July 29, 2010 - Customer service has been knocked off its perch by low prices as the
leading factor driving shopper loyalty, according to a new study
released. The COLLOQUY Canadian Retail Loyalty Index a study of 3,500 Canadian
shoppers, shows that the importance of customer service has plummeted
by almost 20 per cent since 2008 as discount retailers make major gains
in Canada. However, the study also reveals that deep discounts are not the only way to customers' hearts and wallets.
The Loyalty Shift
When asked for the factors that most influence their loyalty to a
retailer, consumers revealed a major shift in their views since 2008.
The importance of customer service dropped 18 per cent among the general
population, falling to second place behind competitive price. By
contrast, in 2008, virtually all demographic groups ranked customer
service the most important factor in gaining and keeping their loyalty,
with competitive price finishing a distant second.
Even among most demographic groups that still rank customer service
as the top driver in shopper loyalty, its lead is narrowing. In Quebec,
importance plunged by 25 per cent in 2010. Similarly, for both seniors
and women it dropped by 20 per cent in importance. The only
exception is young adults, whose views of customer service as the top
factor in loyalty are virtually unchanged since 2008.
Despite the large drop in the importance customer service plays as a loyalty driver in Canada,
the Canadian experience pales in complexion to the US, where a similar
study by COLLOQUY reveals that low prices have become even further
entrenched since 2008, leaving little room for retailers to win on
anything but price.
"While the recession played a major role in driving consumers to
low-price stores, even as the economy recovers the need to deliver a
good customer experience and value is the new normal for all
retailers," said Kelly Hlavinka, author of COLLOQUY Canadian Retail
Loyalty Index and COLLOQUY Partner. "But value doesn't just mean low
prices. Stores that can identify the shoppers that contribute most to
their bottom line, and how to satisfy them, stand the best chance of
survival and success," she added.
Winning strategies for the new retail normal
Since there can only be one low-price "leader" and given the risks to
retailers associated with continuous price cuts, the COLLOQUY Canadian
Retail Loyalty Index suggests the following strategies for retailers:
- Be wise about where you can win. While retailers may not be able to
beat Walmart on price, there are other places to win, from selection
to in-store service. Better yet, retailers can win by knowing and
understanding their most profitable customers and what they want.
- Deliver more value. While the recession hangs on, promotions aimed at
a retailer's best customers and partnerships can augment the value
customers receive in return for their loyalty.
- Collect the customer data you need to succeed. By casting the net wide
and collecting customer data, retailers can ensure their
communications, pricing and product selection hit the bullseye with
their most profitable customers.
- Look local. Examine additional marketing opportunities within a
tighter range of store locations to court nearby customers, and to
attract new and previously infrequent shoppers.
To read the full COLLOQUY Canadian Retail Loyalty Index visit: http://www.colloquy.com/files/2010-COLLOQUY-RetailTalk-Canada.pdf