Loyalty Â– the Elephant in the Room? Win an iPad
A recent report for SMG revealed that by 2015 63% of retailers expected that they would spend more on acquiring new customers than on retaining their existing ones.
This percentage is a mirror image of 2005, when 63% focused their spend on retaining their customer. This huge change is despite the fact that the same retailers say that they get a higher profit margin from loyal customers than from new ones.
Why the change, and how important is it?
The same report identifies that key elements in driving customers from retailer’s doors is poor service and product availability.
Confirmation of the scale of the problem comes from a recent report (In Place of Price) from the Institute of Promotional Management (IPM). 32% of those polled reported that they very/quite often made a trip to a supermarket because of an advertised price offer only to find it out of stock when they arrived. (fast.MAP research 2010).
16% of these shoppers reported that these out of stock positions would affect where they shopped in future. Here, then is ample evidence, in the major fmcg retailers at least, that let the customers down, and you lose them.
Retailers just not interested enough in Loyalty
Dave Poole, Retail Operations Manager Pets at Home commented, “Attracting new customers in new locations is vital but with both new and existing customers what remains important throughout is the in-store experience — it is this that will create and improve customer loyalty.”
The SMG report identifies that over 60% of the respondents thought that US retailers delivered better service. At the same time, they said their companies were satisfied by much lower levels of service satisfaction (40% as low as 3 out of 5).
US retailers, meanwhile, are persuaded by a Harvard Business school report stating only a rating of 5 out of 5 turns satisfaction into loyalty.
Unless UK retailers can keep the new customers they are planning to invest so much in acquiring, spend in this area is bound to expand exponentially further down the road, as return on this spend dives.
The Retail Bulletin, in association with the Institute of Promotional Management, are interested to hear our readers’ views. For your chance to win an iPad, just complete 7 questions in our survey; or if you prefer, you can remain anonymous.
Click here to take part.
The Retail Bulletin is holding its 2nd Customer Loyalty Conference, sponsored by Barclaycard Freedom, at the Cavendish Conference Centre, London W1 on the 15th June 2011. The interactive programme, which looks at key loyalty challenges, will enable a focused peer group of retail and hospitality executives the opportunity to maximise loyalty, profits and market share in today’s multichannel marketplace. For further details click here.
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