Friday, August 28, 2009

Customer Loyalty Shifting From Brands To Retailers

Customer loyalty has always been a hot CRM topic. Thus, the main focus of a CRM strategy is to build a strong customer lifetime value, capturing its loyalty, in order to insure larger cashflow from this specific customer.

Brands have always been great in marketing, and retailers, kind of the followers. In the category management field, which aims for both the brands and retailers to collaborate to enhance departments performances, brands have always been sort of the provider of customer insight, which would ultimately lead to customer loyalty.

Now, based on years of studying people's shopping habits, Hartman Group's researchers predict consumer loyalty is shifting from products and brands to retailers, particularly those that offer shoppers an experience rather than just goods.

That is exactly what I was exposing you not so long ago, about customer experience marketing

"People don't relate to brands in the same way they used to when there weren't that many products to choose from," said Hartman Senior Vice President Michelle Barry. "Capturing the attention of the consumer requires different tactics, getting a lot more intimate and experiential."

Customer experience aims to bond with customers, and as the retailer can be close to customer's daily life, it is the best placed to get valuable insight, and hence, create customer loyalty. Therefore, even though customer experience improvement effort might be difficult to estimate in term of return on investment, it is indeed a valuable asset, which will create customer loyalty and provide a great competitive advantage.

The Starbucks Example
Starbucks is the best example of how you could turn a classic business into a great customer experience that will drive high revenues. "Starbucks took a tired product category and transformed it into an entire world," he said. "Imagine if someone had walked into Folgers and said, 'We have a new business model for you: Open thousands of stores around the world based around the espresso bean.' It's hard to get somebody to wrap their head around what could be."

It also explains the reason why French retailers are so eager to develop private labels, to create differenciation with the competition.