Creating customer value isn’t just about gaining more revenue from customers, it’s also about building relationships with modern customers to keep them returning to your locations. That’s not to say customer value doesn’t have its impact on revenue: Customers who think a retailer is providing excellent service spend 17% more than those who don’t. Part of that excellent service is making customers feel valued, and you can do that by incentivizing them.
Often, we see the word “incentivize” and immediately think “discount.” Jumping to an immediate discount to incentivize customers isn’t the way to make them feel valued. In fact, lowering your prices could potentially lower their value perception of your products. To truly create customer value, you need to focus on five key factors in incentivizing your customer: personalization, engagement, rewards, recognition, and convenience.
Strategy #1: Create Customer Value by Focusing on Pain Points
Pain points, in relation to retail, are the real or perceived problems that your customers are trying to solve when they visit your location. For retailers, this is obviously that they need products, and they need someplace to purchase them. These individuals could choose any retailer. Examining their pain points is how you’ll identify the unique service your location offers, which you can then use to make the customer feel you’re catering directly to them. Most pain points in retail can be broken down into four basics:
- Convenience: Customers may choose a specific location because it’s convenient for them, as it’s close to their home or workplace, or because it offers quick service.
- Cost: Price conscious consumers will generally seek out lower cost, discount options.
- Selection: A location may be chosen because a customer has specific needs. For example, they may choose to shop at an organic market due to dietary restrictions.
- Service: For some consumers, in-store services like bakeries, butchers, and deli counters are things they seek when they’re looking for a location to shop.
The best way to determine what pain points drive customers to your location is to survey them. Simply ask them to rank those categories in order of importance. Then, you can focus your efforts on catering to the most important. If access is the reason, seek out ways to speed up checkout. If service is what they want, offer more in-store amenities like cooking demonstrations or seasonal specials. This is a way to make customers feel like you’re catering to their very specific needs in-store. Another way to do this is through community engagement.
Strategy #2: Create Customer Value by Engaging With the Community
Customers don’t just want a store that makes them feel valued, they want one that values their community. Sponsoring local schools, sports teams, and other points of local pride—as well as sourcing local goods—serve to create a community connection.
Locally grown items are in high demand right now. By 2019, locally grown foods are expected to generate about $20.2 billion in sales, up from $11 billion in 2014. A retailer that wants to engage with the community can also take advantage of this movement by locally sourcing some items. This offers retailers a connection to the community that will make customers feel valued.
Strategies #3 & 4: Rewards and Recognition as a Means of Creating Customer Value
Rewards and recognition go hand-in-hand, as they’re ways to incentivize purchases while also showing appreciation for your most loyal customers. Rewarding customers is simple through a shopping rewards platform like Shopkick, which allows you to offer an incentive to shop while also limiting the cost to you. Here are a few ways that a shopping app program benefits both the customer and the retailer:
- Offers collectible points instead of discounts: With shopping app rewards, consumers receive points that they can use for future purchases. This offers the same incentive as a discount, without the same cost to the retailer because consumer perception of the value of points is often higher than the dollar amount.
- Promotes savings on future merchandise and return visits: It has been shown that about 47% of the time consumers prefer being able to save points toward future merchandise purchases over receiving an immediate discount. For the retailer, this point-saving encourages a return visit—and more spending—from the customer in the future.
- Ease of use trumps coupon clipping: For the consumer, a rewards program is much easier to use, especially when it’s tied directly to their smartphone. Instead of seeking out deals or clipping coupons, they’re able to collect rewards points simply by making purchases. For retailers, these programs are easier to keep track of than coupons and discounts.
With rewards programs, the benefits for retailers are twofold: You reward customers for visiting your location while enticing them to spend more, and you create loyalty and inspire return visits as customers feel recognized and respected by their retailer.
Strategy #5: Creating Convenience Through Tech
Consumers these days are driven by a need for convenience. They want to be able to find items easily and finish their shopping quickly. Nearly three-quarters of consumers report that technology has made it easy to take their business elsewhere. When consumers are looking for a retailer, technology can be a way to pull market share from your competitors. All you have to do is offer the technology that makes it clear you’re the more convenient choice. Consider app-based options like:
- Better budget planning – Consumers can get familiar with products and prices before they leave the house. This allows them to set a budget for their shopping that they can stick to, as they can get a good idea of how much they’ll need to spend before they get to the store.
- Product comparisons: Once consumers find the products they need during the preshopping phase, they can compare the available options. Consumers are savvy shoppers these days and are easily able to research items online. Offering the ability to compare products via mobile can help build confidence in your location.
- Alerts by geolocation: Consumers always appreciate the opportunity to earn rewards and in-store events, and app-based alerts can notify shoppers of these events while they’re in the seemingly endless shopping aisle.
Providing the technology that makes shopping easier for your consumers will make them feel valued. It will also help to create the connection that keeps consumers returning to your location, even when there are virtually limitless places they could take their business.
Creating customer value helps retailers build long, lucrative relationships. Personalization and community engagement work to provide an emotional connection between you and the consumer. Rewards and recognition show that you appreciate your customer’s business. Finally, convenience makes shopping with you easier than shopping with your competitors. All of these strategies incentivize your customers by establishing a mutually beneficial relationship.
Image courtesy stokkete