Emmanuel Probst of Empathica guest-writes for Loyalty 360's State of the Industry series:
An economic drought is upon us. At least that's what it feels like for brands struggling to navigate today's consumer marketplace. Sour labor forecasts and jittery markets have shaken consumers, forcing brands and retailers to adapt to yet another "new normal."
Unfortunately, negative consumer sentiment isn't imaginary. According to a recent Empathica Customer Insights Panel survey, the majority (56%) of consumers are facing more financial difficulties now than they were six months ago. Consequently, consumer optimism has taken a hit, with 64% of consumers now believing that their financial situation will either stay the same or worsen in the next six months.
Widespread pessimism in the marketplace correlates to reductions in household spending. Most consumers (61%) report that they are spending less today than they were a year ago and resistance to taking on new debt is at an all-time high.
With pessimism and spending reductions weighing heavily on the consumer consciousness, brand loyalty is under siege. Unless brands and retailers can effectively incentivize consumers to remain loyal during hard economic times, buyers will transfer their loyalty to low cost providers.
Technology and the Customer Experience
Despite negative news about consumer confidence and spending, there are several strategies that brands can use to promote loyalty in today's economy. Specifically, brands that invest in customer-facing technologies have the potential to capture and retain larger slices of their target markets.
For example, when asked which technologies they value most in their grocery experience, the Empathica Customer Insights Panel survey revealed that 65% of consumers rank self-checkouts at the top of the list. The majority of women (57%) and men (51%) also indicated that user-friendly brand websites influence their overall grocery experience - which in turn, influences their buying decisions.
These numbers reinforce the idea that modern consumers gravitate toward technologies that empower them in the buying process. Invisible technologies or technologies that don't add real value to the experience are less effective in capturing and keeping customers' attention.
When it comes to age, younger consumers overwhelmingly (80% of 18-24 year olds) prefer grocery providers that offer technology-driven customer experiences. Although the value of technology decreases with age, nearly half of grocery consumers over age 65 expressed similar sentiments.
As the buying power of the "digital generation" builds, it will become even more important for brands to leverage technology in the creation of unique customer experiences. But since older generations of consumers are also demonstrating preferences for brands that use technology to enhance the customer experience, growth-conscious grocery brands know that the implementation of new, customer-centered solutions can't be relegated to the backburner.
Consumer preferences for technology-rich brand experiences aren't limited to the grocery industry, however. To combat waning consumer optimism and maintain a loyal customer base, all consumer-based brands and retailers must adopt new strategies for using technology to drive loyalty initiatives.
Using Technology to Drive Loyalty
Technology has the potential to be a primary driver of customer loyalty, especially when pessimism is running rampant in the marketplace. However, the application of technological solutions to complex loyalty problems may not be as simple as it sounds.
To succeed with consumers, brands and retailers must direct their efforts toward strategies that deliver added value to customers and cost-efficiencies to their organizations.
- Ease of Use. Consumers are willing to embrace technologies that improve the buying experience, but only if those technologies are convenient and easy-to-use. If the customer is forced to adapt to an unfamiliar user interface or if they are required to perform multiple steps to access information, they simply won't use it. Rather than boosting customer loyalty, hard-to-use technology can have the opposite effect, driving consumers away from your brand.
- Multichannel. Informed consumers are multichannel shoppers. As a result, excellence in a single technology channel won't strike a deathblow to your brand's loyalty challenges. Instead, you will need to maintain an active presence in multiple channels. A user-friendly website is a good start, but to compete you will also need to deliver information and resources via mobile devices and other channels.
- Social Media. Social media is a critical tool in the battle to maintain a loyal customer base. If it is utilized effectively, social media transforms consumers into brand advocates. When accessed through a mobile device, employees and consumers can employ social media to create instant brand connections and deliver one-of-a-kind customer experiences.
- Couponing. More than half of all women surveyed in the Empathica Consumer Insights Panel survey indicated that they value grocery store offers sent via email or a mobile device. As optimism and spending declines, consumers demonstrate loyalty to brands that offer coupons and discounts through customer-facing technologies - but only to the degree that the delivery system is tailored to the individual and presented in a user-friendly manner.
- Monitoring. Listening is an essential part of a robust Customer Experience Management program. To promote loyalty, brands and retailers must be willing to listen to their customers and engage in brand dialogues through the channels in which they prefer to communicate. By routinely monitoring technology channels, brands gain valuable insights about their customers and equip themselves with the information they need to attract and retain consumers.
In the current economy, frontline brands and retailers are correct in thinking that their customer loyalty programs may be under attack. Consumer sentiments and a flurry of negative economic news are undermining traditional loyalty techniques and will continue to do so for the foreseeable future.
However, the smart application of technology, combined with an ongoing emphasis on delivering exceptional customer experience can combat these threats and give brands new weapons in the battle to protect their customer base.
Emmanuel Probst is the Vice President of Retail for Empathica, a provider of Customer Experience Management (CEM) solutions to some of the world's most respected brands.