Just as consumer confidence was on its way up, rail strikes and snow struck the UK impacting footfall yet again. This, alongside the tough economic climate, has created a perfect storm resulting in unusual reductions in footfall on high streets, as well as in retail parks and shopping malls.
But, if retailers strategically use customer data gathered during the shopping season to their advantage, 2023 could still be fruitful for many. Given the headwinds that were gathering in the final stretch of 2022, it’s incredibly important to retain the customers you have gained during a challenging period for consumers.
Truth be told, competition for customer spend will be hot in 2023. Very hot. As such, instead of just using marketing to create short, sharp spikes in sales, retailers should turn to acquiring, consolidating, analyzing and acting upon the customer data they have gathered going forward.
Why? Because these insights can inform marketing and customer experience strategies, driving customer loyalty beyond the January sales.
Keeping Up With Changing Customer Expectations
Economic recessions affect people’s behavior in varying ways. Of course, price sensitivities may lead consumers to try different products in the supermarket or indulge in retail, restaurants and events less often. But recessions also affect people’s lives in much more subtle ways. They change the way people prioritize and the way people view brands, which has a domino effect on customer loyalty and retention.
This past Christmas almost half of Brits vowed to "shop local" during the festive season in an attempt to support independent businesses and spend less money. And, a third of British people said they planned to shop with charity retailers as a result of the high cost of living.
Change has already started, but it isn’t the main challenge for retailers. Keeping up with these changes is. Customer behavior naturally changes over time. Economic pressure can just catalyze those changes, but it’s up to retailers to stay one step ahead.
The good thing is technology today makes it much easier for businesses to keep up with changing customer behavior than it was a decade ago. With the right tech, retailers can collect enormous volumes of first-party data and gain crucial, real-time understanding into customer intent.
Software supported by AI can then analyze this data and provide actionable insights, personalized to specific customers. In turn, marketers can promote any number of retention-driving actions, from product recommendations and special offers to newsletter sign-ups or referral codes. This makes it all the more easy to react and respond effectively.
The shopping season provided the perfect opportunity for retailers to enhance their understanding of customer behavior, and retailers must utilize martech to their advantage. Processing customer data that was gathered will be key to fostering customer relationships, which extend beyond being purely transactional in future.
Related Article: How to Understand Customer Churn When There Is No Return
Don’t Bury Your Brand With Fear: Marketing Needs Life
On the whole, businesses are responding pretty predictably to the looming recession. Many are cutting budgets and desperately trying to streamline operations. They are also falling into the age-old trap of trying to make savings in the marketing department first.
Research shows brands that increased their marketing spend during the last recession actually increased their overall return-on-investment. This is because, as businesses became more competitive, customers flocked to brands that remained visible and present, dropping those that fell off their radar.
Likewise brands also need to understand the importance of investing in the customer experience during turbulent times. Taking exceptional care of customers becomes even more critical during recessions.
For retailers, engaging customers in the long-term must be a fundamental part of their strategy.
Promotion-led sales provide huge volumes of information about the customers who shopped with a brand over the festive season. As such, using this information to build up detailed customer views will serve retailers in the long term, enabling them to send hyper-personalized messages that strengthen customer relationships well beyond the festive period.
Related Article: We Listen to Our Customers. Really?
Capturing Long-Term Customer Loyalty
History says it all. Placing the heavy burden of small budgets on marketing departments does not work. Instead, retailers must optimize budgets and capture information about their customers’ intentions, which they can then use to enhance future omnichannel campaigns and customer journeys.
Understanding customer behavior and future lifetime value will also be crucial for retailers in 2023. This knowledge allows businesses to focus their precious budgets on the right people, and channel it into the right places.
As competition heats up, marketing teams can use detailed customer views to ensure customer relationships extend beyond being purely transactional to cultivate lifelong customers.
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