Experience Creates More Loyalty Than Price
New research from Forrester finds that when it comes to building loyalty, people respond more to the experience they have with the retailer than with their perception of price. And brands like Marshalls, Amazon, Trader Joe’s and Costco are ahead of the pack in using that experience to drive sales and relationships.
The study reports that for stores, customer experience accounts for 47% of loyalty; when price/value is factored in, it rises to just 47.2%. For banks, also included in the research, it amounts to about 55%. Adding the price/value analysis, it rises to just 56.3%.
“We found that retailers are already pretty good at delivering customer experiences, and traditionally have done a good job,” analyst Maxie Schmidt-Subramanian, author of the research, tells Marketing Daily. “We seem to see something like a 'zone of consistency.’ As long as retailers are priced reasonably in line with key competitors, and their prices stay in a competitive range, improvements in customer experience are much more critical to create and sustain customer loyalty than trying to lower prices.”
But since stores do tend to perform so well (for four years running, retailers have earned the highest average score across all industries in its Customer Service Index, with Marshalls coming in first place), it becomes harder for any one brand to shine.
In order to move the needle, she says, stores need to focus on the core components of positive experiences, including:
* Meet customer needs. “If the product or service is wrong, price becomes irrelevant,” she writes.
* Make it easy. That can include anything from keeping store aisles clear to making it possible to start shopping online, and then still find the items in your cart when you switch to mobile. “Amazon’s two-day shipping and one-click ordering continue to make a strong impact on shoppers,” she says.
* Make it enjoyable. “That comes down to basics, like making sure dressing rooms aren’t messy and that it’s not a hassle to use your coupons.” And stores like Trader Joe’s, QuikTrip, and Costco may be low cost, she says, but the amount they spend training their employees to be more knowledgeable makes the experience more pleasurable.