Customer Loyalty and COVID-19: Make Loyalty Your Top Priority Before It’s Too Late
The impact of COVID-19 on the United States is going to be brutal. S&P Global Ratings forecasts global GDP falling 2.4 percent this year, with the U.S. contracting 5.2 percent. Meanwhile, the Commerce Department reports U.S. consumer spending decreased 7.5 percent in March, the sharpest monthly drop on record since 1959.
Communities and businesses are reeling—a Bellwethr survey of 400 U.S. small-business owners reported that 77 percent of the respondents saying the coronavirus negatively impacted their business have already seen a decrease in sales revenue. Surprisingly, only 67 percent of the respondents said their organizations are making more of an effort to retain customers. This shocks me. What are the other 33 percent of companies doing? When you’re up against decreasing revenue, shortening hours, or closing doors altogether, how can a business justify not trying their hardest to retain customers?
On average, it costs five times more to acquire a new customer than it does to retain an existing one. I’m confident that the cost of customer acquisition is significantly higher in our COVID-19 era, as caution and uncertainty tighten wallets and nurture indecision.
Every business should be questioning how customers’ loyalty has changed in the months since COVID-19 and looking for ways to stem customer attrition. Personalization, done correctly, can be a powerful contributor to customer loyalty and guard against customer churn.
Start With Your VIPs—Loyalty Programs
Your current loyalty program, in whatever shape it’s in, is the obvious and correct place to measure COVID-19-driven behavior changes within a strong sample and then enhance the program to improve customers’ experience and loyalty.
Take a hard look at what works with your most engaged customers and continue to make it all about them. At the same time, be sensitive to customers’ current financial situation by offering double points, unique promotions, or special incentives. We have customers displaying personalized pricing throughout their website, based on loyalty program tiers, and it has increased average order value and promoted repeat visits and purchases.
Use post-pandemic shopping data to enhance your loyalty program beyond the “spend-and-get” model, allowing users to, say, save up for a discount on favored programs, or even to get rewards that aren’t conversion-based. For instance, you can reward customers when they share content, refer a friend, leave product feedback, or respond to an email.
Segment Your Heart Out
The pandemic and recession has affected people, regions, and industry sectors differently. Your traditional messaging or persona strategy won’t deliver the same results and may even offend some of your customers.
For example, not all states are under stay-at-home orders. If your audience crosses state lines, you’ll want to segment carefully before sending an in-store promotion to an audience in a state that can’t lawfully or easily redeem the offer, and instead move that promotion to your website.
Thoughtful segmentation is key here. Take the time to create more nuanced customer segments or refresh your personas, so you deliver hyper-targeted messages that are sensitive to your buyer’s current circumstances. Think through how lifestyles have changed and where your products or services supplement gaps, ease challenges, or spark joy. Grow loyalty through thoughtful and helpful content and promotions delivered to the right audience.
Get Your Data and Algorithms Off Autopilot
Similarly, refresh the data driving marketing programs to mimic current behavior. All consumers and businesses will need to make purchases, but their buying behavior is likely to change. Use real-time or very recent data to personalize marketing campaigns with offers that are relevant to your customers’ evolving shopping patterns. Focus promotions and content around the items they care about now, not what they cared about before.
All running automations need to be checked or modified for context within the COVID-19 environment. Don’t overlook your product recommendation algorithm, one of the most effective automations helping customers find the right products for their needs.
For example, one of our clients has modified its Episerver Product Recommendations algorithm to present items at a lower price point ($15 and below). This small adjustment helps customers tightening their wallets find products they can afford and ensures the brand remains compelling in the current climate.
Another strategy: Offer similar products at a slightly lower and slightly higher price point on your product details pages. This can help you service customers of varying financial means.
It’s All About the Customer Experience
With the high cost of customer acquisition, no business can afford to lose loyal shoppers. This is especially true today, when finances are challenged and consumers and businesses alike are reconsidering their budgets and purchasing decisions.
Personalization is all about making smart decisions about your customers’ experience to cement their loyalty. Of course, AI-driven personalization must be trained to understand your customer base, selling goals, and the behaviors you want to encourage, especially when they’re in flux. Take this opportunity to deep-dive into your audience, unearth common and changed behaviors, and deliver the best possible customer experience to reduce churn. In the end, the best customer experience wins.
As CEO of digital agency Whereoware, Michael Mathias leads Whereoware’s strategic vision and culture of innovation, comprehensive digital marketing, and flawless performance. Mathias comes to Whereoware with an impressive track record accelerating growth for companies at all stages, with expertise spanning marketing, software, professional services, Big Data, analytics, and technology.