A loyal customer is a profitable customer. Not only is retaining customers less expensive than acquiring new customers, the longer (and more frequently) a person shops a brand, the more they spend each time, and the more likely they are to return again.
Moreover, improving customer retention can have a significant impact1 on a company’s bottom line, including:
- Lower costs: a 2% increase in customer retention can lower costs by 10%
- Increased profitability: lowering churn by 5% can increase profitability by 25 – 125%
Increasingly, an effective omnichannel strategy is key to meeting customer expectations and driving customer loyalty. But the average number of consumer touchpoints before purchase is increasing – more than tripling over the last several years. Today’s consumer interacts with a brand across six different touchpoints before purchase, increasing the complexity of providing an omnichannel experience for customers. Additional touchpoints mean that more data on every consumer is coming in from different channels, in different formats, and this data must be aligned and integrated for real-time updates across all channels.
An effective omnichannel can drive customer loyalty, helping a company to reach retention goals for its most profitable, valued customers – and impacting results including lower costs, increased sales, revenues, and customer life value (CLV), as well as improving overall profitability.
Omnichannel retail software can help support an effective omnichannel strategy by providing a streamlined solution that connects sales to inventory, online to offline, and ties it all together by integrating with customer service. As a result, customers have a seamless, superior experience with your brand, regardless of the channel (or number of channels) used.
How Does An Omnichannel Strategy Impact Customer Loyalty?
Omnichannel strategies drive customer loyalty by supporting personalization, enhancing customer loyalty programs, and gathering data insights across all channels for comprehensive customer analytics.
Personalized Experiences
Providing every customer with a personalized, relevant experience is one of the primary drivers of customer loyalty. A recent study2 found that 56% of customers are loyal to brands that ‘get them’, and 89% are loyal to brands that share their values.
However, effective personalization relies on a comprehensive customer profile – one that builds on a customer’s interactions across different devices and channels, taking different brand interactions into account. A personalized offer for cruise-ship apparel may seem to fit the customer based on web activity – until an in-store purchase of skiing equipment is added to the customer profile.
Omnichannel integrations – pulling together information from every channel in real-time, and applying them to a comprehensive customer profile – are critical to creating relevant, unique, personalized experiences for each customer. This lets customers know that they are valued, and their needs are understood, building trust between consumer and brand, and driving customer loyalty to improve business results.
Loyalty Programs
Retailer adoption of loyalty programs is growing, with the total loyalty program market expected to reach $201 billion by 2022.3 This growth has been driven by the increase in mobile shopping and the demand among retailers to provide a customizable rewards program to drive customer engagement and retention.
69% of consumers of all ages reported that a retailer’s loyalty program influences buying decisions and the effect is more pronounced among millennials and GenZ. 63% of younger shoppers wouldn’t make a purchase from a retailer that does not offer loyalty rewards.4
Omnichannel loyalty programs (OLPs) take the most powerful benefits of a customer loyalty program and multiply those benefits across all channels. A retailer can build a closer relationship with a customer by continually reinforcing brand across different channels; and focusing on providing the optimal customer experience at every touchpoint. Omnichannel rewards, then, incorporates customer activity across all channels and every interaction into a complete customer profile, accelerating and tailoring rewards for those customers with a mix of brand experiences.
Read the blog: How to Build an Effective Loyalty Program in Retail
Data Analytics
Customer analytics are fundamental to retention – one study5 found that implementing customer analytics improved retention by 58%. This is because gathering data about the customer, and using it to build a comprehensive customer profile helps to improve branding, messaging, targeting, marketing, conquesting and more.
Omnichannel strategies – and the tools to support them – are critical to customer analytics. Different channels provide data in different ways and include data in different formats. For real-time updating and true omnichannel experiences, data gathered from all channels must be integrated and standardized, and then run through an analytics program to determine the most effective approach for each customer, at each interaction.
This drives loyalty because the more that a customer feels a brand understands them and responds to their needs, the more trust they will feel – and the less likely they are to switch to an unknown provider.
Customer loyalty may very well be the key competitive differentiator of the retail marketplace. After all, it costs five times as much6 to acquire a new customer as it does to retain an existing customer; and repeat customers are 50% more likely to try a new product, with 31% spending more money on each transaction.
Omnichannel retail management can help a company drive customer loyalty, by providing the framework to build unique, personalized, relevant customer experiences, support omnichannel loyalty programs, and structure customer data analytics for valuable, actionable insights. An effective omnichannel strategy builds trust between the brand and the consumer, strengthening the relationship and reinforcing consistent branding and messaging.
Sources
¹https://www.fundera.com/resources/brand-loyalty-statistics
²https://www.fundera.com/resources/brand-loyalty-statistics
³https://www.prnewswire.com/news-releases/loyalty-programs-market-to-reach-201-billion-by-2022-according-to-beroe-inc-300794907.html
4https://www.annexcloud.com/blog/10-statistics-prove-effectiveness-loyalty-programs/
5 https://www.statista.com/statistics/880612/usa-customer-analytics-performance-enhancements/
6 https://www.invespcro.com/blog/customer-acquisition-retention/