Our Changing Retail Landscape – Actions and Options for Creating Brand Loyalty

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Recently, we’ve been living through a confluence of events that have forever altered the ecommerce landscape. From evolving shopping behaviors spurred by the onset of the pandemic to supply chain issues and now soaring inflation and global strife, there’s been a great deal of change.

Retailers feel each of these events in their bottom line, leaving them with questions about how to react and what to do to continue to grow business and gain shoppers. It’s important to consider what can be done to ensure business growth without negatively impacting the customer experience.

There was a time not so long ago when a discount event was a big deal. Retailers would promote it (Black Friday, Presidents’ Day sales) for a period of time to get shoppers’ attention, and typically it would result in a period of healthy sales. That’s really no longer the case.

Ecommerce retailers must do more than simply discount products and services. In the midst of all of the world’s circumstances and tumult, there is a real opportunity in offering alternate incentives to build up a brand and attract loyal, repeat customers that onboard new shoppers based on their positive experience. This article takes a look at how the shopping landscape has changed, making the sales periods less relevant, and the alternative incentives retailers should offer.

Today’s shopping landscape

There are a few causes for these specific sales periods to be less important today.

The first is spending uncertainty. Especially these past two years because we have lived through a worldwide pandemic, a sometimes paralyzed global supply chain, soaring inflation and armed conflicts that make markets and shoppers jittery. The knee jerk response for ecommerce brands is to continually create new promotions and sales to drive engagement and acquire customers. This does keep customers interested and buying, but it also negates the need for the more traditional sales calendar.

The second is that today’s shoppers are savvy. They know what they want and where they want to shop. There is a reduced emphasis on decisions based on product price alone. Many shoppers purchase from brands they believe in as their first consideration.

The third point builds on the second. Shoppers know more and want more from their shopping experience. They want personalized customer service and to know their presence and loyalty as a customer is valued. They see themselves as a reflection of the brands with which they spend. According to The Discounting Playbook, published by LoyaltyLion, 68% of customers said they would be loyal to a brand if it shared the same values as them. 68% of shoppers is a significant number and points to the fact that just offering sales is not enough to attract and retain customers. This begs the question – how do ecommerce retailers offer incentives to secure a profitable year and attract repeat, emotionally-connected customers?

Make sure customers always feel good interacting with your brand

Shopping is often described as a pleasurable experience. People sometimes need to shop for a gift or a particular garment, but often they simply shop for fun or to buy something they’ve long admired. Combine that feeling with the emotional high that comes with saving money and you get happy customers. Research has documented that people who received a discount actually had a notable rise in their levels of the “feel-good” hormone, oxytocin.

But it is not as simple as sales, oxytocin rushes, bottom line boosts. It may seem counterintuitive but ecommerce retailers that offer infrequent discounts are generally stronger than those caught up in a sale-driven approach. Plus, moving away from a discount-heavy strategy can result in a sales decline while customers who are accustomed to constant discounts look for them elsewhere.

How can this be overcome? The data shows that consumers continue to be attracted to unconditional discounts – 76% said that discounts make them feel positively towards brands. At the same time these consumers also feel good about bands that offer alternative incentives. 81% said they felt positive towards brands that offer free or discounted shipping and also felt positive about brands that offer early access to sales (72%), or new products (70%). Plus, these alternatives don’t damage a brand’s bottom line.

Ecommerce shoppers also showed positive sentiments (73%) towards brands that give loyalty points, and the opportunity to contribute to a philanthropy or cause aligned with their personal values. Alternative incentives prove just as likely to drive purchases as a key sales period like Black Friday and encourage customers to make long-term commitments to a brand, either by starting a subscription or joining a loyalty program.

Sales are important, but to attract and retain loyal customers, ecommerce retailers must have a multi-layered strategy to keep those shoppers connected, emotionally invested and extolling the virtues of a brand, bringing in new customers.

The LoyaltyLion research shows how alternative incentives bring shoppers in and converts them just as successfully as discounts. Here are six strategies for attracting and retaining customers:

Loyalty points

In LoyaltyLion’s Discounting playbook, 73% of consumers said that loyalty points redeemable for rewards would encourage them to buy over sales peaks. Giving customers points for shopping and engaging gives them the same surge of oxytocin discounts do.

As shoppers see their point balance grow, they’ll return to redeem rewards. A key finding is that shoppers who cash in their rewards have a 165% higher annual spend than customers who don’t. Loyalty is where it’s at.

Welcome offers and giveaways

Inventive welcome offers for new shoppers create brand loyalty too. For instance, in return for creating an account, provide a new customer with a significant discount or point value toward another purchase. Setting the point value for account creation at around 50% of the total amount needed toward a purchase will ensure that new customers will return soon to redeem it.

Exclusive and early access

Exclusivity feels nice. Customers feel special and wanted when given exclusive offers. 79% of online shoppers say they are loyal to brands if they can unlock exclusive benefits.

Try balancing discounts with experiences for existing customers. The most valuable customers can be offered early access to sales, new products, or limited-edition items. These customers will feel like VIPs and will tell others about their experience.

Free shipping

Free shipping allows a brand to provide the same financial reward as a sale without devaluing products with discounts. One caveat, nearly half of consumers have had at least one bad experience related to delivery and tracking over the last year. Free shipping can allow for positive sentiment building, especially if there were to be a delay or lost package.

Charitable contributions

Today shoppers are looking for brands that align with their values. Connecting with shoppers on an emotional level is more important than ever. Brands that show they are aligned with customers by donating to philanthropies or causes that are important to them gains loyalty and repeat customers. Brands that display or discuss the impact made through these initiatives often attract new customers.

VIP community

Provide the most loyal customers with membership to a VIP community that opens the door to all sales alternatives and discounts. Once they are a VIP, give them points for engaging with key pieces of content, helping them to maintain an ongoing relationship with the brand.

Additionally, allow VIPs to use their experiences to attract new customers with loyalty points for making referrals, or writing reviews that you can use to build trust.

In summary

Consumers today know what they want to buy and where. While discounts are still an important way to drive engagement and attract new customers, they don’t always bring in loyal, long term customers. That’s why a strategy that includes alternatives to discounts to encourage positive sentiments and repeat purchases is a critical undertaking for ecommerce retailers. Incentives that build emotional connections have to be part of the retail landscape to keep highly-engaged, highly-valuable shoppers coming back again and again.

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About the research

This research was conducted by Censuswide, with 4,023 consumers in the US and UK who have browsed or shopped with an independent, online retailer in the past twelve months aged 16+ between 03/08/2021 – 09/08/2021. Censuswide abides by and employs members of the Market Research Society which are based on the ESOMAR principles.

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