Interior of NEST New York's flagship store.
As a way to boost loyalty, NEST New York has begun offering premium levels of service to its best customers. — NEST New York

Why it matters:

  • Retailers and brands need to think beyond discounts to attract and retain customers.
  • When loyal employees can share genuine enthusiasm for a brand, that rubs off on its customers.
  • Conducting surveys of individual customers can help facilitate personalized communications.

Retailers need to think about customer loyalty holistically and incorporate it throughout their operations, according to retailers in a recent CommerceNext webinar attended by CO—.

“Loyalty is not a program or a department; it’s a way to be,” said Matt Powell, chief technology officer at florist network FTD, which is in the process of rethinking its approach to customer loyalty. “Loyalty has to be built layer by layer and brick by brick into everything you do.”

In many ways, retailers have become complacent about driving customer loyalty, relying on the easy access to customers that the internet provides and using data analytics that result in treating customers like statistics rather than as individual people, he said.

As retailers grow, they should instead seek to retain the perspective of being a small, local operator that has personal relationships with its customers, Powell said.

Don’t be afraid to ask your best customers what they want. It’s not always a discount.

Andrea Moore, senior vice president of digital, e-commerce and consumer insights, NEST New York

Your workers should also be your fans: ‘If an employee is not loyal, customers are not going to feel that either’

Ensuring that employees are loyal and enthusiastic supporters of the brand is an important first step, Powell and the other panelists said. This includes employees who handle customer service issues, where customer retention can be critical.

“If an employee is not loyal to an organization, and if they do not feel connected … when they connect with customers, the customers are not going to feel that either,” Powell said.

Sunil Kaki, executive vice president of marketing at Beachbody, agreed that generating loyalty is a mindset that needs to permeate the organization.

Beachbody, which offers on-demand virtual fitness training, is in the process of shifting its resources to focus more attention on customer retention and loyalty, as opposed to customer acquisition, he said. That includes more efforts around social media and creating community, and adding value for customers in an effort to retain them, rather than using discounts.

“You can incentivize the next sale, but then you are always in the business of buying the next sale,” Kaki said.

He singled out Amazon’s Prime service as an example of a brand that creates loyalty in multiple ways by offering a variety of services, such as streaming media, that go beyond free delivery.

[Read: Why Hot Startups Like Pura Vida and Cure Hydration Are Getting Big Results From Micro-Influencers]

‘Don’t be afraid to ask your best customers what they want. It’s not always a discount’

Andrea Moore, senior vice president of digital, e-commerce and consumer insights for NEST New York, said that although the home fragrance company does not have a formal loyalty program, it’s recently begun singling out its highest-value customers for special treatment.

For example, when high-value shoppers contact customer service, they get moved to the top of the queue. NEST might also offer its best customers exclusive access to new products.

“Don’t be afraid to ask your best customers what they want,” she said. “It’s not always a discount.”

Moore cited pet products brand Chewy as a company that excels at providing a high level of customer service that drives loyalty, because of the attention the company devotes to its customers’ pets — sending birthday greetings, for example, and condolences when a pet dies.

[Read more: Chewy’s CEO Explains How the Pet Products Disruptor Has Set the Stage for Ongoing Growth]

 Floral arrangement by FTD.
Florist network FTD is in the process of rethinking its approach to customer loyalty, with the mantra that loyalty is not a program, but rather an entire way to be. — FTD

Leveraging ‘zero-party data’ to personalize customer messaging

Jordan Gutman, general manager of the loyalty and referrals program at e-commerce solutions provider Yotpo, said consumers are willing to share the type of personal information that enables this level of service as long as they perceive they are getting some value from doing so in return.

A Yotpo survey earlier this year found that 83% of consumers are more willing to share data with brands if they are transparent about how it will be used, and 82% are willing to give personal data to obtain personalized recommendations, discounts and other benefits.

“It is about exchanging value for value,” Gutman said.

He noted that retailers can often enrich their customer databases with what’s sometimes called zero-party data, which customers contribute voluntarily in response to surveys, for example.

Casual menswear retailer Mizzen+Main conducts two such surveys among its customers, Gutman said. One is a style survey that asks customers about what types of clothing they prefer, and the other is a lifestyle survey that asks them about their hobbies and interests. Both yield data that can help the company personalize its communications with customers.

These surveys also help identify consumers who might be of high long-term value, in addition to minimizing communications that might be off-message for particular customers.

“You only have so many shots at messaging, so you want to know [what your best shot is],” Gutman said.

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Published November 15, 2021