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How to retain customers in retail: 4 strategies to improve retention

How to retain customers in retail: 4 strategies to improve retention

Learning how to retain customers in retail is critical as about 65% of a company’s business comes from existing customers. Driving revenue requires a focus on getting customers through the doors, with an emphasis on encouraging them to come back again and again. Many consumers have specific retailers that they frequent for their shopping needs, and they often choose them because of the customer experience they provide. These retailers establish strong connections with consumers that keep them returning to the store time and time again.

A business in the U.S. loses 15% of its customer base per year. Often, these losses come not because the retailer did anything wrong, but because one of their competitors did something better. Leveraging tools like personalization, incentives, activism, and exclusivity in marketing can help to improve retention rates by creating deeper connections with consumers.

The Most Common Methods for How to Retain Customers in Retail

Customer retention in retail requires a consistent, ongoing effort. Customers may begin to explore other options if they believe a retailer has become indifferent to them, so it’s crucial for retailers to avoid this. The most common ways brands retain their customers include:

Personalization:

Data and technology provide brands with several opportunities to truly personalize the marketing message. Retailers and brands can make recommendations based on a consumer’s purchase history, habits, and personal details. This can drive interest in products and create a deeper connection.

Incentives:

Incentives like rewards points and discounts make consumers feel appreciated for their patronage. These incentives are low-cost to deliver and can create moments that inspire affinity for a retailer or brand.

Exclusivity:

Consumers who feel like they’re receiving an exclusive or special benefit from a retailer creates a better connection as these consumers feel they’re getting a VIP experience. Meanwhile, consumers who don’t receive the exclusive benefit are driven to seek that status due to a fear of missing out.

Corporate responsibility:

Socially conscious marketing helps retailers give their brand personality. When making a commitment to offer aid to those in need, protect the environment, or focus on sustainability, brands are also connecting with consumers who share these values. This value alignment can easily drive repeat business for a brand while positively impacting society.

These four methods offer retailers a path to creating ongoing relationships with the consumers they serve. As competition both online and in brick-and-mortar locations increases, these tactics will be necessary to maintain market share and convert loyalty to sales.  

1. Use Data to Personalize the Consumer Experience

Data is a great way to connect with new customers, but it’s even more powerful when leveraged to drive repeat sales. This is because the brand already has access to the consumer's preferences, shopping habits, and purchase history—all of which can be used to target consumers.

One common tactic in reaching out to consumers based on their prior retail or brand interactions is remarketing. In remarketing, brands and retailers target consumers who have visited their website before but may not have made a purchase. The website collects data from the consumer which can be used to create a unique identifier for that individual. Then, brands and retailers can create ads that specifically focus on the items consumers purchased or viewed in the past. The results are extremely powerful. In fact, one European auto parts retailer reported a 161% rise in conversion rates by implementing a remarketing campaign, while also reducing their overall programmatic costs.

The high conversion is a result of leveraging warm leads and repeat customers. Marketers know it’s much easier to convert a consumer to sale if they are already familiar with the product or retailer. By using this strategy along with existing consumer data, marketers can personalize the message and keep customers coming back.

2. Leverage Exclusivity With Membership-Based Incentives

Exclusivity triggers a psychological need in consumers and is an effective marketing technique. Consumers want to believe they’re within an inner circle, or receiving benefits that others aren’t. In some cases, consumers are even willing to pay a premium to enjoy this exclusivity.

Amazon Prime is an excellent example of exclusivity in marketing. By paying an estimated $119 per year, consumers enjoy the benefits of free shipping, access to digital content, exclusive sales and other incentives. More than 62% of Amazon customers are members of Amazon Prime. In addition, Prime members spend nearly double what their non-Prime counterparts spend, averaging about $1,300 per year. This program is probably one of the most popular retailer-specific rewards programs in the world. Amazon managed this by:

Providing real value:

Amazon Prime members have access to several exclusive benefits. The free shipping option alone will easily pay for itself after only a few purchases. In addition, these individuals gain access to music, movies, and television shows that they’d have to pay for otherwise, which makes this an appealing platform even for those who don’t do a lot of online shopping.

Offering flexible membership:

While the $119 price tag may be a little steep for some consumers, they offer members the option to pay on a monthly basis, which makes the cost less intimidating. They also offer some specific programs that individuals can take part in, like Amazon Student, which provides additional discounts.

Holding annual events:

One annual event that provides Prime with its biggest boost in participation is Prime Day. Every year, the retailer holds a single day of deals targeted at Prime customers which are announced on social media. In 2018, the retailer reported over 100 million products sold following the 36-hour event.

Retailers and brands that wish to inspire loyalty through exclusivity should look to Amazon’s Prime program as an example of how a retailer rewards program should work. By offering added value to the shopping experience, Amazon inspires consumers to return to their online store and enjoy the exclusive benefits their membership provides. 

3. Use Third-Party Mobile Rewards to Reach New Customers

Sometimes, retailers and brands don’t have their own in-house loyalty programs. Either they don’t have the resources to create or manage one, or they’re unable to see how a loyalty program would significantly benefit their business. In that case, retailers and brands turn to third-party options like Shopkick to incentivize consumers and reward them for shopping.

When eBay wanted to expand its presence and drive sales specifically in the mobile commerce space, the online retailer decided to contact Shopkick. Through the Shopkick app, eBay rewarded consumers for viewing its mobile site and interacting with products. Additionally, Shopkick showcased some of eBay’s top products to drive awareness, and provided kicks (rewards points) to consumers for taking actions like installing eBay’s mobile app or purchasing products. Overall, eBay saw a 6% app install rate and a 62% increase in new audience visits.

Working with a third-party app like Shopkick allows brands and retailers to reach new consumers, as these apps come with built-in databases of highly engaged users. The incentives encourage consumers to interact with products and establish positive brand and retailer affinity. In addition, these mobile rewards provide a better return than standard discounts and sales, as they do not require the retailer to immediately take a loss on the product, or dilute margins. Instead, these incentives are fueled by rewards points that consumers can later redeem for gift cards.  

4. Align With Customers Through a Cause

Retailers can reach their target markets by aligning themselves with causes that are important to the consumers they serve. Sharing a passion for protecting the environment, improving society, or helping those in need can enhance a brands reputation and build a sense of humanity. Whole Foods is one retailer that has used its activism to align with its target market.

Whole Foods’ Environmental Stewardship initiative focuses on leading the way when it comes to green initiatives. To support this, they’ve taken steps to eliminate food waste, implemented solar energy programs at 60 of their stores, rolled out a fleet of electric delivery vehicles, and developed green building standards for locations. All of these efforts solidify Whole Foods as a leader in “going green,” and for this reason, consumers who consider this a priority choose to shop with them. Whole Foods’ cause-based marketing works because it:

Provides real results:

When sharing details regarding an activism program, it’s important to show real results and statistics that indicate the company is making progress. When sharing its results, Whole Foods specifically highlights the efforts they’ve taken to improve the environment and reach their sustainability goals. This underlines that the campaign isn’t just a marketing initiative; it’s about making a real difference in ways that matter.

Gets consumers involved:

Individuals who follow brands or retailers because of their activism are always looking for new ways to contribute. By providing initiatives that help people get involved on a personal level, retailers can spread the message and widen their efforts. Whole Foods offers tips and tricks for individuals who want to reduce their carbon footprint and get involved in sustainability efforts in realistic, everyday ways. This helps the company align the individual consumer to their cause.

Offers support at a community level:

Focusing on local communities is important in sharing activism efforts, as individuals want to see how these programs impact them directly. Whole Foods works with local organic producers and farms to further their sustainability efforts and reduce their carbon footprint. This is beneficial for the communities they serve which helps to drive interest in their stores.

Activism-based marketing must come from a genuine place to create a connection with consumers. When the message is real, actionable, and effective, consumers are far more likely to align themselves with a brand or retailer and make future purchases with them.

Options for retaining customers in retail should center on connecting with them through added value. Apps and programs that offer incentives can help to build customer affinity and expand the brand or retailer’s reach to new consumers. Meanwhile, cause-based marketing aligns those consumers with companies that support the things that are important to them. The ability to retain customers is crucial in retail which is why brands should consider proven options in building mutually beneficial relationships.  

Shopkick aids our partners when they’re looking at options for how to retain customers in retail by providing a unique and engaging shopping app. To see how our program has helped other brands and retailers, review some of our success stories