What is Retail Customer Engagement?
In theory, customer engagement is simple: It refers to the various ways a retail brand interacts with current and prospective customers, both in person and online. In practice, however, it’s a little more complicated than that.
You see, the modern retail customer engagement landscape spans a seemingly endless number of channels, both traditional and digital. In this brave new world, customers are quick to adopt the latest retail trends and technologies and just as quick to abandon them — in some cases, even before brands have had the chance to get on the bandwagon. Add to this the fact that the ongoing COVID-19 pandemic has created new obstacles to customer engagement and led some consumers to question their brand loyalty. With this confluence of factors, it’s easy to understand why some retailers feel overwhelmed by the thought of developing a customer engagement strategy — but with so many customers up for grabs, you can hardly afford not to have one.
In this article, we’ll explain why a strong retail customer engagement strategy is vital to your business’ continued success, as well as explore different techniques to increase customer engagement with your audience.
Table of Contents
- Boost Profit Margins with Repeat Customers
- 8 Retail Customer Engagement Strategies to Invest In
- Invest in the Right Technology
Boost Profit Margins with Repeat Customers
We’ve all heard that it costs more to attract new customers — anywhere from 5 to 25 times more, according to the Harvard Business Review — than it does to retain existing customers. But did you know that repeat customers are some of the most profitable for CPG retailers across the board? Let’s look at a few statistics to put things into perspective:
- An incredible 77% of consumers say they’ve held relationships with specific brands for 10 or more years. This would suggest that customers are not as “fast and fickle” as some reports might have you believe.
- According to that same survey, 61% of loyal customers say they’ll go out of their way to purchase from their preferred brands.
- While only 32% of first-time customers will make a second purchase, 53% of customers that make a second purchase will make a third — and that percentage only increases with each successive purchase.
- According to that same report, the top 10% of loyal customers have a lifetime value that is worth six times the industry value, while the top 1% of loyal customers are worth 18 times more.
- A 5% increase in customer retention can increase profits by anywhere from 25% to 95%. In short, failing to increase your customer retention rate is equivalent to leaving money on the table.
So, what’s the secret to securing repeat customers? Customer engagement. Consumers are more likely to be loyal to brands when they feel a strong emotional connection; the only way to form such a bond is through repeated interactions, typically across multiple channels. Once a brand has initiated multiple interactions with a customer, established a meaningful relationship with them, and earned their loyalty, the more likely that customer will be to voluntarily engage with that brand and even recommend it to their friends and family. In that sense, customer engagement feeds into customer loyalty, and vice versa.
8 Retail Customer Engagement Strategies to Invest In
Interested in refreshing your customer engagement strategy but not sure where to begin? Here are some ideas to help you get started.
1. Build a Solid Omnichannel Strategy
Every retail customer engagement plan needs to start somewhere, and that’s with an omnichannel retail strategy. The fact of the matter is that consumers engage with more channels than ever before — including brick-and-mortar stores, online catalogs, social media platforms, and more — and they expect a personalized experience across each one. In order to deliver this kind of experience, retailers must leverage the data they collect across each of these channels, such as which products are typically purchased together, major milestones in a customer’s life, mobile app usage, and more, as well as from external sources.
For example, if a customer were using your eCommerce platform to shop and placed a pair of pants in their virtual shopping cart, you might also show them an automatically generated recommendation for a particular shirt that is frequently purchased with those pants. Another example: While visiting one of your brand’s brick-and-mortar locations, a customer mentions to a store that they recently bought their first house. The associate makes a note of the conversation in the store’s customer relationship management (CRM) system and in just a few days, that customer starts to receive targeted advertisements over social media and email for different home goods.
Your omnichannel retail strategy should also extend to customer service, which remains a pivotal component of customer engagement. Offer your customers a multitude of different ways to request and receive service — such as submitting a ticket, calling a support line, or direct messaging a branded social media account for the former, and talking to a live agent, interacting with a chatbot, and looking up information in a knowledge base for the latter.
The most important thing to keep in mind when developing an omnichannel is that you need to deliver a high touch, consistent experience, regardless of which channel your customers use to shop.
2. Humanize Your Brand
At the risk of generalizing, B2C consumers don’t like to feel as though they’re engaging with a faceless corporation. To that end, it’s important that you figure out what tone, voice, and style best embodies your brand. Is it witty and irreverent, like Denny’s? Is it elegant and refined, like Tiffany & Co.? Or is fun and whimsical like Disney? Your brand’s voice will dictate what you say, and your brand’s tone will dictate how you say it.
Next, you’ll need to figure out what type of messaging resonates with your audience. Put simply, what topics are they interested in, and what do they care about? The worst mistake a retailer can make is to assume that simply advertising their products is enough to generate consumer interest.
Instead, the modern consumer expects brands to share content that appeals to their interests, ask questions, and initiate conversations — you know, engage with their audience in much the same way an individual person might. The fact of the matter is that 64% of consumers want brands to connect with them. The more connected a customer feels to a brand, the more likely they are to be loyal to that brand and recommend it to friends.
Therefore, if your customers care about sustainability, you might consider sharing information about different eco-friendly initiatives your brand supports. If your customers want to stay current with the latest trends, you might partner with a popular influencer within your industry to promote products.
Finally — but perhaps most important — listen to your customers. Your customers have opinions and are willing to share them, so be sure to capitalize on this opportunity every chance you get, either by soliciting feedback in the form of surveys and polls or instructing service agents to engage with customers one-on-one. By listening, you’ll not only gain valuable perspective into how your customers think, feel, and act and what they want out of your products — you’ll also create a sense of trust between your brand and your audience and build stronger, longer-lasting consumer relationships.
Once you’ve successfully humanized your retail brand, remember to apply it consistently across everything from marketing materials to social media messaging. Speaking of which …
3. Know Where Your Customers Go
Social media has indisputably transformed the retail landscape, affecting everything from how brands choose to market to consumers to how consumers choose to engage with brands. Research indicates that social media users spend an average of 2 hours and 24 minutes per day across an average of eight social networks and messaging apps. With so many networks to choose from — each with its own unique cadence and audience — it can be overwhelming for retailers to cover all of your bases. When it comes to social media, it’s important to think smarter, not harder, and that requires you to go to where your target audience lives.
Think for a minute about your ideal customer. What age group do they fall in? What are their interests? What are their influences? These questions might seem basic, but they reveal a lot about consumers and where they’re likely to congregate.
For example, let’s say you run a popular clothing brand whose target audience is young women, ages 15–25. Your ideal customer is typically interested in pop culture and social issues, follows major influencers, and enjoys sharing the latest fashion trends with their friends in a visual format. Based on that information alone, you can pretty safely assume that your target audience can be found on platforms such as Instagram and TikTok and build your social media strategy accordingly.
That said, it isn’t enough to just make an educated guess about which platforms your target audience prefers — you need to support those assumptions with data. Retailers need to use customer segmentation and other analytics-based strategies to gain valuable insight into their customers’ behavior and make informed decisions based on that information.
By being selective about which social media networks you use to promote your brand and engage with customers, you not only save yourself unnecessary effort, but also increase the likelihood of reaching your desired audience. This component of customer engagement is especially critical in the age of COVID-19, during which all consumer research and CPG shopping is done online.
4. Give Customers the Reins…
Consumers have more control now than ever before over what content they engage with, which is great for consumers, not so great for retailers. People tend to be naturally wary of brands, which can make even the most carefully planned and executed strategies fall short of expectations.
According to a report from Edelman, 41% of consumers say they don’t trust brands’ marketing communications to be accurate and truthful. In fact, consumers are more likely to trust fellow consumers than they are to trust brands — according to one survey, 51% of respondents said that they’re more likely to trust user images of a product because they’re more authentic and trustworthy than brand-owned creative.
As every retailer knows, in order to earn customers’ loyalty, you must first earn their trust, which is why user-generated content (UGC) has become one of the most popular retail marketing trends in recent years.
UGC is exactly what it sounds like: content promoting a brand that is created by an unpaid contributor rather than the brand itself. UGC can come in a wide variety of formats, from text and audio to images and videos. Perhaps the most famous example of UGC is Coca-Cola’s wildly successful “Share a Coke” campaign, which encourages customers to share photos of themselves with a Coke bottle featuring their name on social media. Another great example of UGC in action is Pottery Barn’s “My Pottery Barn” campaign. For this campaign, current customers share photos and videos of how they’ve styled their Pottery Barn furniture under the hashtag “#MyPotteryBarn”; prospective customers can then scroll through the hashtag and get design ideas and inspiration based on real-world examples.
UGC offers a wide range of benefits. It can:
- Actively promote customer engagement
- Leverage social media in clever and innovative ways
- Humanize your brand
- Make your brand appear more trustworthy
- Save valuable resources that would have been otherwise invested in creating content
Best of all, though, it can turn your existing audience into brand advocates and win their loyalty for years to come.
5. …Or Let Them Opt-out Entirely
On the opposite end of the spectrum from UGC is consumers who actively want to disengage. As much as retailers would like to believe in the contrary, there are times when consumers simply don’t want to engage with brands, whether in-store or online. Regardless whether they’re busy or just disinterested, it’s important that you offer your customers opportunities to opt out in order to avoid alienating them. One very basic example of this is allowing customers to either modify their subscription preferences for marketing materials or to unsubscribe entirely; another is to give customers the option to tailor how much personal information they’re willing to share with you.
That said, not every situation lends itself to completely opting out, especially in-store environments. If opting out is a practical impossibility, look for ways to streamline your customers’ shopping experience. One easy way to do this is to design your store layout in such a way that it keeps traffic flowing; another is to implement a self-checkout system.
Although this idea might seem antithetical to retail customer engagement, giving customers the opportunity to engage with your brand on their own terms rather than by default actually fosters trust and loyalty because it shows that you respect your customers’ preferences.
6. Deliver Curated Experiences Using Artificial Intelligence
As mentioned earlier, the modern consumer expects a personalized experience across all retail channels. One key way to meet — and even exceed — this expectation is with artificial intelligence (AI).
Retailers have access to a wealth of product, marketing, and customer data, which AI can use machine learning algorithms to analyze and generate targeted recommendations for everything, from which products customers are most likely to buy to which marketing campaigns are most likely to convert. From a personalization perspective, AI has a wide variety of applications, including:
- Curate product recommendations based on factors such as a customer’s purchase history, style preferences, and items frequently purchased together.
- Target customers with specific product offers, discounts, and coupons based on their browsing history or loyalty status.
- Develop marketing campaigns tailored to the specific interests of different customer segments and buyer personas.
- Use chatbot technology to create a virtual assistant that offers recommendations and answers customers’ questions in real time as they shop.
For an example of how retailers can leverage AI to deliver a more personalized customer experience, look no further than Stitch Fix. Stitch Fix is an online personal styling service that uses machine learning algorithms and data science, as well as the expertise of professional stylists, to deliver customers a monthly subscription box with items curated to their sartorial taste.
The secret to Stitch Fix is its iterative approach: First-time subscribers take a style quiz and answer a series of questions about their preferences, budget, lifestyle, and so on; this information is used to build out a style profile. Based on this profile, Stitch Fix stylists assemble a box with five items — including everything from outerwear to shoes to jewelry — that they think the subscriber will love, as well as style cards with recommendations on how to pair different items. The subscriber keeps (and pays for) the items they like, sends back the ones they don’t, and fills out a return survey rating the different items they’ve received. Each box provides Stitch Fix with valuable data points that it uses to refine its algorithm and build out the subscriber’s style profile. The more feedback the subscriber provides, either through return surveys or Stitch Fix’s Style Shuffle feature, the more curated their monthly delivery. It’s a win-win for both Stitch Fix and its customers.
7. Revitalize Brick-and-Mortar Locations with SRM Technology
- Let’s face it: These days, consumers aren’t exactly showing up in droves to brick-and-mortar store locations. COVID-19 has effectively created a new housebound economy and has drastically accelerated the growth of eCommerce. That said, there will come a time in the (hopefully) not-too-distant future when customers will be able to return to stores — and, when they do, it’s up to retailers to make sure that their experience is as safe as it is exceptional.
- That’s where a store relationship management (SRM) system comes in. Though SRMs have been around for some time now, they’re sorely underutilized in comparison to their CRM counterparts. This comes as something of a surprise given that SRM systems can help retailers update associate training programs, track key store performance metrics, implement customer engagement best practices, and so, so much more. Essentially, SRM technology streamlines business processes on the back end so that you can focus on providing a better overall experience to your customers.
- Looking ahead, a key component of that experience will be creating a safe environment in which your customers feel comfortable shopping. To that end, an SRM system can do everything from detect how many people are in your store at a given time in order to maintain safe occupancy levels to monitor the flow of traffic in order to minimize person-to-person contact.
- The data an SRM collects over time can also provide valuable insight into store operations, such as what a store’s peak hours are, and which touchpoints customers most frequently come into contact with (and therefore need to be sanitized more often), as well as targeted recommendations on how to optimize existing processes. With an SRM, retailers can deliver an in-store experience that both delights customers and offers them much-needed peace of mind.
8. Blend the Digital and the Physical
Retailers have been testing out different ways to incorporate digital solutions into in-store shopping experiences — and vice versa — for years now. Let’s take a look at just a few of the innovations that have resulted from this industry-wide initiative:
- Endless Aisles enable shoppers to browse a brand’s full product catalog — including items that aren’t physically in stock — and have products shipped directly to their door. This not only spares customers the frustration of looking for items that aren’t in stock, it also saves retailers from having to carry inventory for each item at all store locations.
- Using augmented reality, virtual fitting rooms enable shoppers to “try on” different items before they buy without ever having to leave the comfort of their home. Similarly, virtual showrooms make it possible for retailers to showcase product virtually, without having to carry physical stock, and for consumers to visualize how larger, higher ticket items such as furniture might appear within their homes prior to purchase.
- Proximity marketing utilizes geomagnetic technology to send targeted offers, such as coupons and discounts, direct to customers’ mobile phones based on their in-store location via push notification.
- Contactless payment systems leverage radio-frequency identification technology, making it possible for customers to pay for goods without cards or cash ever having to change hands.
- Buy online, pickup in store — or its recent iteration, buy online, pickup at curbside — enables consumers to purchase items through a brand’s online channels and collect at their soonest convenience, providing them with the safety and immediacy they desire.
Many of these “phygital” — a clever combination of “physical” and “digital” — innovations have made it easier for retailers to adapt to the new normal of COVID-19 by reducing customers’ risk of exposure and taking advantage of omnichannel trends.
Reimagine Retail with Hitachi Solutions
When you really come down to it, retail customer engagement is all about enhancing the overall customer experience, whether that’s by providing exceptional service, delivering one-of-a-kind experiences, anticipating consumers’ needs, or all of the above.
Allow us to throw one last statistic your way: In 2017, over two-thirds of companies reported that they are now competing on the basis of customer experience. That number has only climbed in the years since. In order to compete on customer experience, retailers must first compete on customer engagement — and in order to compete on customer engagement, you must first develop a data-driven strategy to support it.
Here at Hitachi Solutions, we specialize in delivering powerful, customer-centric solutions built on the Microsoft platform. From clienteling to store operations to merchandise management, each of our custom-built solutions presents data-driven opportunities increase customer engagement, enhance the customer experience, and earn customer loyalty.
Reimagine retail with Hitachi Solutions; contact us today to get started.