How to keep the customer on your side

Customer loyalty, multiple sales channels and social media are just three challenges facing the retail sector. Six experienced executives give Marketing Week their views.

Marketing Week (MW) How do you communicate the concept of “value” to your customer? And has this changed since the start of therecession?

Michael Bates (MB) The recession revealed that a lot of shoppers are still making choices based on quality, as fierce competition on pricing and offers became a given. Value for money has always been at the heart of our business, not just a credit crunch bolt-on. The combination of our strength in fresh food and keen prices is why we’ve gained customers from across the market.

Roy Dickens (RD) As a premium brand, it’s important for Sony to convey the concept of value to customers in terms of product reliability and longevity. As the saying goes “Buy cheap, buy twice”, so over the last year we have offered additional reassurances to our customers such as a three-year guarantee on Bravia televisions and two-year guarantees across our Vaio laptops. In the recession, it’s even more vital that customers feel reassured they are investing in a product that will last for years to come.

Matt Button
Matt Button, Head of customer relationship management at entertainment brand HMV

Matt Button (MBU)

The notion of “value” is obviously important in a retail context, though it can mean different things to different customers and be offered in many ways – not just the low price route.

A key way we are delivering value is through our Pure HMV rewards scheme, which enables members to redeem points earned on purchases at HMV against rewards that money can’t always buy. The success of Pure HMV, which was actually launched just ahead of the recession, suggests that people can be very responsive to this type of “added” value even when consumer spending is tight.

Lisa Looker (LL) HobbyCraft’s promotions calendar gives customers special offers throughout the year.

However, for us the challenge is to provide customers with a greater comprehension of what can be created. The recession has helped drive an increased interest in the arts and crafts category, and the “make do and mend” mindset is gaining traction.

MW Recent research suggests that retailers are losing customers because they are not very good at moving them between sales channels. How do you make sure you don’t let customers slip through the gaps?

LL It is a challenge to admit that customers are no longer segmented as “store shoppers” and “online shoppers” alone. They are both. They might have different buying habits but they are the same people. If we think with this mindset then the marketing challenges are the same for the web as any other media/ engaging with your customers to drive desired behaviour.

Siobhan Fitzpatrick
Siobhan Fitzpatrick Head of brand marketing at Argos

Siobhan Fitzpatrick (SF) The multichannel approach to retailing is a core focus of our business and marketing strategy. Today’s consumer is resource-rich but time-poor so you have to deliver choice, value and convenience where possible. Convenience comes from having instant stock check, reservation and product availability in store.

MB Although we don’t sell online, we know that customers research the offers on our site before they go shopping. So we have an interactive service in the pipeline that will allow consumers to set their offer preferences, receive offers tailored around their purchase choices, create and save their own shopping lists and see their total savings before they decide to shop.

Sean Galligan (SG) Right from the start, we decided that we would be multichannel. We make it as simple as possible for customers; we don’t try and force them along any path towards a particular channel. A customer isn’t bothered about whether our web sales are not as good as our mail order sales, they simply want to place their order and get on with their lives – so we make sure they can use the one that is most convenient to them at the time.

Roy Dickens
Roy Dickens Retail director at electronics brand Sony UK

RD In 2009, Sony UK launched its multichannel retailing platform, bringing together all Sony sales channels into one comprehensive purchasing environment. Customers visiting the website can find the product they want and then place an order online with their local Sony Centre, collect from store or arrange home delivery.

MW How are you using social media to promote your business? Would you say this medium has becomean important marketing tool for your company in 2010?

MB Social media has helped us promote our fresh food expertise to a wider audience and put the food we make to the test through bloggers. In 2010, we want to make the most of social media by increasing the interaction between our bakers, butchers, fishmongers and customers when they’re not in-store.

MBU Brands are now expected to communicate with consumers – particularly younger ones – through social media, and it can shape the view they have of your brand and customer proposition.

As we increase our understanding of these channels and how to use them to engage with customers, we are becoming a little more adventurous. We host monthly podcasts featuring guest artists, and also have our own content bloggers, for example. HMV actively monitors these media channels and participates in and responds to questions, debates and discussions.

RD We have Facebook pages, Twitter feeds and YouTube videos informing customers of new products, in-store deals and company news. These are an invaluable way with which to engage in a two-way communication with our customers.

SF We use social media to provide content, such as product reviews, and our “ask and answer” function helps customers find what they are looking for quickly and easily.
We have also run a number of successful viral campaigns aligned to seasonal events and insights for customers as well as monitoring customer feedback to ensure we add value where consumers most want it.

LL There has been a retail race to get into social media. It is no doubt a powerful way to let customers interact with your brand. But as with any communications initiative it needs to be done in a tone that reflects the brand, as well as being timely and relevant, which is more tricky to get right with an evolving media. We are working on plans ourselves but rather than rush in, we are working on developing an integrated solution with measurable results.

Sean Galligan
Sean Galligan Marketing director at lifestyle and household brand Dwell

SG We have started to use social media to communicate with customers about new products, special events or offers that we are running. Social media should be used as part of a balanced marketing mix and not just another channel to bombard followers with selling messages. I am sure that we will develop more use for social media but the question for us is: how many of our customers are currently using social networking themselves?

MW What innovations do you think are currently most important in developing the in-store customer experience?

LL We’re considering a number of options to enhance and add value to our customers’ shopping experience, but they must also add value to our turnover.

We are trying to develop greater comprehension of what can be made using our products, which has involved a new style of messaging and increased use of photography in store. We recently launched a glossy customer magazine, which has proved to be a very cost-effective way of encouraging customers to shop in our stores more widely and has driven significant sales increases of featured products.

SF Delivering great customer service is a key focus for our business. We have introduced quick-pay kiosks into all of our stores and are working on developing technology and processes to ensure the customer journey is engaging and efficient.

Our customers want a shopping experience that is modern and comfortable and gets them in and out quickly. That’s why we are about to start on a four-year store refurbishment programme to ensure that all stores meet those needs.

Michael Bates
Michael Bates Marketing director at supermarket Morrisons

MB While others trial “assisted service stores”, we remain convinced that basic human interaction is key to developing the in-store experience for our customers.

SG A lot of people see shopping as a pastime, rather than a chore. When customers are out shopping they are looking to be entertained whether that is by products, the environment or by additional activities in stores. When we planned our new flagship store in Tottenham Court Road, we removed as many of the “normal” retailing fixtures and fittings as possible and created themed room sets. As customers wander around, they simply take an item they like and then buy it.

RD A key focus for us in-store is providing interactive product demonstrations. Consumer electronics products are often kept behind glass doors and are not switched on, making it difficult for customers to engage with and understand the products. We are working across all our retail partners, and in particular Sony Centres, to improve the interaction between our customers and our products.

We have also revised our Sony Centre mystery shopping programme to make it more customer-focused. This has seen our monthly average mystery shopping scores increase from 82.2% to 88.8%. Most importantly, the Net Promoter Score, which rates how likely a customer is to recommend their experience to a friend or family member, has increased from 46% to 56.2% – a score that now ranks as a benchmark against other retailers in the consumer electronics sector.

MBU Ultimately, everything comes down to creating an environment that people want to visit and spend time in. This is achieved through look and atmosphere, the depth and range of product you offer, and how you back all this up with excellent customer service and engaging marketing. Get these basic elements right and your business has a chance of doing very well, even in these difficult economic times.

But all this can’t always offset structural challenges such as those facing the music and entertainment retail sector right now, and for this reason HMV is diversifying its product mix into technology, artist/licensed merchandising and fashion. We’re also investing in adjacent entertainment experiences, such as the live music sector, ticketing and even cinemas.

MW What’s the best way to maintain customer loyalty?

MBU Our loyalty scheme helps us to understand our customers much better.

Lisa Looker
Lisa Looker Marketing director at arts and crafts retailer HobbyCraft

LL We let the products do the talking. Customers should be able to find what they want, get ideas and possibly be seduced to try something new, all wrapped up in a relaxed friendly environment and delivered with a level of expertise.

SF We listen to customers talking about what they most want from us and that remains unchanged – choice, value and convenience. We focus on delivering product and service propositions that are broad enough to appeal to most of our customers, while ensuring that we are then able to tailor specific offers appropriately across differing customer needs and types. We then underpin this with a continual focus and commitment to offering great customer service.

SG It’s all about products. If you don’t have good products it doesn’t matter what you do to incentivise customers, they won’t buy. A customer will be loyal as long as you offer them the right item at the right price and the right level and standard of service. If you don’t, they quite rightly walk, simple as that.

MW What are the big challenges of dealing with rival online-only retailers?

LL Shopping remains the country’s biggest leisure pursuit. We need to ensure that we add value to the in-store shopping experience so the customers’ preference is to shop in store rather than online.

MB Only one in nine adults in the UK does their grocery shopping regularly or exclusively online. Food, especially fresh food, remains an emotional purchase. Our customers still want to feel in control of their shopping – touching, feeling and smelling food before they buy it.

MBU An online-only retailer will have just one channel through which to interact with customers, whereas multichannel retailers have so many more points of contact and interaction with their customers. And where such retailers get it right, they can create a more fulfilling shopper experience. Customers want to be able to browse and buy in their own way. Giving them a choice via both store and online channels means that we can cater to all their needs.

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