3 Essential Strategies to Address in 2021 Retail Planning

While COVID has been an “unprecedented disruption” for business and consumers, it’s clearly been an accelerant for existing trends. For retailers, this includes “Retail Darwinism.”

Retailers filing for bankruptcy is nothing new, but regardless of a vaccine or another “unprecedented” event, failure to understand the context that made COVID exacerbate retail’s challenges will only leave your business and your brand further behind.

There are three critical customer marketing priorities that while important pre-COVID, are even more significant going forward.

1. Focus on the Customer Experience

Amazon.com has been the clear catalyst for prioritizing and setting the bar for customer experience (CX) since its founding (“Day One”), yet it’s taken COVID for merchants to further prioritize customers and the customer experience. Examples range from expanding delivery to adopting contactless payments to more positively recognizing (or even surprising) customers. Conversely, customer service is a blight for many brands due to COVID disruptions and channel shift. There's much work to do.

The shift to customer centricity is less about loyalty programs and more about customer loyalty and what drives that, which is where CX is fundamental. Loyalty marketing, which we define as paying attention to customers and acting accordingly, is integral to CX, yet most loyalty programs on their own fail against this definition.

According to Bond research, loyalty programs actually lost relevance at the beginning of COVID as brands failed to adjust them in response to the pandemic. While those numbers have improved, it’s worth noting that baseline satisfaction — i.e., the percent of loyalty program members very or extremely satisfied with such programs — as measured by Bond in The Loyalty Report was only in the mid-40s (percent) prior to COVID and dropped to 30 percent in May. The bar is, and remains, low for loyalty programs, in spite of their role in enabling not just better customer marketing but also a better CX.

2. Employ New Metrics and Refresh Your Analytics

The digital acceleration — and dominance — post-COVID means your metrics should likewise shift or they'll be (or already are) worthless. In a customer-driven marketing world, the denominator is no longer stores or units, it’s customers. Shifting and blurring channels means that if you’re a customer marketer, the only way to truly measure the impact of your strategies and execution is via customers rather than stores or channels.

Doing so starts with comp customer metrics, which we introduced more than a decade ago — i.e., sales per same customer, not sales per same store. Margin per customer, not margin overall or by channel. While a few retailers employed such metrics prior to 2020, they remain a minority. It’s exciting to see growth in your e-commerce business of 400 percent. What if that reflects a delta of 5 percent to 25 percent due to COVID? Is that good or bad when your physical store sales dropped by 80 percent? Comp customer measurement gives you the correct answer.

If you have any pre-COVID customer insights, segmentation solutions or predictive models, they're as useless as last year’s flu shot. Customer habits have fundamentally changed, leading to defection, trial of new brands, and new habits. If your business and customers have been immune, pop champagne. If not, revisit your analytics along with your metrics.

3. Prioritize Brand Loyalty, Not Just Customer Loyalty

Customer loyalty is more than essential now and going forward, which again is nothing new but only accelerating in importance. However, brand loyalty is even more important, especially when you consider that loyalty is an emotional state and not a transactional one.

Loyalty doesn't come from discounts, but rather from a brand being loyal to customers. Recall the definition of loyalty marketing above: paying attention to customers and acting accordingly. This is a simple idea, but as important as gaining customer loyalty is, it won’t happen without the brand first showing loyalty to customers — and to prospects, as that’s where the brand relationship begins.

As you undertake 2021 planning, if customers aren't a top priority, reconsider your strategy. The shift to the customer didn’t start with COVID, but it will expand because of it.

Your brand matters, and it has to show loyalty to customers.

And you have to measure it.

Phil Rubin is executive vice president, strategic partnerships at Bond Brand Loyalty. He founded customer marketing firm rDialogue, which is now a Bond company.