Are retail customer relationships still a reality?

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By: Wise Marketer Staff |

Posted on July 2, 2007

Carlson Marketing and Peppers & Rogers have published the results of their Relationship Builder 2007 study on the current state of customer relationships within the retail industry.

In the most recent chapter of its ongoing research series, in partnership with online survey firm Zoomerang, the Carlson put the retail sector's consumer relationships to the test. Nearly 1,200 consumers took part in a comprehensive survey providing a clear look at the current state of customer relationships within the retail industry.

Are relationships a reality?
The research report answered the question of whether or not customers are having real relationships with retailers. The simple answer of course is "Yes". Customers do have meaningful relationships with retailers, and the range of the strength of those relationships is broad. Among the US retailers with the highest level of relationship strength are Barnes & Noble, Hallmark, Bath & Body Works, Best Buy, Old Navy and Target.

However, in all cases, there remains substantial room for improvement. The study found that the strength of the relationship between a retailer and each of its individual customers is not uniformly equal. There is an opportunity to improve on an overall basis as well as individually, based on the variances in relationship strength among customers within retailers.

Retail relationship best practices
The Relationship Builder survey suggests the top ten things to remember for retailers that want to build stronger, more meaningful relationships with their customers, including:

  1. Loyalty programmes drive incremental purchases
    One-third (33%) of customers agree that direct participation in a loyalty programme has resulted in the purchase of additional products from a retailer that otherwise would not have occurred.
  2. Satisfaction alone is not sufficient
    A large segment of customers (41%) are at least as satisfied with other retailers as with their primary retailer.
  3. There's always a competitor
    More than half of customers (51%) state that there are many other good retailers, any one of which could serve as an alternative to their primary retailer.
  4. Be nice to the customer
    Customers agree that "being easy to do business with" (89%) and having "good customer service" (90%) are important attributes in preferring one retailer over another.
  5. Aim for alignment
    When the interests of the customers and the retailer are perceived as resulting in a mutually rewarding experience, the alignment enhances the likelihood to recommend the store or company to friends and family, remain a customer, and shop more at the retailer (68%, 39% and 43% respectively, for those with high as compared to low levels of alignment).
  6. Brand is big
    Almost two-thirds (64%) of customers agree that familiarity with a brand name plays a role in the choice of a retailer. The effect is even larger for those with a high versus low level of relationship strength.
  7. Customers are human
    Among the top three most important considerations when interacting with customer service are staff courtesy (59%), apologizing when something goes wrong (32%), and being empathetic (28%).
  8. Morality matters
    Customers agree that the reputation (70%) and the moral values (50%) of the retailer are important when choosing where to spend their cash.
  9. Web sites work well
    Almost two-thirds of customers (65%) use a retailer's web site for activities such as searching for merchandise, learning more about the store, and reading about news or offers. The percentage varies considerably by the type of retailer (department store, 71%; grocery stores, 44%).
  10. The basics are essential
    Customers overwhelmingly agree that having the best price (93%) and a good selection / availability of merchandise (93%) play a role in determining where shopping occurs.

"Knowing that customers have varying degrees of relationships with retailers, the Relationship Builder 2007 study addresses the key question of whether it really matters if retailers get it right," said Luc Bondar, vice president of loyalty marketing, Carlson Marketing. "We all know that building better relationships in retail certainly makes common sense, but at the end of the day, does it actually enhance customer recommendations, retention and intent to shop more with a specific retailer? The answer is a resounding 'yes'."

Thriving and not just surviving in the retail marketplace requires more than just executing the basics, Bondar concluded. It requires building strong relationships that in-turn enhance customer recommendations, retention and shopping. Today, some retailers are already doing this better than their peers, but there is much room for improvement across the board.

The use of loyalty programmes, improvement of communications, customisation, personal relevance, and frequency are all 1-to-1 approaches highlighted in the study as mechanisms for delivering better retail results.

Download the report
The full report has been made available to download from Carlson Marketing's web site - click here (free registration required).

At the core of this research is a model of relationship strength developed by Carlson Marketing and founded on the work of Dr. Robert Morgan at the University of Alabama. This model places customer relationships in a mediating role, residing between the marketing activities or antecedents that influence (positively or negatively) those relationships and the outcomes that occur as a result of changes in relationship strength.

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