Why loyalty sours in modern retail
October 15, 2014

Loyalty programs remain a great way to build customer retention. However, the problem with building retention is that many retailers are losing customers for various reasons. There is an overwhelming sense among merchants that consumer loyalty is no longer a given in the modern economy. Retail sales are down because the foot traffic of patrons has become increasingly inconsistent. There are far fewer customers that return to the store on a regular basis. When addressing the matter of getting people to come back, a store should try to understand why they leave in the first place.

A matter of change
A recent report from Catalina Marketing and Pointer Media Network examine the causes in the drop in customer loyalty in recent years. The major driving point that they were able to conclude is that 33 percent of previously loyal customers have defected from their favorite brand or store in the course of one year and newly committed patrons were not growing fast enough to make up for the loss. That's a major issue among stores. The reason has much to do with the recession and subsequent recovery, as well as the economic uncertainty that overlaps both. With people still feeling ill at ease and not seeing personal improvements in the pay they bring home, there is little reason to stick to specific brands or stores when it's more effective to shop around for less-expensive alternatives.

There are other factors to consider as well. Sales expert Michael Esposito points out that one of the primary factors driving customer loyalty is not transactional, but customer service based. With the purchase of actual goods becoming less of a hurdle for customers thanks to online retail, service is becoming increasingly important for stores. With online reviews making a significant impact on foot traffic, it's hard for businesses to make the case that they're the place people should visit for their needs. Merchants need to address the service aspect of the business first and foremost as a consequence of this shift away from products.

Customer service can be addressed in many ways. An integrated payment system can help in this respect. For example, such a system can accept checks efficiently, opening up payment options for many people. In another case, stores can handle inventory with a greater level of effectiveness than before and can provide stores with an accurate enough picture of the store situation that they aren't caught off guard when a customer demands a special item.

Nexus: G-WEBCD3