Customer loyalty management

What needs to be changed in the bonus programs of the shoe store and accessories

A period of economic stagnation has challenged most shoe retailing companies. Many market participants had to revise the principles of organizing business processes. Interestingly, the smallest metamorphosis occurred with customer service and loyalty programs. But buying behavior has changed, and this is a direct call for the correction of these systems, says Anna Bocharova, a business coach and consultant on organizational development.

Today, as never before, it becomes relevant to analyze the effectiveness of existing programs to retain and attract customers, as well as the conditions of these stimulating events.

The terminology issue should also be clarified. Often, shoe service managers primarily refer discount programs to customer service and loyalty programs. However, there are still a significant number of options for the formation of customer loyalty.

Customer service and loyalty programs are any actions / events / conditions for organizing the presentation of the goods / purchase process / communication with the buyer / after-sales / after-sales work with the goods, the purpose of which is to create a buyer’s sense of value / benefit / advantage of this retail store over similar ones. Important addition:

The introduction and application of conditions for customers should result in additional profit for your store. In other words, if you do not earn on an additional client service, then there is no point in continuing the program.

The key business objectives of an effectively organized customer program are :

1. Retention of the buyer (maintaining the current customer base of not less than 75%).

2. Stimulating the transition of a casual client into the category of a regular / loyal customer.

3. Increase in sales of goods at full price (for most shoe stores and accessories, it is safe if at least 50% of the collection diverge at full price, without waiting for the sale period).

4. Increase store conversion.

5. Detuning from similar stores (the target buyer prefers your outlet and its assortment offer).

Avoiding traffic drop

Let's see what mistakes retail stores make in developing, implementing and analyzing the effectiveness of customer service programs and loyalty.

1. Terms and conditions are the same for all customer groups, regardless of a customer's history (i.e., their classification within a specific customer group). For example, suppose you sell shoes and offer repair services for two years from the date of purchase. This service is available to everyone, whether they spent 15,893 rubles on shoes or bought shoes from you for 1,640 rubles during a sale. This is incorrect. Additional service options should be primarily available to those who generate more profit for the store and, in turn, serve as an additional incentive (argument) for choosing a higher-priced model, and certainly at full price, which, as you understand, is what generates your profit.

2. A discount on the first purchase, as well as issuing loyalty cards during the store opening. While many of your store's visitors will appreciate receiving such a gift, it will never serve as an excuse for additional purchases. Furthermore, there's a special group of store visitors who come in once, during the store opening (the so-called "innovators"). You won't see them again, as this category of customers has minimal loyalty to the store. In other words, you could have kept the discount as your profit, but you chose to share it with the customer.

3. Any customer's request is fulfilled. Over the past three years, shoe and accessory stores (and others) across Russia have reported an increase in the number of blackmailing customers. Customers threaten to cancel their purchases unless they receive additional discounts, or begin haggling with sales associates, announcing their intention to post information about poor service on social media, etc. Store managers are obligated to make a decision and communicate it to their sales staff—as we do in these cases. Remember the nuances of customer behavior. What comes easily is never valuable. Those who give in to extortion will never earn respect and recognition. Once you give in to a "good/promising/loyal" customer, you'll create a chronic problem in your store. Once you offer a discount, you'll always face requests to continue the practice and bewilderment from the customer when they try to refuse. Moreover, during the scenes in the sales area, the other customers will want to join the “blackmailer” (“He got a discount, why should I pay full price!?”).

4. Programs remain stable over time. Customers begin to notice a pattern in your actions (for example, alternating new stock with previous deliveries at a special price). As a result, you lose your main source of income—impulse (unplanned) purchases of full-price shoes. Customers are given the opportunity to plan their purchases. As a result, turnover slows, and the bulk of purchases will occur only during sales. Change program terms at least once every two years to prevent habituation and reduce customer sensitivity to store conditions, as well as to plan your actions.

5. The customer has no responsibility to the store. For example, customer Sidorov received the maximum possible discount based on his purchases last year. However, over the next seven months, he made no purchases and didn't visit the store. Many companies maintain the terms of their customer programs and make a mistake. The customer doesn't have to visit the store when the store requires it. There's no incentive to do so. In other words, under these conditions, the store is playing a one-sided game for customers.

6. The amount of income and the conditions for earning it for a sales assistant do not depend on what they sold to a customer or on what terms. For example, a store's salespeople are paid piecework—2% of revenue. Selling a new genuine leather bag at full price is quite different from selling a belt from last season at a 70% discount. In the latter case, the store's income is lower, and the salesperson's constant income reduces the already small profit margin for this product.

Efficiency mark

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Based on what data to understand the results of the implementation of loyalty programs? The main criteria for evaluating the effectiveness of customer service programs and loyalty will be the following data:

Average, recommended performance indicators of service programs, based on which you can understand whether the client services are organized correctly:

1. The ratio of sales of goods at full cost and sales at reduced prices: at least 50% of the goods are sold at full price.

2. Sales dynamics: we will be interested in whether the sale of goods at full price is increasing.

3. Depth of discounts: at what discount are more products sold? Do customers buy at the beginning of special offers (5-10% discount) or mainly at the end of the promotion (last chance - 70% discounts).

4. At least 30% of customers participating in the loyalty program after joining it began to visit the store more often, buy more.

5. The turnover rate increased after the introduction of customer service.

6. Overall, store profitability has increased.

7. Customer retention: how often regular customers participating in the loyalty program come. In other words, do loyalty programs and customer service really stimulate the frequency of visits to the store? Is the customer’s offer of our store valuable and directing the buyer to us? Optimally, if you lose no more than 10% of regular customers per year (those customers are considered regular whose frequency of visits correspond to the average data for a particular store).

8. Customer opinions - how much do they evaluate current client programs. Regularly collect the opinions of regular customers, optimally: in personal conversations and during observation during visits to the trading floor. Show sincere interest in their opinions, capture all offers from buyers. But .... do not rush to implement. Between the wishes of customers (even loyal, regular) and the way they will behave after you harm all their advice, there is, in the popular phrase “a big difference”. Many heads of retail stores complied with the wishes of customers (for example, to bring a special product, start working with a brand, order a popular model, etc.), however, at the time of presentation of the results to the customer, they made an unpleasant discovery. The product was no longer needed, it seemed otherwise, in another place it was cheaper, etc. Needless to say that, planning to satisfy the needs of the buyer, the store received a loss, because Does any non-standard operation have a higher cost? In addition, the additional effect of such a service will be the selection of resources from the execution of directly profitable trading operations?

9. Loyalty program costs: optimal if you spend no more than 2% of revenue.

For the manager of the shoe business and related product lines, it is important to always remember that the purchasing competence of customers increases from season to season. Hence the conclusion - the program and its conditions formulated by the buyer must be correct and comply with the ethics of business relations. Regardless of the choice of the price segment of your store, the customer has the right to receive benefits without prejudice to reason and morality.

The role of staff in loyalty programs

Of course, in order for statements about customer service not to become an empty phrase, it is necessary to hire people to work in your stores. "Service" staff. Not every jobseeker of the seller-consultant position is also capable of being a service specialist. Loyalty programs do not make sense without a personnel management system, sales and customer communication techniques. Any, even the most thoughtful program for customers is easily spoiled by "non-service" personnel.

Already at the stage of selecting employees for your stores, pay attention to whether the applicant is able to become a truly customer-oriented employee. In interview topics, you can use techniques to identify such competence. For example, you might "accidentally" drop your pencil and watch the applicant's reaction. Potential workers who share the call for customer service and are truly willing to regularly create comfort for visitors will 100% of the time pay attention and raise their pencil.

When planning service programs, keep in mind that there should be no discrepancies between the conditions for joining the client program and the actions of sales consultants.

Keep track of the words the store employees use to convey information about loyalty programs. It is important to remember that joining a customer to great deals and additional opportunities also has to "sell".

Make a list of recommended and / or forbidden phrases for your employees. For example, I always recommend to refrain from the speech modules "discount card", "discount card". When the buyer hears such words, already at the subconscious level, he assumes that his purchase will be an advantage at a discount. That is, with his careless remarks, the sales assistant deprived himself and his employer of income, and also provoked an additional objection from the client. Demand to implicitly apply the following speech modules in communication with customers: joining a loyalty program, inclusion in a loyalty program, a map of our store, a card of our regular customer, a card of our beloved customer. Whenever possible, sales floor consultants should avoid the word "customer", replacing it with the options: "customer", "guest", "visitor" of the store / boutique.