Retail Customer Engagement in 2023: 9 Opportunities for Retailers

In a world where consumers have thousands of options virtually at their fingertips, it can be incredibly challenging to capture — let alone keep — customers’ attention. Given what’s at stake, retailers must make every possible effort to engage with their target audience, and then continuously reengage those customers in order to earn their long-term loyalty. The secret to achieving this involves developing a strong retail customer engagement strategy.

In this blog post, we’ll take a closer look at why retail customer engagement is vital to your business’s continued success and explore different techniques for how to improve customer engagement in retail.  

What is Retail Customer Engagement?

Retail customer engagement refers to the various ways a retail brand interacts with current and prospective customers, both in person and online. Seems simple in theory, right? In practice, it’s a little more complicated than that.

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You see, the modern customer journey 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.

There’s also the fact that rising inflationary pressure has dealt a blow to customers’ purchasing power, making them more selective about how and where they shop. Under these circumstances, customers are more likely to prioritize shopping retailers that have earned their long-term loyalty or those that offer one-of-a-kind, memorable experiences.

Based on this confluence of factors, it’s easy to understand why some retailers feel overwhelmed by the thought of developing a retail customer engagement strategy — and why having such a strategy in place is absolutely necessary.

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 retailers across the board? Let’s look at a few statistics to put things into perspective:

• In a Yotpo consumer survey, 59% of shoppers said that they would wait to purchase until their favorite brand’s products were back in stock.
  
• According to that same survey, the vast majority of respondents (67.4%) said that they prefer to purchase directly from the brands to which they are loyal, rather than through a generalized platform such as Amazon.

• Bain & Company reports that apparel shoppers purchase 67% more per order after shopping with a company for 30 months. 
• Seven in 10 customers remain loyal to the brands they used growing up, which goes to show that brands with strong retail customer engagement strategies have to opportunity to earn customer loyalty for life. 

• A 7% increase in customer loyalty can increase your customers’ lifetime value by upwards of 85%.
  
• 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? Retail 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 — up to five or more — typically across multiple channels.

Once a brand has initiated multiple interactions with a customer, established a meaningful relationship with them, and earned their loyalty, that customer will be more likely to voluntarily engage with that brand and even recommend it to their friends and family. In that sense, retail customer engagement feeds into customer loyalty, and vice versa.

How to Engage Customers in Retail: 9 Winning Techniques

Interested in updating your retail 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, purchase history, customer reviews, and more. Retailers should also incorporate data from external sources, such as census data, industry-wide buying trends, online search queries, social media activity, and so on.

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 might mention to a store associate that they recently bought their first house. The associate could make a note of the conversation in the store’s customer relationship management (CRM) system and, in just a few days, that customer would start 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 retail customer engagement. Offer your customers a multitude of different ways to request and receive service, such as:

• Submitting a support ticket
• Talking to a live agent
• Direct messaging a branded social media account
• Interacting with a chatbot
• Looking up information in a branded knowledge base

The most important thing to keep in mind when developing an omnichannel retail customer engagement strategy is that you need to deliver a high-touch, consistent experience, regardless of which channels 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 it 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 — essentially, engage with their audience in much the same way an individual person might. The fact of the matter is that consumers want brands to connect with them.

In fact, according to a consumer survey from SproutSocial, 57% of customers said they would increase their spending with a brand they felt connected to, and 76% said they would prioritize that brand over others. The key to building those connections? Putting a real face in front of the brand: 70% of consumers report feeling more connected when a brand’s CEO is active on social media, and 72% reported feeling similarly when employees share information about a brand online.

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 that approach consistently across everything from marketing materials to social media messaging.

3. Make Sustainability Part of Your Mission

Consumers are more aware of the impact their individual choices have on the environment now than ever before. As a result, consumers are increasingly looking to do their part to combat climate change by shopping sustainably.

According to a survey from SensorMatic:

• 81% of consumers report being concerned or very concerned about the future of the environment.
  
• Over 70% of consumers said that they would use a brand or store less frequently — or stop shopping there altogether — if they discovered it wasn’t operating sustainably.
  
• 70% of consumers said they’re willing to pay at least 5% more for products that can demonstrate a fully sustainable supply chain.
  
• Nearly 90% of consumers think that retailers don’t do enough to broadcast their sustainability efforts

This last item is especially compelling — of course, in order to offer the kind of eco-friendly experience shoppers are looking for, brands must first make a sincere effort to embrace sustainability in their products, their business practices, and their supply chains. But it seems as though brands that have already made that investment aren’t showcasing it as well as they can or should — and that’s where retail customer engagement comes into play.

Here are just a few examples of how retailers can make customers more aware of their sustainability efforts (and increase engagement in the process):

• Use your online platform to educate consumers about climate-related issues, and what they can do to get involved
  
• Partner with a nonprofit dedicated to protecting the environment to raise funds for an important cause
  
• Reward customers for making sustainable choices, such as bringing a reusable bag to stores or donating gently used items, with special discounts
  
• Build a page on your company’s website that transparently documents your sustainability efforts, including supply chain disclosure
  
• Offer customers advice on how to get more mileage out of your products to reduce the risk that they end up in landfills
  
• Create a resale channel for lightly used products, such as Madewell’s Madewell Forever “preloved” shop

Environmentally friendly products and practices are an immediate draw for consumers. Plus, supporting sustainability initiatives is a great way to show your customers that you listen and care about what’s important to them. A word of caution, though: In order for this retail customer engagement strategy to be effective, it must be genuine. Avoid greenwashing at all costs, or risk losing the goodwill of your customers forever.

4. 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 27 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 their 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 the unnecessary effort but also increase the likelihood of reaching your desired audience. This component of retail customer engagement is especially critical given that 27.6% of the global population — that’s 2.14 billion people — now shop online.

5. Give Customers the Reins…

Consumers have more control now than ever before over what content they engage with, which is great for consumers, but not so great for retailers. People tend to be naturally wary of brands, which can make even the most carefully planned and executed retail customer engagement 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.

Here are just a few examples of brands that have found success with UGC:

• Doritos’ ambitious Legion of Creators gives Doritos-loving independent content creators the tools to create their own brand-sanctioned advertisements through a series of creative challenges.
  
• Apple’s iconic “Shot on iPhone” campaign encourages iPhone users to share their best shots on social media with the chance to have their photos displayed on billboards and in Apple stores around the world.

• Cards Against Humanity’s “Your Bad Ideas” campaign gives fans of the game the opportunity to submit their own ideas for new cards, with the chance of having their suggestions included in a future game pack.
  
• Pottery Barn’s “My Pottery Barn” campaign asks existing customers to share photos and videos of how they’ve styled their furniture on social media under the hashtag “#MyPotteryBarn,” so prospective customers can scroll through 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.

6. …Or Let Them Opt Out Entirely

On the opposite end of the spectrum from UGC are 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 of whether they’re busy or just disinterested, it’s important that you offer your customers the opportunity to opt out to avoid alienating them.

One very basic example of this is allowing customers to either modify their subscription preferences for marketing materials or 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, allowing customers 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.

7. Deliver Curated Experiences Using AI

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, and 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 Wantable. Wantable is an online personal styling service that uses machine learning algorithms and data science, as well as the expertise of professional stylists, to deliver monthly subscription boxes curated to suit customers’ unique sartorial tastes.

The secret to Wantable 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, Wantable stylists assemble an “Edit” — a box containing seven items from popular brands such as Levi’s, Lucky Brand, Kenneth Cole, and more — that they think the subscriber will love. Subscribers also have the opportunity to request items from Wantable’s Stream.

Once a subscriber receives their edit, they have five days to mix and match their new items, and then decide which items they want to keep (and pay for) and which ones they’d like to send back. Wantable offers free return shipping, and subscribers can even write notes to their personal stylist offering feedback on what they’d like to see in next month’s edit.

Each box provides Wantable with valuable data points that it uses to refine its algorithm and build out the subscriber’s style profile. And the more feedback a subscriber provides to their stylist, the more curated their Edit. It’s a win-win for both Wantable and its customers.

8. Turn Brick-and-Mortar Locations into Experience Centers

Despite fears that the COVID-19 pandemic would bring about the death of the brick-and-mortar retail store, in-store shopping is back and more popular than ever; however, it looks a little different than it used to.

In the past, the nature of brick-and-mortar stores was largely transactional: the customer walks in, finds the product(s) they’re looking for, pays, and leaves. Although this type of store certainly still exists, it’s easy to see how this doesn’t make for the most engaging experience for customers. In defiance of the status quo, a growing number of retailers are transforming their brick-and-mortar locations into experience centers: places where customers can have one-of-a-kind, memorable experiences.

Sephora was an early leader in transforming its in-store experience, offering beauty classes hosted by professional makeup artists; customers not only get the opportunity to try popular products before they buy, but also walk away from the experience having learned new tips, tricks, and skills. Sephora has since expanded upon its in-store offerings with special events hosted by customers’ favorite beauty brands, brand consultations, new product launches, and more.

Luxury brand Louis Vuitton’s New York pop-up shop is also an excellent example of how retailers can reimagine the in-store experience to enhance retail customer engagement. The space is transformed from top to bottom with the release of each new collection, with lighting, flooring, displays, and more all carefully selected to match its theme. For example: For the label’s summer 2021 “By the Pool” collection, it replicated the experience of being at the bottom of a swimming pool using mosaic-tiled walls and floors and lighting effects that mimicked the rippling of water.

A third and final example: Gibson Brands, the iconic guitar maker, recently opened its Gibson Garage entertainment and retail outlet in Nashville, Tennessee. Located inside Nashville’s historic Cummins Station, Gibson Garage offers visitors the opportunity to not only shop for new instruments, but also test out equipment, see Orville Gibson’s original instruments, listen to live music, take lessons, and build a custom guitar. Given what extensive experience the Gibson Garage has to offer, it’s little wonder that it’s quickly becoming not just a retail store, but a Nashville tourist destination.  

Although it may not make sense for every retailer to take the experience center concept quite as far as Louis Vuitton or Gibson, now’s the time for brands to start thinking outside the box and look for ways to turn their brick-and-mortar locations from places where customers need to be, into places where they want to be.

9. Blend the Digital with 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, but 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 homes. Similarly, virtual showrooms make it possible for retailers to showcase products 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.

Enhance Retail Customer Engagement 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 based on customer experience. That number has only climbed in the years since. To compete on customer experience, retailers must first compete on customer engagement — and 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 to increase customer engagement, enhance the customer experience, and earn customer loyalty.

Enhance your retail customer engagement with Hitachi Solutions; contact us today to get started.