Omnichannel

How personalization and digitalization can drive customer loyalty

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April 3, 2024 by Edward Drax — CEO, Yocuda

Amidst the current cost of living crisis, U.K. shoppers have tightened their purse strings, presenting a formidable challenge for retailers to remain competitive. With less money to spend, customer spending habits are shifting and this is impacting brand loyalty. In these times, shoppers prioritize thoughtful purchases, underscoring the importance for retailers to adapt and connect with customers on a deeper level.

For major retailers navigating these stormy financial waters, maintaining a loyal customer base is more crucial than ever. This is a lesson some brands are having to learn the hard way as they grapple with weakening ties to repeat customers, leaving them vulnerable to competition. In this article, I offer data-driven insights and strategies for brands and retailers to foster lasting customer loyalty in an ever-changing landscape.

Empowering personalization with customer data

Personalization is key to building lasting relationships with customers and to forming marketing strategies. And by prioritizing data security and GDPR compliance, retailers can instill trust in customers while delivering personalized experiences. Customers are more comfortable sharing personal data when they see tangible benefits in return and have high expectations regarding how their data is handled and presented back to them.

Our research reveals a growing preference for tailored offers, with nearly two-thirds (64%) valuing personalized promotions based on their shopping history. This sentiment is particularly strong among younger demographics, with 75% expressing a preference for personalized offers. This highlights how retailers must leverage customer data to enhance the shopping experience, but how do you create the purchase histories and build the customer profiles required for personalized communications?

Loyalty programs provide a wealth of customer insight, but they may not be appropriate for some retailers and even the best programs will only entice a subset of customers to sign up. Digital receipts are a proven solution for identifying customers and linking them to their transactions and work well either on their own, or as a complementary solution to an existing loyalty program. Customers are happy to identify themselves in order to receive a digital receipt for easier storage of receipts and for hassle-free returns. And as a result digital receipts enable retailers to identify non-loyalty members, thereby significantly increasing customer data capture and insight.

Engage customers with loyalty programs

Loyalty programs offer a reliable way to engage customers and support brand loyalty. Once a connection has been established with offers that reflect interests, personalization can be extended to rewards and loyalty discounts to incentivize repeat purchase and foster long-term interest.

With 97% of customers enrolled in at least one loyalty program, these initiatives are clearly popular. In fact, over two-thirds of customers say they are signed up to at least three programs, evidencing their commitment to maximize the offers, discounts and benefits that retailers make available.

In efforts to make long-term savings on particular items, loyal customers will often spend a little more in the short-term to unlock the extra loyalty tiers, so brands shouldn't be seeing these schemes as a sacrifice of short-term revenue. If effort is put in to encourage brand loyalty with a personalized set of rewards, the lifetime value of customers can skyrocket.

It is an opportunity to build relationships with customers, especially if the offers on show are tailored to specific needs through consistent, data-backed personalization. We know that 57% of customers are more likely to shop with a retailer that personalizes offers for them. So, lacking a loyalty scheme may mean customers turn to other brands — especially if the economic climate is putting pressure on spending.

From an engagement point of view, if loyalty programs are the carrot to encourage a customer to make repeat purchases, the digital receipt is an additional benefit of that program and a distribution channel for promoting the rewards and benefits of the scheme. It allows retailers to extend the customer conversation to include post purchase communication about the brand, service and also be used as a marketing tool. This provides an opportunity for retailers to broaden the relationship with the customer and foster increased loyalty.

Digitize shopping experiences with digital receipts

Loyalty programs are here to stay in retail and it matters how they are presented to customers. Choosing to make these experiences digital brings brand initiatives in line with customers' expectations about communication, personalization and ease of use. This is especially important as technology becomes more integrated across the industry.

In-store digital receipts are blurring the lines between online and in-store shopping, creating an omnichannel environment. Our survey indicates three-quarters of shoppers have been offered the option of digital receipts. It is a notable preference among younger customers, with 80% of those aged 26-35 expressing a favor for this option.

This preference is even stronger when linked to loyalty programs, with 79% of shoppers preferring digital receipts to be available automatically for loyalty purchases — an indication of the importance of digital touch points in building customer relationships for retailers.

Similarly, the inconvenience associated with physical receipts — especially when making returns — is driving a preference for digital options. We know 77% of shoppers have thrown out receipts that they meant to keep. With the majority of retail spending still happening in-store, lost or discarded receipts are a real frustration point for customers. It's no surprise that 62% find digital receipts desirable at the point of payment.

This goes to show there is a clear customer desire for more streamlined in-store experiences. Retailers offering digital receipts in a seamless and transparent manner are likely to see an increase in repeat purchases and improved customer satisfaction — unsurprising given almost half (47%) are more likely to shop with retailers that provide easy access to digital receipts.

Keeping customers content

In a competitive market where customers have high expectations of brands, relying solely on product offerings is not sufficient to ensure customer loyalty. Retailers can enhance the shopping experience by using data and exploring new marketing channels to make shopping more enjoyable, convenient and memorable for shoppers.

By implementing simple digital solutions for in-store processes like issuing digital receipts, retailers can make a positive initial impression and build a foundation for long-lasting customer relationships. Engaging customers with loyalty programs and using transaction data to tailor future shopping experiences are key strategies to drive long-term success.

About Edward Drax

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