Differentiated experiences are the new currency of retail success, suggests new PwC study.
To attract shoppers, retailers with loyalty programs can’t emphasize the point rewards aspect and ignore the quality of in-store shopping experiences – because points alone don’t form the basis of long-term relationships.
Indeed, loyalty programs ranked last when PwC US (PricewaterhouseCoopers) asked shoppers in its Experience Radar 2011: Retail Insights study of more than 6,000 consumers what influenced purchase decisions. More important: price (55%), past experience (21%), brand (14%), convenience (7%) and recommendations (2%), trailed by loyalty (1%).
Retailers that differentiate experiences around their products and services can drive growth, profits and lasting loyalty – all while charging price premiums, says PwC, which cites five key elements of success:
• Build psychological connections with shoppers through knowledgeable staff that help affirm purchase decisions and prevent buyers’ remorse. More than half of shoppers said friendly staff assistance was key to winning or losing them.
• Identify, incentivize and promote satisfied shoppers to act as brand ambassadors. Encourage younger shoppers, for example, to share positive experiences through social media to build buzz.
• Use flexible return policies to help shoppers avoid risk and feel less anxious about buying.
• Have a multi-channel strategy in place that makes buying easier online and offline.
• Quickly resolve any problems, and apologize.
Where are retailers hurting their own competitiveness? According to PwC:
• Retailers can gain 8% to 12% additional margin opportunities by offering free shipping, yet 59% charge for shipping products. (2010 Comecore Survey)
• 72% of consumers are unwilling to repurchase from retailers that fail to resolve their issues, yet 69% of customers say they’re dissatisfied by retailers’ resolution of bad service.
• 95% of retailers have or plan to have a loyalty program, even though shoppers rank them last as a purchase driver.
Readers of The Lempert Report know how strongly we feel that supermarkets have wide-open opportunities to delight consumers with many kinds of food experiences. The PwC study points out that stores must concurrently make the shopping experience productive, memorable and worth repeating and talking about.