Business Day

Research Gives New Insight on Retail Industry Customer Relationships

A new study confirms that customers really do feel strong relationships with the retailers they patronize. The Carlson Relationship Builder(SM) 2007 study was conducted by Carlson Marketing Worldwide and Peppers & Rogers Group.

In the most recent chapter of its ongoing research series, Carlson Marketing -- leveraging the expertise of Peppers & Rogers Group, its strategic consulting division, and its partnership with Zoomerang(TM), the pioneer in online surveys -- put the retail sector's consumer relationships to the test.

Nearly 1,200 consumers took part in a comprehensive survey providing a clear look at the current state of customer relationships within the retail industry.

The research report answers the question of whether or not customers are having relationships with retailers with a resounding "yes." Customers do have relationships with retailers, and the range of the strength of those relationships is broad. Among the retailers with the highest level of relationship strength are Barnes & Noble, Hallmark, Bath & Body Works, Best Buy, Old Navy and Target. In all cases, there remains substantial room for improvement. The study found that the strength of the relationship between a retailer and each of its individual customers is not uniformly equal. There is an opportunity to "raise the bar" on an overall basis, and individually based on the variances in relationship strength among customers within retailers.

Top ten things to remember in retail:

  1. Loyalty programs drive incremental purchases. One-third (33 percent) of customers agree that direct participation in a loyalty program has resulted in the purchase of additional products from a retailer that otherwise would not have occurred.
  2. Satisfaction is not sufficient. A large segment of customers (41 percent) are at least as satisfied with other retailers as with their primary retailer.
  3. Here today, gone tomorrow. A majority of customers (51 percent) state that there are many other good retailers, any one of which could serve as an alternative to their primary retailer.
  4. Walk a mile in their shoes. Customers agree that "being easy to do business with" (89 percent) and having "good customer service" (90 percent) are important attributes in preferring one retailer over another.
  5. Aim for alignment. When the interests of the customers and the retailer are perceived as resulting in a mutually rewarding experience, the alignment enhances the likelihood to recommend the store or company to friends and family, remain a customer, and shop more at the retailer (68, 39 and 43 percent respectively, for those with high as compared to low levels of alignment).
  6. Brand is big. Almost two-thirds (64 percent) of customers agree that familiarity with a brand name plays a role in the choice of a retailer. The effect is even larger for those with a high versus low level of relationship strength.
  7. Customers are human too. Among the top three most important considerations when interacting with customer service are staff courtesy (59 percent), apologizing when something goes wrong (32 percent), and being empathetic (28 percent).
  8. Morality matters. Customers agree that the reputation (70 percent) and the moral values (50 percent) of the retailer are important when choosing where to spend their cash.
  9. Websites work well. Almost two-thirds of customers (65 percent) use a retailer's website for activities such as searching for merchandise, learning more about the store, and reading about news or offers. The percentage varies considerably by the type of retailer (department store, 71 percent; grocery stores, 44 percent).
  10. Don't botch the basics. Customers overwhelmingly agree that having the best price (93 percent) and a good selection / availability of merchandise (93 percent) play a role in determining where shopping occurs.

"Knowing that customers have varying degrees of relationships with retailers, the Carlson Relationship Builder 2007 study addresses the key question of whether it really matters if retailers get it right," said Luc Bondar, vice president of loyalty marketing, Carlson Marketing. "We all know that building better relationships in retail certainly makes common sense, but at the end of the day, does it actually enhance customer recommendations, retention and intent to shop more with a specific retailer? The answer is a resounding 'yes.' Thriving and not just surviving in the retail marketplace requires more than just executing the basics. It requires building strong relationships that in-turn enhance customer recommendations, retention and shopping. Today, some retailers are already doing this better than their peers, but there's ample room for improvement across the board. The use of loyalty programs, improvement of communications, customization, relevancy and frequency are all 1to1(R) approaches highlighted in the study as mechanisms to 'get it right' and deliver results."

Participants in this research study answered numerous questions on a range of topics, including whether they would encourage friends and family to shop at a specific store, will they still be a customer of this store 12 months from now and how likely are they to shop for more products from this store within the next 12 months. In addition, respondents were asked about demographics and -- of course -- relationship strength as measured by the Carlson Marketing RSxSM relationship index.

Visit http://www.carlson1to1.com/loyalty to download the research report.

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