The Retail Imperative: Building Strong Customer Relationships

The Retail Imperative: Building Strong Customer Relationships Has Never Been More Important

Loyalty experts have been touting a customer-centric approach to retail for years now. The idea isn’t new, and it’s always been central to our approach at AIR MILES. But never has it been more important to know your customers and nurture those relationships than it is today, as our economy struggles to recover from the effects of – while continuing to face – a worldwide pandemic.

By knowing your customers, I mean really knowing them, and that means having a deep understanding of their individual purchasing patterns and the associated underlying drivers in order to deliver truly personalized content, value and experiences. This creates the foundation for building meaningful relationships that endure in the face of challenge.

Relationships have been put to the test

The COVID-19 pandemic brought about a seismic change in the traditional retail landscape, which altered the nature of interactions between brands and their customers, maybe forever. Retailers are feeling this deeply.

Physical interactions were once seen as fundamental to retailers’ relationship-building strategies. But temporary store closures, the re-opening process and the accompanying health concerns have dramatically changed things. Even consumers who might have once resisted ecommerce are now flocking to online channels (a Leger/lg2 study found that 64% of Canadians “have adopted an online behaviour for the first time OR are doing something more often compared to pre-crisis”¹). As they discover the benefits of the increased flexibility and choice they find there, many may stick with online shopping for good (78% say they intend to continue this new habit²).  

The struggle to retain customer bonds is compounded by other changes in the interactions between customers and retailers. In the initial phases of the pandemic, most retailers rightly began holding off on sending out the kinds of marketing content and offers that they normally relied on to build customer interest and loyalty. Simultaneously, the pandemic awakened consumer sensibilities, with 32% of consumers vowing, for instance, to reduce frivolous expenditures that could impact their financial health.³ They also began putting more value on community, bringing about a wave of support for local products and merchants (53% say they plan to do more local shopping from now on ⁴). These changes are forcing retailers to re-evaluate their strategies for product selection, merchandising, marketing and promotions, all of which are impacting the balance in the customer relationship.

We also can’t forget that many companies are facing a fair amount of organizational upheaval at the moment – trying to re-imagine their operational systems and processes, reassess expenditures and revisit staffing needs – which can easily divert attention away from the customer.

It’s time to refocus on a customer-centric approach

But smart retailers know they can’t bow to these pressures. What’s key to weathering this storm is rebuilding emotional connections. The relationships that hold up over time will be the ones built on trust, an understanding of motivations and habits, and a mutual exchange of value.

To create that, retailers need to re-invest in getting to know their customers and learning how they are behaving in this new normal. Many businesses are reluctant to spend money right now given the uncertainty in the market, and are understandably focused on pivoting their operations and revisiting financials. Some that are spending marketing dollars are focused on reinforcing their brand message and reassuring people that they care. This is important, there’s no doubt. But while spreading the brand promise can build respect in the market, combining it with customer-centric strategies fuels and strengthens loyalty. This is precisely the time when investments in customer programs are critical. In the midst of uncertainty, investments in growth and long-term sustainability are paramount.

Customer centricity begins with access to and mining of data and insights, to understand what each customer buys, when they buy it, and through what channels, and then mapping that against demographic and other known information to develop a complete, ever-evolving picture. That can be compared to pre-pandemic data to inform new strategies across your varied marketing channels to interact with customers in a personalized, relevant way, one-on-one.

Combining those actions with a system for rewarding and recognizing behaviours helps subsequently motivate behaviors and fuel loyalty. Retailers must take the time to understand which motivators work best for each customer, prioritizing strategies with the highest potential value. You might send better offers to less-responsive customers, or bigger offers to more loyal customers – there’s no one-size-fits-all formula. But the more you understand each customer, the better equipped you are to make hypotheses about which currency will work best for them, test them out, and quickly adjust. While the ultimate goal is to generate emotional loyalty that goes well beyond offers and rewards, these remain important stepping stones to building customer connections.

Together, these strategies will foster strong, loyal relationships with customers who stand by your side, no matter what challenges you may face or even mistakes you may make. These are the customers who will support your business long into the future.

To learn more about how you can connect with your customers or for support with your current loyalty strategy, please reach out: ALevesque@loyalty.com.