August 19, 2021
TPL Insights: Building Peak-Performance Cultures #81 – How the Right Digital Experience Drives Customer Loyalty
with paraphrased content from Hathaway + Punch Digital Report August 2021 and Other Sources
A highly differentiated customer experience is one of nine principles at work in organizations that perform at the very top of their sectors. When customers feel better about themselves when interacting with you, they are more willing to make a left hand turn across traffic to shop in your convenience store, drive a mile further to shop in your supermarket, wait for 30 minutes to dine in your restaurant, or fight mall traffic to shop in your department store. The importance of the customer experience is not limited to consumer businesses either. Every customer on the planet now has more choices and higher expectations so we’d all better be paying attention. Digital is extremely important but cannot be seen as a solution in and of itself. Even retail giant Amazon figured out that the human interaction cannot be discounted. Despite the 1.6 million shipments Amazon makes every day to customers, it is easy to get a friendly Amazon customer service rep on the phone if there are any issues that need to be dealt with.
The digital experience is one important element of a total value proposition, but engineering the right digital experience is not easy. B to C and B to B customers alike report that the wrong digital experience can send them scurrying for another solution. Delivering a digital experience that enhances customer loyalty requires a holistic understanding of today’s customer expectations and the ability to anticipate future shifts. With those insights in mind, brands will need to adapt existing technologies and invest in the right platforms. Perhaps the biggest challenge is repositioning how we’ve traditionally thought about customer loyalty. The most successful companies of the 21st century will be those who continually adjust their offerings as customers redefine the total value proposition they seek and the overall customer experience. Regardless of the sector in which we work, we can learn from various formats that seem to have cracked the code.
In convenience stores for example, 81% of respondents to a 1,200-person sample, said they would choose one brand over another if they felt the brand understood them better as a customer. 77% reported they found loyalty programs important. Mobile loyalty programs were in the top three priorities for 75% percent of respondents and took the top spot for 50%. 66% of customers surveyed said they were moderately or very interested in monetary rewards such as discounts and ways to earn points toward purchases. Customers report a strong interest in loyalty programs that provide a sense of being valued – benefits that go well beyond just points and discounts. Lest ye think that digital is the total answer, 72% of convenience store customers surveyed said they would choose one brand over another based on the way they are treated once inside the store. The key then, is delivering a digital experience that is fully aligned with your brand promise and your personal interactions.
Dick’s Sporting Goods, a prime example of total customer experience, now offers customers a single, secure login across all digital and mobile touchpoints. Customers receive regular and relevant communications that are individualized and make the customer feel their relationship with Dick’s is important. Dick’s also goes a step beyond and sends periodic discount coupons that are on top of whatever other promotion might be in effect. Dick’s pays attention. Before optimizing its current omnichannel experience, they worked hard to eliminate impediments that prevented shoppers from navigating digital touchpoints with the same ease as walking from one department to another in a brick-and-mortar store. And here’s how Dick’s, which includes Golf Galaxy, ties it all together. My own personal experience shopping both Dick’s and Golf Galaxy, across multiple locations in multiple cities, is proof that the employees at both make you feel welcome and valued.
Nordstrom delivers one of the simplest and most effective omnichannel digital platforms in retailing today. Its “personal book” software is integrated into its point-of-sale system and provides real time data on customer purchases and preferences to their merchant offices. They’ve tripled their online offerings in recent years and made finding items of particular interest much easier. Since Nordstrom targets busy upscale shoppers that demand online shopping but still want to experience the store experience, they’ve added outside entrances that don’t require shoppers to fight mall traffic. They’ve created “local stores” that don’t have inventory but feature juice bars, nail salons, seamstresses, and fitting rooms for online purchases. Nordstrom’s loyalty program, long a hallmark of its success and contributing to 51% of its sales, is constantly evaluating data and evolving in ways that benefit the customer. And then, there’s the human element. Nordstrom’s store associates are famous for exceptional customer service while refraining from vulture like behavior. What’s not as well known is what a customer experiences if there’s an online snafu. Last year, I made an online purchase that was shipped to an old office address, which was my mistake. To my utter amazement, I received a call from a Nordstrom representative informing me that they had contacted the person who had leased my old office and asked her to hold the item until they could get ahold of me. She offered to have the item picked up and shipped to my current address and offered the option to pick the item up directly from the person who occupied my old office. Now that’s total customer experience!
Delivering the total customer experience is far from simple and few companies do it well. Understanding who your customers are and their vision of what great looks like, creating an emotional connection, capturing, and acting on customer data in real time, using a framework for developing your team and getting regular employee feedback are critical. Our research indicates that a purpose driven culture supported by the board, CEO, and leadership team goes a very long way to enhancing customer loyalty. Since engineering the optimal customer experience requires investment, cost leadership that drives costs that don’t contribute to stakeholder engagement out of the business is also a necessity. At Allen Austin, we have passion for helping leaders build cultures that deliver their best customer experience and would love to have a conversation with you.
Consultants in Retained Search & Leadership Advisory