Retaining customers for the long term – three waves of retail customer engagement


John Watling | Managing Director | Retail Business | Accenture Africa | mail me |

New shopping habits brought on by the pandemic are creating both challenges and also huge opportunities for retailers to rethink their customer retention strategies.

The pandemic accelerated key trends that were already well underway. According to Euromonitor International, South African e-commerce grew by 56% in 2020. Master Card data also shows 68% of local consumers are shopping more online since the start of the pandemic, and 71% of them will continue to shop online. But how do retailers keep these new digital customers over the long term?

Developing a differentiated customer engagement strategy will be critical for retailers to maintain brand relevance and cultivate stronger loyalty.

Adapt to a new definition of customer value

In a best-practice digital channel, new customers get plugged into ‘welcome campaigns’. Here they receive personalised messages acknowledging their status and nudging them to engage or shop again.

Retailers that don’t follow suit are blowing a golden opportunity to retain these new customers by turning insights into action and providing an experience that recognises their value. Worse still, more digitally native brands are chasing hard after the existing, often highly profitable, customer base of traditional retailers.

So, how are retailers performing when it comes to not only gaining deep insights into customers, but acting on those insights at scale to generate more value for and from customers over the long term?

In our experience, retailers are spread across the customer engagement maturity curve, which has three distinct waves:

Wave 1: Know thy customer

In this wave, retailers are just starting their digital journey, with a primary focus on understanding the customer.

The majority of retailers are still in this initial wave. They use basic segmentation methods to target customers with minimal customisation of content. Assess current capabilities (people, process, and technology) and identify gaps that prevent the retailer from gaining visibility into customer data and deriving insights.

They set the customer strategy by aligning on the right growth objectives and strategic goals with the rest of the organisation, along with measurable and controllable KPIs.

They determine the relative value of their customers by applying analytics to behaviours, journeys and purchases.

Most retailers in Wave 1 have access to customer data and may have small teams that perform customer analytics to support ad hoc operational decisions or reporting, but often they lack the understanding, skills and ability to inform deliberate action to engage customers.

Wave 2: Begin to take action

In this wave, retailers are deliberately structuring their data and insights engines to fuel personalised action.

These retailers typically summarise insights into key themes and outline specific actions that different business teams can own and act upon, for example harvesting data from social channels and leveraging browsing data to inform marketing creative and email copy.

They employ advanced techniques, such as multidimensional segmentation, customer profit clusters, and behaviour analytics to automatically personalise their messages. They establish clear governance and ownership across the business so incentives are in place to drive action.

Most retailers in Wave 2 experience operational drawbacks that prohibit personalisation at scale, and while they have the data and analytics prowess, these retailers find it very expensive and labour intensive to progress further in their personalisation ambitions.

Wave 3: Provide full personalisation for each customer

In this wave, retailers deploy one-to-one personalised journeys in a seamless and automated way at scale, usually with the help of artificial intelligence and machine learning, often running on cloud-based systems.

These retailers have made a deliberate and significant investment in their business model, technology, and workforce, and have complete alignment within the organisation that customer strategy is the core priority for the business.

They pair analytics and augmented third party data with AI to understand the tastes, wants, and behaviours of individual shoppers and take predictive actions at the individual customer level at exactly the right time during digital engagement. They adopt cutting-edge personalisation as a core part of their customer engagement strategy.

With all these capabilities in place, retailers in Wave 3 are best positioned to create long-term loyalty and customer value over time.

Here are five steps to set retailers on the path to Wave 3:
    • Understand where you are today – What percent of your customer communication is personalised? How are you activating personalisation across multiple levers using customer data? Are you adapting to consumer behaviour using analytics and making data-informed decisions?
    • Align on customer strategy – Gather the right customer insights Put in place the right KPIs and analytics to measure truly customer-centric and retention-focused behaviours and activities.
    • Assess your current technology – Determine current gaps in the technical architecture and how best to close these, such as using partners for speed to value where appropriate.
    • Turn insights into action, at scale – Summarise insights into key themes and outline specific actions that different business teams can own and act upon.
    • Establish clear governance – Assign clear ownership and incentives to equip your organisation to deliver on the customer strategy.

From retention to value

Customer-centricity throughout an organisation is what Accenture calls the Business of Experience (BX). It’s a holistic approach that allows organisations to become customer-obsessed and is a hallmark of retailers in Wave 3. On average, we see BX leaders outperforming their peers by 6.5 times of profitable growth in year one.

The transformation required to sustain customer loyalty is substantial. Retailers that master individually personalised interactions at scale will be best positioned to create value for, and hold on to, their new digital customers gained from the pandemic, as well as the existing ones who are shopping online more than ever.

Now is the time for retailers to rethink their customer retention strategies and configure their organisations for success, capturing the hearts and minds of consumers for sustained growth.



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