If you’re in retail, you already know the market is highly competitive and constantly changing.
There are a number of trends driving massive change in retail: online shopping is on the rise, customer reviews sway purchasing decisions, and many large, traditional retail brands are struggling to survive.
This changing market has led some brands to make huge changes like slashing prices, changing inventory, and even shuttering stores. However, some tactics work far better than others. As your company struggles to stand out and remain competitive, there’s one thing that can make a huge difference: customer loyalty through personalization.
Every retailer works hard to attract loyal customers, but some tactics are more effective than others. By offering personalized and immediate offers to your customers, you can build loyalty more quickly and improve your results. Learn how personalized loyalty offers can be your secret retail weapon.
The Failure of Price Wars
Far too many retailers today rely on discounts alone to drive loyalty. Today, 68% of retailers offer more frequent promotions than they have in the past, according to a 2017 study from RSR Research. However, these are often mass promotions that are offered to every customer, regardless of their past purchases or interests. And unfortunately, shoppers who are looking for the best price alone aren’t always the most loyal. They’re more likely to switch from one retailer to another, looking for the best possible deal.
In addition, when everyone is cutting prices, it ends up becoming a race to the bottom. Rather than offering customers the best possible experience and product, it becomes all about price. These types of mass discounts don’t work in terms of building long-term customer loyalty and can start to hurt the bottom line. Retailers are actually discounting themselves out of business, and successful retailers are moving away from mass discounts as a strategy.
Loyalty Programs Drive Results
Rather than offering huge discounts to all, offer your best deals to your most loyal repeat customers and you’ll see better results. That’s where loyalty programs come in. Done right, a loyalty card or other loyalty program can drive repeat purchases and incentivize them to come to your store or use your site. Targeted offers and promotions keep your customers coming back for more, rather than straying to a competitor -- even one online.
A fantastic example of a loyalty program that works is ULTA Beauty. According to a report from Deutsche Bank Securities Inc., more than 90% of sales are done through ULTA’s loyalty program. For their customers, the ability to earn discounts and free samples drives shoppers to stores and the website alike. Due in part to this program, ULTA has grown their online business by 50%+ annually over the last two years to now account for 7% of sales. This is despite the fact that almost all of the products on ULTA’s site are available through other web retailers at similar or even lower prices. The loyalty program has created a powerful experience for ULTA’s customers, driving repeat purchases and intense customer loyalty.
The Power of Personalization
While loyalty programs can help your brand stand out, it’s also important to personalize the offers you make. Every customer wants to feel as though they are unique, respected, and valued. That’s why personalization is the key to an effective loyalty program, such as ULTA’s. Again, mass discounts don’t work as well in converting customers.
Rather than offering every single person in your loyalty program the same discount each week, you can analyze their past purchases and offer up customized discounts based on their personal interests. This has become an extremely effective tactic for retailers, results in higher sales and more effective loyalty programs. Because of this, 64% of retailers plan to offer personalized pricing to shoppers in the next 3 years.
Don’t get left behind. Now is the time to turn one-time customers into loyal, repeat customers by combining personalization with a loyalty program.
Contact us today to find out how you can drive personalization across your stores.