6 Ways Retailers Can Win Back Lost Customers
By: Jenn McMillen
Bad first impressions don’t just happen on dates. Shopping with a retailer is much like a courtship, and many retailers have experienced the equivalent of a bad breakup following an honest mistake, misstep or because they were used. Here are six ways to win back lost customer love.
Seven in 10 relationships reportedly fail within the first year. Are retail-customer relationships any better?
This is the right time of the year to think about it, when millions of people are celebrating their love and relationships. Because for millions of others, this time of year serves as a reminder of love lost, or love never found. And retailers don’t escape this reality.
Retailers and brands are, in fact, in a constant state of wooing, tasked with convincing every single customer that she or he is special; perhaps “the one.” Sometimes they hit the mark, sometimes they don’t. (Case in point: those out-of-the-blue, “Just for you because you’re one of our very best customers” emails to customers who haven’t shopped with them in years.)
Yet the customer retention rate in retail is just 63%, compared with 75% in banking and 78% in telecommunications, according to the payments services company Paddle. After all, it’s relatively easy to leave one retail site or store for another, and oftentimes, the customer has a good reason to shop somewhere else – price, lack of convenience, lack of product, or just general disappointment.
If Your Shoppers Come Back to You, They’re Yours
But customer disappointment doesn’t have to last forever. Retailers can redeem themselves of the common mistakes most likely to cause a customer breakup. Following are six of those breakup triggers, and makeup tips.
- You forgot about the date. A retailer doesn’t have to be a Romeo to know that when shoppers show up at the store – by its own invitation – they expect the goods to be there. Yet in late 2022, Chain Store Age reported that 71% of consumers said they were frustrated that out-of-stocks are worse now than before the pandemic. Nearly 60% just switched brands when that happened. Makeup advice: The leading causes of out-of-stocks include inaccurate forecasting and inventory counts, according to Oracle Netsuite. Hey, we all make mistakes, and shoppers may forgive them when the retailer owns up to them. Signage can post online order information for out-of-stocks, so shoppers can get what they came for (ideally, with free shipping).
- You were late. Shoppers are increasingly less tolerant of late deliveries. In a 2022 survey by Voxware, 65% of consumers said they would completely abandon a retailer after two or three late deliveries. Makeup advice: Update, update, update. By email, by text, by phone, if necessary. Whole Foods and Amazon set an example to follow with their two-hour delivery service. It sends notifications when the order was placed, when it is being packaged and when it goes out for delivery. Further, tracking options allow the shopper to see exactly where the delivery is en route, and how many stops it is from its destination, so no surprises.
- You’re a bad communicator. Any retailers that request customer contact info should be sure it’s got Cyrano-level communications skills. Know your audience – don’t send sweet offers to Roxanne that make no sense to her. And work on your topics of conversation. If you send the same types of messages, over and over, she’ll stop listening. Makeup advice: Choosing the right word requires retailers and brands to first listen and hear what is important to their best customers. Keyword searches, competitive research and customer service correspondence can provide guidance. Cyrano de Bergerac had a great nose, but even better ears.
- You forgot your date’s name. Even if a retailer is a good communicator and sends promotions that engage the customer, that retailer loses credibility if it addresses the offers to “Dear Customer.” The shopper may continue to take advantage of the deals, but nothing else, because it’s clear the retailer can’t be bothered to even remember a name. Makeup advice: Use loyalty programs and memberships to personalize customer correspondence. Retailers can train team members to use the shopper’s name when it is available. Hotels are very good at this, because their employees know their customers are really guests. Retailers would do well to adopt the same mindset.
- You were used. This tends to occur when retailers woo new reward program members with generous signup perks. This can be an effective enrollment tactic, but a good number of new members may never be back. Makeup advice: In the best relationships, it’s understood that you can’t be all things to one person. Retailers can show one-and-done shoppers that there’s much more to them than meets the eye. Co-branding reward program partnerships, such as those between Kroger and Shell or Target and Ulta, offer a more complex and enriching program relationship.
- You were boring. Look around at the competition, retailers. Dollar General has glammed up its look with the youthful chain Popshelf. Walmart is testing interactive concept stores. Amazon has stopped rolling out Amazon Fresh stores until it figures out how to distinguish them from the competition, RetailWire has reported. Makeup advice: A retail experience that stays exactly the same is reliable, yes, but it can become so ho-hum. This is where retailers can spot shoppers who come for habit, not for loyalty. But loyalty can be won if the retailer follows its shoppers and makes small adjustments to help them feel more important. These do not have to be expensive tweaks. Walmart’s concept store includes improved lighting, a simple effort that can extend a shopping date.
Lastly: You Didn’t Call Back!
Look, pretty much every shopper transaction is tracked today, so the capabilities exist to send even in-store shoppers a text or email after a purchase to thank them and ask for feedback (maybe another shopping date?).
These follow-up communications must stand up to scrutiny. They need to be thoughtful, complimentary and generous in sentiment. Like Tesla did in 2016, when it sent buyers of its Model 3 hand sketches of the vehicle. Or how beauty brands do, when they send free samples with online orders.
However, retailers should not act desperate. The whiff of desperation is real (looking at you, Bed Bath & Beyond). Profitable courtships take momentum, while on-again, off-again shopper relationships can cost a lot. Know when to let go.
This article originally appeared in Forbes.
Forbes.com retail contributor Jenn McMillen is nationally renowned as the architect of GameStop’s PowerUp Rewards, and is Founder and Chief Accelerant of Incendio, a firm that builds and fixes marketing, consumer engagement, loyalty and CRM programs. Incendio provides a nimble, flexible and technology-agnostic approach without the big-agency cost structure and is a trusted partner of some of the biggest brands in the U.S.