More people might be shopping online than ever before, but the concept of loyalty within retail has arguably been thrown up in the air.
Due to changes in our daily habits, the reasons why a consumer shopped at a particular retailer before Covid might no longer be relevant, or even still exist.
This is a topic I recently discussed with Christian Selchau-Hansen, the CEO of enterprise software company, Formation.ai. Formation helps large companies connect with their customers, using artificial intelligence and machine learning to deliver personalised offers and experiences that are relevant to individual consumers.
“The trend before (Covid) was already customers demanding ever-more relevance for their time,” Selchau-Hansen explains. “The pandemic has accelerated that trajectory quite a bit. What we’ve seen is that customer behaviour – particularly for digital engagement – has moved ahead somewhere between five and ten years.”
Relevance is expected (regardless of sector)
That’s not to say that consumers didn’t have high expectations before the pandemic.. Selchau-Hansen reminds us how these expectations have been set by brands and platforms delivering high levels of personalisation. “If you think about what you might watch on Netflix, how you might engage on Instagram, or if you’re doing online shopping perhaps through Amazon, each of those experiences – which have only gotten more of your mind-share in a post-Covid world – each are curated just for you,” says Selchau-Hansen.
“Once someone gets used to having that high bar of relevance, which is making it easier for them to find things that they value, they want that to be persistent – across any of the customer touchpoints.”
Essentially, a relevant experience is what keeps customers coming back for more, and it is also the criteria that leading brands are measured against. “What we’ve found is that customers are not just comparing a grocer to a grocer, or an airline to an airline – they are comparing any one of those businesses to Netflix, or to Google, to Facebook, in terms of the kind of customer relevance that they expect.”
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Patterns of loyalty have changed
Of course, Covid-19 has impacted consumers (and their behaviour) in a variety of ways. This includes financially, meaning that value for money is now more of a priority for some people. At the same time, the concept of convenience has changed, with city centre retailers no longer offering commuters the convenience they once did.
As Selchau-Hansen explains, “Before Covid, the major decision criteria that you had as a customer was ‘It’s a product or service or brand I enjoy – and it’s convenient’ – but the convenient component of that has completely gone away. And so, what we have seen is significant changes to customer behaviour.”
So, surely this has also had a knock-on effect on loyalty, I ask? Selchau-Hansen suggests that Covid hasn’t changed the importance of loyalty to a business or impacted what it means to maintain a great customer relationship. However, what it has changed is almost everything that retailers might have previously considered about capturing it.
“When it comes to loyalty, all of the patterns, the personas, the segments, the types of customers and the reasons that they came to your business – almost all those things have changed. Even more when you put on the lens of safety, which became either important or the critical decision criteria for many customers this year – that also changed everything.”
For Formation’s clients, which include a number of grocery retailers, the focus has shifted to recognising new customer priorities, even if that means going against what might have previously been considered off-putting. Take safety, for example, whereby grocery retailers are focused on signalling safety measures to reassure customers (rather than hiding them, or deliberately making everything appear as it was before).
“So, this now means restricting the number of people in the store at any given time, spacing to remind people about social distancing, and having regular reminders and announcements over the PA system about cleaning,“ Selchau-Hansen explains. “Even the smell of disinfectant which, pre-Covid, would have been a negative – all of a sudden has become reassuring and a signal that cleanliness and safety is being prioritised.”
Personalisation matters
Signalling safety just so happens to be relevant to most people right now. But in order to lock in longer-term custom and loyalty, Selchau-Hansen suggests that retailers need to delve deeper into other factors that are now prioritised by consumers.
“I’m no longer going to the office anymore, so places I used to go for lunch three or four times a week are not seeing me,” explains Selchau-Hansen. “Now my local burrito place sees me quite often. So, in terms of loyalty…. personalisation matters, and the part of personalisation that matters is recognising the changes in the customer – both the preferences and the behaviour and being able to tailor the customer experience to those new changes.”
Selchau-Hansen also suggests that agility is key. “If you can recognise the new needs that your customer has more quickly, then you’re going to be able to serve them more effectively; to engage them, and to establish that ongoing relationship that leads to loyalty,” he says. “Personalisation has played a role before and after, but I would say the biggest difference now is if companies can recognise this quick change, and continuing change in customer behaviour, they are going to be more successful.”
Tailoring communications to individual consumers
While grocery retailers might have seen an increase in demand from consumers, other industries must acknowledge and even embrace the fact that consumers are less willing to engage (due to the impact of Covid).
“One of the companies that we work with is United Airlines”, says Selchau-Hansen. “And one of the things that United has done is to recognise that the readiness to travel is something that is very individual. It could be your particular risk profile, a family member’s risk profile, a part of your job – all these things influence your readiness and ability to travel.”
Selchau-Hansen explains how United Airlines has been taking this ‘readiness’ into consideration and tailoring their communications and customer experience based on that.
“For someone in a higher risk profile with a lower willingness to travel, this means making sure that the communications coming from United are far more educational as well as infrequent and really, again, tailoring it to this need. In contrast, someone who has a much higher willingness to travel should be starting to get more information about how they can continue to do it safely, what precautions the airlines are taking, and how they are making it safe and effective.”
What will the future look like?
So, when life returns to relative normalcy, will we see customers revert to habits that were formed before the pandemic? Selchau-Hansen argues that – as well as the acceleration of digitally-enabled commerce – certain new behaviours will stick.
“We have seen changes in how consumers see value in different types of engagement, which could be moving some of their purchases for home delivery instead of in-store pickup. Also, there is the expectation that engagement with brands in both the digital and the physical realm will be more seamless – I think that’s only going to continue.”
“Actually, I think what we will see is a number of the ways that we have changed our behaviours because of Covid absolutely going to remain and continue. It will also further accelerate how companies can connect with their customers in a more individual way, and how they do so by providing more value for those engagements.”
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