As retailers try some of everything in an attempt to boost sales, they may be overlooking one valuable resource that’s right in front of them: repeat shoppers. As the 80/20 rule goes, 20 percent of shoppers account for 80 percent of revenue. Since these avid fans are already enthralled with the goods, it only stands to reason that they’d be the most likely to reach deeper into their wallets—but only if retailers can figure out how to cozy up to them.
A new report from retail management consulting firm BRP reveals how good retailers are at identifying these shoppers and personalizing their messages, merchandise and methods to them.
“Personalization is the best way for retailers to enhance the customer experience, especially for those customers who are already invested in your brand,” said Perry Kramer, senior vice president and practice lead at BRP. “Identifying and rewarding your most valuable customers with personalized offers and services is imperative to cultivating loyal, brand enthusiasts.”
It all starts with amassing information about each shopper—a practice that typically entails dangling a big enough carrot to convince them to entrust you with their details. For more than 50 percent of respondents (53 percent), that incentive is a special offer. Stores also solicit shoppers’ information with product incentives (34 percent), an easier returns and exchanges process (32 percent), the promise of personalized services (32 percent) and a credit toward a future purchase (29 percent).
How enticing the offer has to be generally varies by the age of the consumer. “Younger generations are much more willing to share their contact information; however, they also have much higher expectations for constant content refreshes and value associated with sharing their information,” the report noted.
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Once retailers gain access to shoppers’ information, their next challenge is identifying the best of the bunch—those that spend the most, visit the most, pay the most per item or chat the brand up the most among their friends and followers.
The report pointed out that “a happy customer isn’t just a customer who wants to purchase more, they are a customer that is loyal, valuable and – perhaps most importantly–a customer who will be an advocate for your brand.”
Retailers are starting to take note of this attribute, owing to the power of word of mouth, BRP found. “Brand advocacy is a valuable measurement tool for retailers as many consumers base their research and purchasing decisions on peer recommendations and testimonials,” it said.
Though only 8 percent of retailers said they’re able to reliably identify and reach advocates today, another 32 percent are working to improve in this area.
Still the top identifiers determining if a customer holds the most promise remain recency, frequency and dollars spent. Of those polled, 30 percent have a handle on the recency metric and another 35 percent are actively working to improve their ability to spot consumers who have shopped their stores and sites lately. For dollars spent and frequency, 39 percent of respondents are able to single these shoppers out and are working to get better at it, while 26 percent have the former handled and 29 percent are confident in their ability to spot the latter.
With their best shoppers accounted for, retailers must next figure out ways to deliver a personalized shopping experience.
More than two-thirds (69 percent) offer invitations to special events, 56 percent send personalized promotions and 50 percent opt for customized rewards. Only a quarter provide these fans with early access to new product. And no more than a few provide perks like personal shoppers, special shopping opportunities and microsites featuring special sales.
Granting personalized messages and incentives proves especially tricky in-store. Of those who responded to the survey, 47 percent say they have no way of alerting sales associates of a customer’s “most valuable” status before the checkout process begins. “This is a missed opportunity for retailers to nurture relationships with their most valuable customers and it also risks disappointing them,” BRP warned.
When used correctly, BRP said retailers are able to take customer data and combine it with other relevant information to offer a truly transformative experience.
“Customer context is the interrelated factors of customer insights and environmental conditions [that] make the shopping experience relevant,” BRP said. “It enables retailers to personalize the shopping experience based on customer preferences, purchase history, their closet, their most recent online browsing history, time of day, weather and their physical location–all based on real-time information and personalized to create a bond with these valuable customers.”