By Michael Rolph, CEO of Yoyo Wallet
A report published by analysts Retail Economics for the law firm Womble Bond Dickinson states that 53% of UK retail sales will be online within 10 years, doubling its share of the market, and casting further doubt on what looks like a bleak future for the high street.
With the world of e-commerce dominated by the likes of Amazon, the competition seems relentless – and more than ever before, retailers are feeling the pressure to deliver a customer experience that can generate crucial repeat business. If they fail, they won’t survive in such a competitive and fluctuating market, and the high street will continue to struggle and the odds will remain stacked against bricks and mortar.
Online e-commerce is booming. According to a report that came out in March by research firm Mintel, almost 90% of UK shoppers use Amazon and 40% have access to its Prime subscription service. Amazon shoppers usually visit the online retailer at least once a month and just under a fifth once a week, highlighting the omnipresence of this e-commerce behemoth.
The success behind these figures is due to the cost savings and convenience that Amazon offers, which is hard to beat. However this doesn’t mean that consumers don’t want to shop in-store – in fact, when Yoyo Wallet conducted a survey with YouGov last year, we found that the majority of British shoppers – preferred shopping in person – particularly those of 18 to 34-year-olds.
This makes sense – you can’t buy a café latte on Amazon – or test a perfume on your wrist. There’s also the missing element of enjoying the shopping experience – walking into a store and actually feeling valued. This is where we believe fintech comes in.
Our YouGov research revealed more than half of shoppers surveyed would be willing to share their personal data with businesses in return for a more personalised interaction with their retailers, with offers and discounts tailored to past purchases topping the list of demands. Fintech innovation can achieve this – so retailers no longer have to spend a disproportionate amount of money on acquisition, with huge advertising budgets, exclusive deals, offers and rewards- just to bring those new customers through the door.
Before fintech, retailers could expect to pay at least five times as much to attract a new customer than to keep an existing one, or 80% of future revenue to come from just 20% of their existing clients. Now, with the right innovation, there’s a lot more to opportunity to safeguard the customers that you have – as well as attract more through the door and keep them loyal for life by figuring out their preferences.
Unfortunately, most businesses aren’t doing enough to figure out what consumers want – and to make them feel appreciated for their custom in a seamless and frictionless way.
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Businesses try to address this challenge with rewards programmes, which, in theory, seem great – but if they feel like they’re too much work or inconvenient to use, or impersonal, the customer won’t engage with them. Just think of all those loyalty stamp cards you keep forgetting about in your wallet – how many missed opportunities for that free espresso have you lost? Is it even worth you lining up to get a coffee if the experience doesn’t feel personalised or rewarding from a consumer standpoint?
At a time when personalisation couldn’t be more important for the customer and when hyper-relevance is the best chance for a retailer to differentiate themselves from competitors, businesses in this sector can’t afford to be so amateur in their retention thinking.
The fintech solution
Retailers today require a dynamic retention strategy that is driven by real-time customer preferences. It must also be able to analyse and combine multiple behaviour segments and to identify and instantly react to customers who change their behaviour or show signs of slipping away.
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To achieve this they need a platform that can deliver the right insight from the right customer data – and this is where fintech innovation comes in with mobile payments loyalty apps. Through mobile technology, you can gather the most reliable and granular details about each customer every time they make a purchase at the point of sale.
This data can be harvested and placed on a platform to instantly analyse, learn and deliver up-to-the-minute customer insight, and offer retailers the most robust and dynamic way of measuring value for customers – and to create ways to reward shoppers for their regular business or to targeting those who look like their beginning to slip away.
If retailers are serious about staying in the game for the long-term they need to take action now when it comes to increasing the lifetime value of their customers. If they fail to keep up and deliver a better experience for the consumer, then the online world will win.
Starbucks, Caffe Nero, Primark, Zara and just examples of brands that are bucking the trend and continue to thrive on the high street. I believe we need more success stories like these in the UK but to achieve this we need retailers to step up to the plate and truly invest in creating a relevant, consumer experience that will keep customers loyal to their brands for years to come. Fintech is the answer – so let’s hope more retailers take the plunge to invest in customer loyalty innovation – and to future proof their business.