Depending on the retailer, membership comes with other perks, too, such as access to exclusive events, discounts on furniture-assembly help (Wayfair) or even free fitness classes (Lululemon).

To help figure out whether a membership will be worth the cost, ask yourself these questions.

  • Will the discounts really save you money?

At $15 per year, the PowerUp Pro membership at GameStop, for example, will get you 10 percent off all pre-owned games, so you’d have to buy about six pre-owned games in a year to offset that cost. A $100 membership to Restoration Hardware gets you 25 percent off any full-priced item, an amount you could likely offset with just one piece of furniture....

  • Will a membership cause you to spend more than you should?

Amazon Prime customers spend an average of $1,400 per year on the site, compared with just $600 spent on Amazon by non-Prime members, according to CIRP....

    • Will you use the extra perks?

    • Do you know how the retailer might use your data?

    • Is it simple to end a membership?

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How Rifle Paper builds loyalty with social media

Some products are products are perfect for building loyalty through social media. Rifle Paper is an image-oriented company, so Instagram is a natural. The customer communication is very good on Facebook as well. On both platforms, Rifle Paper Co. is generous and interactive. 

The real value of social media "done right" is brought home by the 10,000 responses they received to a customer survey. This type of loyalty allows the company to co-create its future with the customers, substantially reducing risks. 

Business of Home: How Brand Loyalty Allowed Rifle Paper Co. to Break into Home, 2019-Jan-28 by Mel Studach

With its entrenched audience of millennial consumers and an Instagram following nearing a million people, Rifle Paper Co. is preparing for its next phase of growth. “It feels like a startup again a little bit,” says Nathan. “It feels like we’re taking big risks, spending some money—really investing in the business again in a new way.”

Trish Whalen, the company’s recently appointed brand president, is a key part of that investment. A business development and licensing veteran, Whalen held executive roles at Kate Spade, Ivanka Trump and Draper James prior to joining the team at Rifle Paper Co. Tapping into the brand’s loyal consumer base was among her first priorities. She organized an online consumer survey, posing queries such as where customers shop for Rifle Paper Co. products and what categories they’d love to see the brand in, and received more than 10,000 responses.

“To have a brand that has created such an emotional connection to these customers, that is something you can’t architect,” says Whalen. “If you have that going in, we’re way ahead of the game. And that’s what the survey taught us.”

The results quickly confirmed that consumers want to see Rifle Paper Co. in the home category—a response that happened to be aptly timed with the release of the brand’s new rug and pillow collections with Loloi. There was uncertainty about how the collaboration would be received, considering the rugs were a higher retail category than consumers were used to paying for the brand’s traditional paper goods. “Nathan and I talked about keeping our fingers crossed that they convert,” Whalen admits, “and then the Luxembourg rug sold out completely within the first two weeks.” It would be one of seven rugs that would reach sold-out status.

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Mailchimp's chief customer officer shares ways to get closer to customers

More than any company I've found, Mailchimp works to create better listening opportunities with their customers. It's not enough to pay attention when customers speak up. We have to prompt customers to share. At Mailchimp they try to make it fun and productive. 

Fast Company: MailChimp’s cofounder shares the best ways to get to know your customers, 2018-Sep-23 by Dan Kurzius

Visit your customers where they live or work... 

Invite customers into your office... 

Be your customer for a day... 

Early on, we decided that our motto was going to be, “Listen hard, change fast.” For us, this meant constantly looking for improvement and innovating quickly, and letting the customer dictate our focus as a company. 

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Best practice... Get out... the newsletter

If you work in a big company and your job is getting the newsletter out, you have challenges, but the newsletter gets out there. For people like myself, independent or in small organizations, regular release of the newsletter is hard. 

Getting a newsletter out is a matter of "showing up." You wouldn't miss an appointment with a client, would you? Never blow off the newsletter because is going to be late. If you miss an issue due to catastrophe, share that story with your readers. Act like it makes a difference, and it will. 

I highly recommend Ann Handley's newsletter to all communications professional. She's inspiring. Learn more.  

Total Annarchy: Email is the OG,... 2018-Sep-23 by Ann Handley

I talk a lot about the need to put your reader first. To serve an audience. To make something that you love in service to those who will miss you if you don't show up on time.

This isn’t an original idea: Lorne Michaels used to say that Saturday Night Live didn’t go on because the cast was ready; it went on because it was 11:30 on a Saturday night.

You show up because you promised others you would.... 

Years ago, I heard Darren Rowse of Problogger speak in Denver. He told the audience, “Your next big thing might be the little thing that’s staring you right in the face right now.”

Of course, for that little thing to grow into a big thing, you’ve got to make a promise to yourself to do it.

So many people I’ve met this fall have shared their big goals with me. They want to write a book. Or they want to be invited to speak more. Or they want to make an impact in one important way or another. But I don’t know where to start. Or how do I fit it in?

The truth is that it’s hard. But it’s not magic.

You have to show up. And then you have to start. Then keep going. One foot. Next foot.

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Better customer relationships require contextual analysis

Every time a supplier misinterprets our customer behavior, we get a little more frustrated. Most CRM systems don't even have the ability to track the context of a purchase. So the salespeople and customer service representatives have to take the initiative, find out what's going on, and record it. The companies that figure out how to train their people and update their systems to track this, they will be the loyalty winners. 

Edge Perspectives: Navigating From the Industrial Age to the Contextual Age, 2018-Aug-15 by John Hagel

The forces shaping the Big Shift are progressively undermining standardization and efficiency (as conventionally defined) as drivers of value creation. As consumers, we’re gaining more and more power and we’re less and less willing to settle for standardized products and services – we want offerings that are tailored to our unique and evolving needs. On the supply side, digital technology is making it easier and far more affordable to produce highly personalized products and services. That’s leading to more and more fragmentation in product and services businesses, something that I’ve explored here.

As these forces play out, context is becoming more and more central to value creation. If we don’t pay attention to the circumstances surrounding a person or an event, we’re unlikely to understand how to create the greatest personalized value. Those who are most insightful and adept at understanding context, will be those who create the most value, both for customers and for themselves.

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Simplicity drives loyalty for Google, Netflix, Amazon, Chipotle...

Recently recognized for their ability to delight customers with simplicity of use, Google, Netflix, IStock_000022889089XSmallAmazon and Chipotle made it to the top five of the "simple brands" identified by customer experience strategy consultant Siegel+Gage. 

 

Among the up-and-coming "simple brands," Dollar Shave Club says "Dollar Shave Club couldn't be simpler. Select one of our great blades, pay only for the cost of your blades, and we send ’em right to your door every month." At Seamless, they say "we make ordering food for delivery and takeout seamless!"

Harvard Business Review: Why Simple Brands Win, 2015-Nov-9 by Margaret Molloy

Customer experience is the new battleground for loyalty. Years of findings in the Global Brand Simplicity Index demonstrate that when brands build cultures of simplicity, all parties benefit. Employees have the clarity to innovate and deliver superior customer service, consumers have better brand experiences, and ultimately reward brands with their loyalty.

Growth is welcome and inevitable for any successful company—but complexity is an unavoidable side-effect of growth. Companies must be on the lookout to simplify processes and create fresh and clear brand experiences. A commitment to simplicity starts at the top. Senior management must be committed to implementing practices that encourage simplicity. Brand purpose—what a brand does and why it does it—should be articulated in a way that is easy for employees to internalize, and customers must view a brand and its services in a manner consistent with this purpose. While it is necessary to look inward to refine and simplify, ultimately the customer’s perspective matters most.