Managing Dwindling Loyalty in Retail Stores

By February 5, 2020Evolve Insights

As it appeared in the Daily Nation on February 4th 2020
Dr. Lucy Kiruthu

When growing up, we would purchase household items from a specific shop at the shopping center. Most of the purchases were on credit. My mother would write a shopping list and the shopkeeper recorded all the purchases in a credit-sales book. On receiving her end month salary, she would make the full payment without fail. This went on for years until she retired. She was a very loyal customer. However, building a loyal customer base did not seem a priority for the shopkeepers. After retirement, my mother started making cash purchases. The cash purchases were no longer concentrated to this specific shop. Many small kiosks had sprung up closer home. In the main town, supermarkets were being established. The choice in the retail space had extensively widened.

In the last three decades, the retail stores have completely evolved. Kiosks are located at every street corner and small and large retail stores are in plenty. Besides the proliferation of retail shops, general supermarkets and specialty stores in most major towns, there has been some growth in online shopping. Today, customers are spoilt for choice. Unfortunately, loyalty levels have been dwindling over the years. Not very many Kenyans make their purchases from a single retail store. Worse still, not many stores are intentional about developing a strategy to build a loyal customer base.

Most large retail stores run some loyalty programs. In these programs, customers get the opportunity to accumulate loyalty points. Besides the accumulation of points, nothing much is known about these loyalty programs. Worse still, many customers do not receive any awards on point accumulation or get cash back equivalents. Enrolling customers in a points’ accumulation program and issuing them with ‘loyalty cards’ does not make them loyal. As the retail space continues to advance and become highly competitive, businesses need to rethink customer loyalty.

Loyal customers are not those that have enrolled in a loyalty program. Loyal customers are those that are happy to make repeat purchases and to refer others. In the face of dwindling loyalty levels, retail businesses need to be more creative in developing strategies that will make their customers come back. Retail customers desire an end-to-end experience that is delightful. Convenience in terms of location and accessibility are crucial and so are the stock levels and the presentation of the products. The willingness of the staff to assist, their courtesy levels and speed also count. Today, retailers have large quantities of data they can use to better serve their customers. They have the opportunity to integrate data into decision-making. Further, in-store shopping can be supported with online ordering and offer more personalized services.

I look forward to the day that retailers will fully engage their customers beyond loyalty cards. This requires a good understanding of the customers’ purchase behaviour. For example, most customers make a regular monthly household shopping. I do not understand why retailers would not go an extra mile to make these purchase painless. Maybe retailers should enable pre-ordering and plan for delivery of the monthly or weekly shopping. The future of retail is bright for those having clarity on how to build loyal customers.

Dr. Lucy Kiruthu is a Management Consultant and Trainer. Connect via twitter @KiruthuLucy

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