The present and future of customer loyalty

Customer loyalty has always been paramount for retailers, but as we wade into 2012 and beyond, it is becoming increasingly evident that retailers have a renewed focus on establishing a strong sense of loyalty and creating an engaging customer experience through cross-channel initiatives that are touching customers both in and — perhaps more importantly — out of the store.

“This is a great time to be a shopper,” said Steve Mader, senior analyst for Kantar Retail. “The shopper’s entire path of purchase is evolving, and it is becoming more fluid across channels and ... more fluid across mediums. I think that retailers and brands are going to have to push themselves to be where the shopper expects them to be.”

While the in-store shopping experience remains important, it undoubtedly is becoming just one slice of a larger, more connected personalized customer experience. Enter social media, m-commerce, QR codes, mobile apps, mobile point-of-sale and in-store kiosks, to name a few.

Retailers, as well as manufacturers, swiftly are wading through the sea of fast-rising technologies to determine how best to leverage them and how to truly engage shoppers and remain relevant in the minds of today’s tech-wielding, information-hungry consumer.

In fact, the recently released joint report by the NRF Foundation and KPMG, “Retail Horizons: Benchmarks for 2011, Forecasts for 2012” indicated that 2012 is “all about the customer.” The survey of 247 retail executives from various sectors found that nearly 67% of companies ranked customer satisfaction as the top strategic initiative for 2012 and, similarly, 82% said customer service strategies will be their top priority in the coming year, up from 75% last year.

For the first time in the survey’s 10-year history, retailers’ websites or online channels eclipsed physical stores as the top channel for marketers (81% for brick-and-mortar versus 86% online). According to the survey, 85% will emphasize increasing online sales, up from 83% in 2011, and 38% will have a greater focus on increasing m-commerce sales over the next year, up from 29% in 2011.

Furthermore, more than half (53%) of those surveyed said they specifically will focus on Web personalization engines in the coming months, which include such enhancements as location-based services and tracking methods unique to shopping habits.

To better serve mobile-savvy shoppers in their stores, retailers also stated that enhancing such handheld technologies as mobile point-of-sale will be a core focus over the next 18 months. While 17% already use mobile POS technologies in their store, an additional 33% indicated they plan further POS investments during that time frame.

“Your best customer is your multichannel customer,” Mike Gatti, SVP at NRF and executive director of the Retail Advertising and Marketing Association, told Drug Store News. “Your big spenders are the ones who are shopping through all of your channels, and they are most heavily engaged with you. So it has become really key for retailers to engage with the customers.”

What’s also important to note is that the industry is evolving to engagement solutions and away from just broadcast messages. One such example is QR codes. These little ubiquitous black-and-white squares must offer customers a compelling reason to scan in order to drive engagement or sales successfully. Simply slapping a QR code on a shelf or product packaging that, when scanned, just redirects a customer back to a brand’s website isn’t likely to meet customer expectations.

“It is interesting to see how all of the different pieces have come about. ... You are seeing all these different pieces of the pie starting to enhance the shopping experience and make it an omnichannel event,” Gatti said. “It is all about making that shopping experience better.”

 

QR codes: To scan or not to scan?
Quick Response, a.k.a. QR, codes are popping up everywhere it seems, from print advertisements to retail shelves to product packaging. For smartphone owners, QR codes no doubt are becoming a part of the purchase process. In fact, the Consumer Pulse study of more than 1,200 U.S. consumers conducted by Chadwick Martin Bailey and iModerate Research Technologies found that half of smartphone owners surveyed had scanned a QR code, and nearly 20% of them made a purchase after scanning.

While 70% of respondents who have scanned said they found the scanning to be an easy process, the results were more mixed when respondents were asked to rate the usefulness of the information they got from scanning the code; only 41% reported the information they got to be useful.

Several industry players, including Rite Aid and Duane Reade, are leveraging QR codes to further connect with shoppers. Earlier this month, Rite Aid announced that it was helping patients manage seasonal allergies with strategically placed QR codes in stores that, when scanned, point smartphones toward local pollen counts.

New York-based pharmacy retailer Duane Reade rolled out its “Get Social with Duane Reade” initiative, which involves the placement of QR codes on store windows and on its website. The code directs users to Duane Reade’s mobile weekly deals site. Walgreens, which owns Duane Reade, also has added QR codes to its print coupons so mobile users can view more deals directly from a smartphone.
Glamour magazine in February also unveiled the Glamour Apothecary Wall in New York, which enabled consumers to buy items using their mobile phones.

 

Getting 'social'
Today, most retailers are turning to social media (e.g., Facebook, Twitter, Foursquare) to further connect with consumers.

For example, Walgreens and Foursquare recently introduced the industry’s first mobile coupon program. Walgreens has 87,740 Foursquare followers, the largest retailer Foursquare following in the United States, according to the company.

How it works: Customers who check in at any Walgreens store nationwide through Foursquare instantly receive a scannable coupon via their smartphone that is redeemable in store.

For its part, CVS/pharmacy hosts for patients live Facebook chats with CVS pharmacists. Earlier this month, CVS/pharmacy hosted a live allergy chat and in February hosted a live chat on heart health and managing cardiovascular disease in recognition of American Heart Month.

 

Gaming for the health of it
Online games are proving to be helpful tools in fostering patient participation by making health care fun. One such example is Healthper, a social game-based health engagement and achievement platform. Members choose games designed to help achieve personal health goals “through fun, personalized and rewarding steps.”

 

Plugging into in-store tech
The virtual world increasingly is weaving its way into the physical store to create an integrated experience, and that is playing out in the form of innovative in-store kiosks and handheld technologies like mobile point-of-sale and iPads.

Duane Reade’s flagship store in New York City features a virtual makeover kiosk, which essentially allows virtual trial before purchase. By uploading a photo and scanning in beauty products of interest, users can see how the makeup will look.

Sephora announced earlier this month that it is testing iPads in stores. Twenty stores have received iPads to help shoppers navigate products and interact with a menu of services offered at the Beauty Studio. Sephora also is using iPod Touches to allow sales associates to help clients find and research products.

 

Mobile apps a healthy market
Many companies are developing mobile apps to better serve their customers and offer greater convenience.

Touted as the “drug store in the palm of your hand,” Walgreens unveiled in March new mobile features — including Pill Reminder and Transfer by Scan.

CVS/pharmacy also offers enhanced shopping and prescription refill functionality for mobile users, including the ability to manage their ExtraCare rewards, scan and send prescription refills and order photo prints from CVS Photo Centers.

Giant Food Stores recently launched a mobile app that syncs with customers’ BonusCards, enabling customers to check point totals and view personalized offers.

It also should be noted that mobile health, or mHealth, is playing an important part in transforming the healthcare IT environment. Mobile health has been defined by a NIH Consensus group as the “use of mobile and wireless devices to improve health outcomes, healthcare services and health research.”

New analysis from Frost & Sullivan stated that the mHealth market garnered revenues of $230 million in 2010, and is estimated to reach $392 million in 2015.

To see the results of our poll — which asked users "What's the most effective way to drive shopper loyalty?" — click here.

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