PERKS? DON’T ANNOY ME.
Image: Lluís Martínez-Ribes
If companies make it easier for the customer to find a solution, not only do they reinforce customer loyalty, they also improve the perception of the service, reduce their costs and lose fewer customers.
“Shopping experience” gets over 50 million hits on Google. So it is clearly not a new concept.
In the past, I have explained how shoppers’ behaviour can be changed by managing the specific meaning shopping experience may provide. It is possible to stimulate the customers’ purchases, acting on their perceptions, for example by reducing their price sensitivity.
Thus, right from the start, the emphasis many managers place on increasing the average sales per ticket might seem reasonable. They can do this either by using “aggressive” media (for example, multiplying the number of “stoppers”) or by playing Shakira’s Waka Waka at full blast.
However, one of the main drivers of a retail firm is customer loyalty. These companies do not make their profit from the gross margin of a transaction, however large that may be. Instead, their economic sustainability is a result of customer loyalty. It makes more sense for a company to make its main priority to ensure its customers come back.
In hard times, it is not too important if customers buy less, as long as they remain faithful to the same shop.
Thus, it is a highly strategic move to manage the shopping experience, in order to ensure customers loyalty. The main way companies achieve this is by increasing the pleasant aspects of a customer’s shopping experience.
This is done for instance through videos, shop windows with animated elements, unique scents, backlit signs with LEDs, touchscreens, etc. There is no end to the number of resources used to delight customers.
Reducing annoyance creates loyalty
A study by Dixon, Freeman and Toman (1) reaches the conclusion that simply satisfying its customers’ needs or exceeding their customer-service expectations does not make them more loyal.
Nevertheless, if companies make it easier for the customer to find a solution (2), not only do they reinforce customer loyalty, they also improve the perception of the service, reduce their costs and lose fewer customers.
If they can shop easily, without having to make a great deal of effort, many customers do not notice the absence of incentives on offer in the shop.
This route, reducing annoyance and effort, is very beneficial for both customers and companies.
Despite that, often the efforts customers have to exert are not detected, because they are considered to be “normal”: queues, too much choice, unintelligible information, products that cannot be found, inappropriate opening times, sales assistants who cannot answer customers’ questions, etc.
Once all the problems that customers come up against have been identified, the company may look for ways of solving them.
Moreover, it would be a good idea to use a type of indicators that could provide information on the company’s capacity to create loyalty.
For example, the percentage of time spent in the shop that customers feel annoyed or have to exert a great deal of effort.
Or the same percentage including pre-shop and post-shop time.
This customer-centric approach may inspire the design of innovative retail business models.
(1) Dixon, M.; Freeman, K.; Toman, N. (2010): Stop trying to delight your customers, Harvard Business Review, July-August 2010, p. 116-122.
(2) See more in: www.martinez-ribes.com in the article: “Para vender más desde mañana mismo. Lo que realmente compra el cliente”.
Source: Distribución Actualidad, the spanish retail magazine
(nº 425, may 2011)