MAKING SENSE OF RETAIL’S HYBRID APPROACH AND THE LOYALTY ECONOMY

It’s no secret that the economy is changing and, with it, so are questions around customers, loyalty, data, and privacy. These were all hot topics at the Brunch with Brands we hosted last week–though not as hot as the record-breaking weather in San Francisco (it’s a good thing the event was virtual).

Some of the questions raised: How does a brand create a mix of emotional loyalty and keep the brand top of mind while the economy may be entering a recession? Which brands inspire loyalty and earn trust from buyers? Which customer touchpoints are the most important, and what’s the role of data?

These questions and more were discussed by our terrific speakers including Tovi Heilbronn (Harry Rosen), Bernadette Nixon (Algolia), Joseph Ansanelli (Gladly), Marie Van Blaricum (AB InBev), and Kim Moore (Glynn Capital).

Thank you to all our guests, senior marketing leaders from the likes of: Nike, American Airlines, Versed, Starbucks, Liberty Mutual Insurance, Surf Air, Autodesk, and many others for attending and contributing to the lively discussion.

The main topic: the shift in retail and e-commerce to an increasingly hybrid approach and the loyalty economy. Among the observations and takeaways:

On loyalty

Customer loyalty is an outcome.

As consumers, we all have brands we’re loyal to, and whether it’s a stamp card, extra discount, or even access to new products before they’re released, we love the perks that come along with frequenting the same brands.

But for brands, customer loyalty is the single most important metric when correlating with profitability and brands need to know how they’re going to gain it and retain it. In fact, a 5% increase in loyalty can drive an increase in profits of between 25% and 95%, and our attendees said they see increases on the high end of that range. Additionally, the payback of dollars spent on loyalty is much higher than the payback for dollars spent on customer acquisition.

That’s easier said than done, though. Companies typically lose an estimated 40%-60% of their customers every year, and one-third of budgets are spent in the pursuit of re-acquiring customers.

The definition of loyalty is evolving, from a focus on high-volume buyers to a broader group that includes those who enjoy a fantastic experience but might not be high-frequency buyers.

What happens to loyalty in a looming downturn? Customers won't come back if brands don’t support them in tough times. The power of advocacy can be underrated; it is hard to quantify but critical to business. There’s a compounding impact when it comes to community.

The best brands seek both a programmatic and emotional connection to consumers. Data-driven behind the scenes, these companies forge an emotional connection with consumers. One person says a certain well-known motorcycle company tracks a metric known as MTU – for monthly tattooed users.

Not every company needs MTU, but every company needs data since it’s central to understanding and capturing customer loyalty.

On data?

Know thyself, know thy data.

There are many challenges to unlocking the power of data, but one key is data aggregation. A company that is able to collect, store, and draw insights from data will be successful in understanding their customer behavior.

If data aggregation is the key, then data ownership is the master key. It unlocks even more access to personalized experience and one attendee even encouraged others to wean themselves from third-party cookies. Data from trusted allies, second-party data, can also work well for some brands. However, if the brands’ average order values vary a great deal, it won’t always yield useful information.

Now where does that data come from?

?On customer touchpoints?

“The only channel is the customer.”

As in-person shopping experiences resume and e-commerce simultaneously makes rapid advancements, the question of whether shopping is occurring in store or online misses the target. Instead, aim to look at the customer, wherever and however they shop, to create a seamless experience.

One overlooked touchpoint is call centers, which can be a frontline function versus a back-office function. Glynn Capital portfolio company Gladly, where Joseph Ansanelli, is CEO, is powering a movement to re-train and rethink call centers from cost centers to places that can generate value. If a customer service team cannot get a customer into “a new opportunity moment,” that’s a real missed opportunity for companies.

In this wacky retail world where consumers can buy something through a social media ad, pop-up store, or anything and everything between, it’s up to brands to adopt a customer-centric mindset and understand the various touchpoints where consumers can engage and convert. Understanding this data is equally important for driving loyalty and eventually profitability.?

Further reading:

• New word to describe the intersection of physical and digital commerce: “phygital” “Let’s get phygital” - a downloadable report based on a survey by Adweek Branded.
• Customers shop via multiple channels, as noted on the Algolia blog:
• “According to a study involving almost 46,000 shoppers that was cited in the Harvard Business Review, 73% of shoppers at one company used more than one channel during their shopping experience. ‘Even more compelling,’ say the researchers, is that ‘with every additional channel they used, the shoppers spent more money in the store.’ “