For a retailer, these are the best of times; these are the worst of times! These are times of plenty as far as the pool of customers is concerned; these are times of scarcity as far as the customers’ loyalty is concerned! The same technology and channels that empower the retailers have also empowered the customers. And when you think about it, most customers are also retailers of some product or service. Thus they are aware of standards expected. Thus, any retailer today faces at least 8 challenges:

 The customer is pampered for choices. Gone are the times when he had to choose between a handful of brands. Today, there are dozens and even hundreds of brands even in the luxury sector which was supposed to be exclusive in every way.

1. Every customer is more knowledgeable and she compares each little feature, advantage and disadvantage of the product/service to assess the value for money it offers before making a purchase.
2. Armed with greater knowledge and greater choices, the customer takes much longer to become loyal to a brand. Every retailer has to invest much more resources to get a conversion and even more resources to ensure that the customer returns for repeat purchases.
3. The traditional hierarchy of a manufacturer selling to wholesalers who in turn sell to retailers is fast breaking down. Realising the potential of brand-building and retail sales, many companies are also launching their own individual retail channels. Thus, the competition is hotting up and it is only bound to get more intense.
4. The digital disruption has hit hard at the retail industry. Today, it is no longer good enough to have a strong physical presence providing a wonderful customer experience. The lines between the real and virtual worlds have almost smudged and the customer seeks a multi-channel experience while purchasing. And there too, the customer demands the same experience and treatment with no difference between the virtual store and the brick and mortar store.
5. For a retailer, it is no longer sufficient to be able to provide the highest quality of goods or services. The demanding customer seeks experiences today. Thus, the retailer faces the challenge to gather, integrate, analyse and intelligently use customer data to constantly innovate personalised and customised experiences. This is what makes the purchase process memorable.
6. With the explosion of social and digital media and technologies, retailers face the dilemma of having to choose and pick the optimal channels for communication and the best technologies for results.
7. Leveraging customer data brings immense benefits for retailers. But it is a double-edged sword opening up a pandora’s box of security concerns. The slightest error could potentially lead to great damages to the customer and so, badle affect the retailer too.

 If failures are stepping stones, challenges are escalators towards greater success! When the retailer puts in efforts to achieve seamless multi-channel experience, customised offerings and genuine customer service, there is bound to be success that builds customer loyalty which lasts for years.

In this data-driven age where everything is broken down to and measured by numbers, it is a startling statistic that acquiring a new customer costs 7 times more than retaining an existing one! That fact alone should be sufficient to emphasise the criticality of customer retention. Yet, more than 50% of companies and brands have greater focus and emphasis on customer acquisition compared to the mere 16% that focus and emphasis on customer retention!

 Why Customer Retention Becomes Even More Important…

 Since existing customers contribute 65% on an average of a company’s business and are also 50% more likely to try out new products, evidence is clear that retaining customers should be the dominant strategy for any brand or business. However, nowadays, customer retention becomes even more important primarily because of the following 4 reasons. 

1. Gen Z, the latest generation which is becoming adults, is the potential customer group for almost all businesses. This generation is very experimental in its mindset and are immune to the traditional marketing strategies for customer-retention. They have the least brand loyalty among all the generations so far. They are also the most diverse generation racially and ethnically. Naturally, they have forced businesses to completely rethink strategies on how to retain them. 
2. The Covid-19 pandemic has made the world more virtual and digital with multiple competitors lurking just a click away from customers. In this aggressive and predatory scenario online, customer loyalty is possibly the brand’s/business’ only defence. 
3. Sensing the shoppers preference for brands and businesses that run loyalty programs, more and more businesses and brands are coming out with such programs. Therefore, loyalty programs are slowly becoming more of an expectation rather than something that delights the customer. This will force brands to think deeper and innovatively to retain customers. 
4. From 0% a few months ago, the chances of a global recession exacerbated by inflation is close to 40% in 2022-23. Everyone cuts back on spending (especially on discretionary items) and the least affected brands will be those with the highest customer loyalties.

The Key To Customer Retention

A whopping 89% of companies agree that the most important factor driving both customer loyalty and customer retention is the customer experience. Customers have been so pampered these days that they expect delightful experiences throughout the purchase and service journeys.

Creating an experience that is more immersive and engaging, rewarding the brand pioneers and first users, inspiring and motivating consumers beyond the product/service, making shopping fun by taking it social and finding newer ways and means to save the consumers’ time will all make for a delightful customer experience. That in turn will enhance their loyalty and boost your business’ fortunes.