Technology Record - Issue 23: Winter 21/22

168 www. t e c h n o l o g y r e c o r d . c om V I EWPO I NT The loyalty balancing act M I CHA E L K L E I N : ADOB E S Y S T EMS Keeping existing customers happy while attracting new ones is a constant balancing act for retailers. A focus on personalisation can make all the difference Retailers understand the importance of marketing to existing customers to drive loyalty, especially through digital channels. And with the cost of acquiring a new customer continuously increasing, they must balance the time and effort expended on existing customers versus sourcing new ones. This means making sure brands are inspiring loyalty and growing the customer lifetime value. But that can be difficult, especially at a time when consumers are hopping from one website to another, and worldwide supply chain issues are forcing consumers to purchase goods from alternative merchants, challenging loyalty. Personalisation and first-party data strategies are at the heart of Adobe’s strategy for the retail sector. The key is to inspire loyalty by delivering experiences tailored to the consumer. Larger retailers don’t necessarily have an advantage here. Our 2021 report, Failure to Scale: The State of Personalization in Retail and Travel, reveals that while large retailers have resources to drive personalisation, smaller retailers are also developing strategies in this regard. The larger global retailers, such as Alibaba and Amazon, have major footprints and can devote significant resources to building customer loyalty through personalisation. But size is not everything: the grocery, personal care and apparel sectors, for example, benefit from the availability of abundant first-party data, along with high recency and frequency of customer orders and interactions. In contrast, retailers in sectors such as home appliances or consumer electronics may need to over-index at times on finding new customers, simply because activities like furnishing a new home or purchasing a new computer do not happen as often as grocery shopping. Another aspect of building customer loyalty is recognising that it is not just about having an ‘earn and burn’ loyalty programme – one that enables customers to earn points and discounts, fly all over world, or go to hotels. We are seeing a paradigm shift, where ‘earn and burn’ is still part of the equation but there are other factors, including quality of service, quality of product, and personalised services that might make the customer feel more part of a community. When it comes to fostering community, we see this happening with apparel brands’ efforts around sustainability. This feeds into another part of loyalty around behaviours and social consciousness. Consumers in the younger generation (joined more recently by other demographics) have indicated to us that if a brand is a little more conscious in how they manufacture or source their goods, they may attract more loyalty as a result. It’s no longer enough to say to these customers: if you patronise my brand, I will give you a discount somewhere along the line. “It is critical to fully understand who the consumer is to deliver the best customer experience”