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Holiday season check up: Are you effectively using store cards to foster customers for life?

Citi Retail Services' Leslie McNamara explains why building lifelong customers starts with early engagement, personalized communication and a seamless point-of-sale and digital experience.

Photo by istock.com

December 6, 2019

By Leslie McNamara, Citi Retail Services

This holiday season is forecast to reach new milestones for U.S. retailers, with sales expected to cross the trillion-dollar threshold — despite it being the shortest since 2013. This crucial window also proves to be a massive opportunity to turn one-time transactions into long-term customer relationships, as foot traffic and online traffic open doors to cultivate loyalty, and  more importantly, sustain it. This holds especially true for millennial shoppers, who plan to spend more than any other generation this holiday season.
 
The end of the year — and the influx of shoppers that comes along with it – is a critical reminder for retailers about the importance of getting customer loyalty right.

Building lifelong customers starts with early engagement, personalized communication and a seamless point-of-sale and digital experience.

•Early engagement is crucial: New research from Citi Retail Services shows that store cards remain a popular option for U.S. shoppers: more than 7 in 10 consumers — and 84% of millennials — would be likely to get a store card if they found the right one. One critical reason? Store cards provide an opportunity for customers to consolidate their category spending with a retailer offering invaluable rewards in the process. Generally, store cards are very much designed to deliver on this loyalty promise, but early engagement with customers after they sign up for a card is pivotal to converting payment behavior and preference.

So, if early engagement is the key, the question is what's changed with today's customers that retailers need to think about? It turns out, what's old is still incredibly true — in the first thirty days of account opening, reaching customers with accelerated loyalty opportunities or incremental value to second and third purchases is key in converting store card holders to loyalists. If there is a shift in this formula, it's in the "how" — with a broader range of communication options that connect with the customer at the point of destination decision. Connecting the deal to the goods to the moment via proven digital tools and anticipatory, predictive modeling techniques. With so much promotional noise to compete with, it's essential to get these initial interactions right.

•The power of personalized communication:  Early engagement is only effective if it's personalized and aligned with consumer preferences. According to recent research, 40% of millennials say that the most important thing a brand can do is ensure that its messages are personalized to their interests. Offers, coupons and product upgrades must be customized to be effective, especially when targeting newer cardholders who haven't yet demonstrated a commitment to continuous usage.

Personalization isn't just message specific. It's also channel specific. For many retailers, that is where coupling outreach across more traditional channels (mailers, emails, etc.) with social media — which is used by nearly 90% of millennials — comes in. Having multiple social media touch points is the new norm in proactively engaging customers in an environment where they spend, on average, one hour and fourteen minutes per day. More than that, engaging with customers on social media this season also has intrinsic sales value: 15% of Americans plan to use social media sites for their holiday shopping this year, which is nearly double that of last year.

•Creating a seamless POS and digital experience:  According to research, when it comes to shopping, 68% of millennials demand an integrated and seamless experience, regardless of the channel. One way to meet this demand is by ensuring the card product and corresponding loyalty program is well incorporated into the path of purchase so that the user experience is smooth and uninterrupted. Customer access, both in-store and online, must be ubiquitous so they can obtain the information and rewards they are looking for quickly and easily. Customer friendly mobile applications and 24/7 online account services are just a few ways in which retailers can digitally streamline the customer experience.
 
The projected uptick in year-end sales is a massive opportunity for retailers — if they take advantage. Leveraging store card and loyalty program adoption to create customers for life starts with early engagement, personalized communication and a seamless point-of-sale and digital experience. Tackling these important areas is mission-critical and approaching them thoughtfully ahead of the end of the year will set retailers up not only for a successful holiday shopping season, but for 2020 and beyond.