More on (smart) retail
In this article, we’ll talk about technology trends we’re seeing in the retail industry and why implementing some of these strategies will result in a minimum 10% increase in customer loyalty. After all, we know that on average, it costs 5 times more to acquire new customers than to retain existing customers and that a simple 5% increase in customer retention can increase profits by 25% to 95%.
The retail industry has never been more competitive. Facing unprecedented disruption retailers were forced to change the way they communicated, to both retain existing customers and attract new ones. Customer Loyalty is at the center of how retailers adjusted. Some strategies included green and sustainably friendly messaging. There are examples of retailers sunsetting print catalogs that had been delivered for over 100 years in favor of starting a greener online version of course. This not only resulted in a greener image but also the added benefit of increased measurable results and actionable consumer data.
Many retailers went further, shutting down traditional stores located outside cities and opening showrooms downtown, taking a major bet and making significant investments in driving and sustaining long-time consumers online. If you have not already integrated a customer loyalty strategy there are some strong advantages with both short and long-term benefits you’ll see from embedding a loyalty scheme into your customer’s experience.
Real-Time Automation and Personalization
There are smart reasons for investing in brand and creative marketing. Mainly, with the goal of inspiring new customers and employees to join your family. But when it comes to customer retention a simple email, at the right time, with a relevant and personalized offer can oftentimes be enough to spark a new engagement and consequently a new purchase.
On average, for every $1 spent on email marketing, a retailer can expect a return of $36, with the majority of this return coming from existing customers. Combine a personalized email with real-time customer journeys to increase customer loyalty. We attribute these quick-to-implement customer journeys to actual returns to help CMOs justify new/more budget and purchases.
James Varn, Engagement Director at HSO International says, “In retail, you see that companies often struggle with retaining customers. Organizations spend countless dollars attracting new customers through their digital or brick-and-mortar front door, then do nothing while that new customer walks out the exit door. This is, of course, a missed opportunity. Especially when we know that with our smart retail technologies – also known as smart retail – we are helping our clients increase customer loyalty by more than 20 percent.”
Use AI to make repeat buying easy
Use data and artificial intelligence to reduce issues that frustrate your customers. A common example leading to poor customer retention is out-of-stock products. Stock is spread over four distribution centers, while an above-average amount of products are shipped from one of the locations. The result is that the customer must deal with out-of-stock and delayed shipments when this is not necessary. Customers will be disappointed, and can easily go to the competitor around the online corner and make their purchase there.
"With artificial intelligence, you can better predict where products should be – in the store or in the distribution center. Use these smart algorithms to organize the chain, prevent delivery problems, and give customers what they want faster. This makes repeat buying a no-brainer."
Use Data to Drive Outcomes
How do you know when you have strengthened the bond with a customer enough that it sticks? Retailers have to know their customer’s behavioral patterns and what influences that behavior in both a positive and negative way says Jasper Hillenbrand, Director of Analytics, “Knowing what the future holds and who your customers are, is an important pillar in making repeat buying easy.”
By understanding your customer’s behavioral trends it becomes much easier to predict which customers are loyal and which are most likely to churn or cancel a subscription/contract. And more importantly, for what reasons did they decide they could live without your products or services. With these insights, you can better organize the sales strategy and optimize the content marketing is sending to these individuals. It provides a connected customer experience and leads to repeat purchases. Cross and upselling are also more likely to be successful as well, now that you understand the type of products your customers purchase and optimize loyalty campaigns to present them with relevant cross-sell products.
Invest in Smartbot, Conversational AI, and Merge Loyalty Programs with Payment to Improve Customer Loyalty
A technology that strongly contributes to customer loyalty is an intelligent chatbot. These bots should give personal advice to online visitors and present personalized content in the most consumable way for the customer. For example, a chatbot that gives the same clothing advice as a personal shopper inside an easy-to-navigate mobile app linked to their customer loyalty number.
The number one trend in Loyalty Marketing is merging payment with loyalty so retailers need to make sure that the more their customers shop, the more they are incentivized to continue to buy, with, for example, exclusive offers. The more a customer purchases from your store, the stronger their profile (behavioral and transactional data) will also become. This data serves as the foundation for a personalized experience.
You can now serve your customers in real-time, with personalized content, on their preferred channel, whenever he or she needs your service. Companies like Delta, Amazon, Starbucks, and Uber do this well and can serve as an example.
The next step is taking an intelligent chatbot and adding Conversational AI to it. With Conversational AI, the customer feels as if he or she is actually speaking to a person. It is not a problem if you switch to a completely different topic after a few questions. The algorithm knows exactly how to respond, making the contact very personal. This also prevents the customer from having to start a new conversation with customer service. Or worse: picking up the phone to take 30 minutes of one of your customer service representative’s time.
Use Segmentation and Run Simulations
Knowing customer needs gives retailers insight into future customer behavior. How does it work? “We inventory the characteristics of the target group,” Jasper Hillebrand explains.
“Customers from certain segments have similar characteristics and needs. By running a simulation on other prospects and customers from different segments you can find all kinds of smart data, for example, what happens when you give customers a high level of personalization which they interpret as a high level of personal attention. HSO uses Retention Analytics for this.”
Use Retention Analytics and Predictive AI to Increase Customer Lifetime Value
With insight into retention, you can accurately predict the lifetime value a customer will bring to you. To start, a customer may flow into segment B, but with Predictive AI insights, we know that this customer has the potential to evolve to segment A. For example, a student eventually becomes a starter and will buy different kinds of products.
Eventually, that person may have children which again will influence their buying decisions. As customers’ needs change over time so should the content they are sent and the way they are interacted with.
"For the actual retailer it’s simple, you have a CRM system that contains your customer data. Inside your customer card, there is a certain lifetime value threshold: low, medium, or high. If you hover over the value then you will see that a customer value is low today but will deliver more value in the future. Do you want to know why? Then click on the explanatory analysis on your Smart Retail dashboard,” says Jasper Hillenbrand.
HSO creates personalized, real-time campaigns to nurture clients and extend their lifetime value. We use new technology like Chatbots and Conversational AI to increase the level of service retailers provide and to ingrain personalization even deeper into consumer experiences. We merge payment systems with loyalty schemes to help create meaningful incentives that bring consumers back time and again. We use Predictive AI to understand business processes so, for example, stock levels are always optimized so that customers never find their favorite products out of stock.
We use data to know which of your customers is on the threshold of new purchases or leaving your products altogether and aggregate that data to run simulations on prospect segments to analyze the results of potential strategies. We then dashboard the most important information for retailers’ C-level teams to make informed decisions. And we use personalized retail best-practice to harvest the right data so that we can package that data into smart data solutions.
HSO understands the issues retailers are facing like disrupted supply chains, increased production costs, extremely competitive markets, and how inflation is affecting consumers. Because of continued disruption, it is even more important for retailers to reduce costs and increase revenues and an easy way to do this is through current customers making loyalty and driving repeat purchases essential.
HSO gives retailers the tools to anticipate, act, and steer consumer behavior. The result is a win for the retailer and a win for the consumers with a highly engaging and interactive customer experience that keeps customers engaged with a corporate story and their products & services for years. With this approach, HSO can increase Customer Loyalty by a minimum of 10 percent. Customer churn is also reduced by 10 to 20 percent.