Consumer trust is what every smart retailer wants for the holidays this year
The holidays are just around the corner, but this year perhaps it shouldn’t just be the kids worrying about whether they’ve been naughty or nice. The last couple of years have been a period of accelerated digital transformation across the retail sector, as brands shifted their focus to ecommerce in the face lockdowns, social distancing and the general disruption wrought by the pandemic.
This switch to digital-first has brought with it a new set of rules for engagement, with personalisation and customised digital experiences becoming the battle ground for attracting consumers and engendering loyalty. By tailoring thousands of individual touchpoints, brands can enrich their relationship with consumers, alongside boosting basket value through mechanisms such as suggested purchases and special offers.
They’re making a list and checking it twice
Intelligent use of customer data such as this can give brands a competitive edge; but with great data there must also come great responsibility. Brands that mismanage customer data will likely find themselves on the “naughty list.” According to Adobe’s Future of Marketing research, polling 2,000 UK consumers, seven out of ten would stop buying from a company completely following a breach of trust. Younger consumers are even more likely to vote with their feet; 74% of GenZers have left at least one business due to a breach of trust in the last year, with more than one in four having left at least three businesses.
Our research also revealed the company actions most likely to breach consumer trust, with nearly half of those polled citing “being creepy” in the form of online tracking and communications without permission. Four out of ten highlighted “being annoying” via too much communication and unclear privacy policies, and the same number listed “not listening”, as businesses continue to send adverts after the customer has opted out. The repercussions from this loss of confidence can go far beyond losing a single customer, with around a third of consumers saying they would post a negative review about brands who have broken their trust.
Putting a number on goodwill
However, the flipside to that coin is that consumers will reward the companies they trust by placing them firmly on the “nice list”. Seven out of ten will make more purchases, while six out of ten will recommend the brand to friends. In news that will gladden the heart of any marketing department, four out of ten customers would show a willingness to engage further by joining a loyalty programme. As an example of the value this can represent, Marks & Spencer recently relaunched their SPARKS loyalty programme, attracting 3 million new subscribers. Their data shows the lifetime value of these members as approximately four times that of a non-SPARKS member customer. It is surely not a coincidence that M&S have recently upgraded their profit projections for 2021 and have seen a significant bump in their share price.
Similarly, a leading luxury department store launched a digital transformation project last year aimed at significantly improving their online customer experience. The new approach saw them double revenue throughout year-on-year on peak trade days in 2020, achieve a 64 per cent increase in conversion rate year-on-year for November, and an 80.8 per cent uplift in order volumes over November and December 2020.
Make it the most wonderful time of the year
As the holidays approach, brands would do well to remember that loyal customers are the gift that keeps on giving. Reputations are hard won and easily lost, and customer mobility has never been greater. The good news is that consumers are looking for the same thing as retailers; to establish ongoing relationships with credible brands.
Of course, we can’t predict precisely what the coming year will bring us, but we can at least learn from 2021. Consumers will keep spending more online, as they increasingly value the bespoke offers and services made available by digital marketing. But in return they expect transparency from retailers, and proof they can look after their personal data. Those that handle it with care will thrive. But retailers who squander consumer trust in 2022 will likely find themselves on the “naughty list,” and should prepare to find nothing more than a lump of coal in their stocking next year.