Surviving Digital Transformation is a Matter of Loyalty

The transformation of the global retail market would be unbelievable if it weren’t happening right in front of our eyes.

With the increasing presence of giants like Amazon.com and the growing online footprint of established retailers like Best Buy and Walmart, the number of store closures for smaller retailers is ramping up, and the banking sector’s exposure to retail properties is cautiously narrowing.

Smart retailers know that rearranging the furniture won’t be enough to survive; brands need to be embracing digital transformation. Smart, connected point-of-sale systems; streamlined service approaches; and better performing, more efficient shipping models are all cornerstones of digital transformation.

Modern day shoppers have the world at their screens, and the proliferation of lightning-fast tech requires an equally exceptional response. Price is one thing, but service is king.  Brands that can offer personalized services — in combination with modern technology and back-end systems — stand to gain more than their competitors, especially in an age when market-entry costs (thanks to technology) are at an all-time low.

McKinsey Research shows 70 percent of complex, large-scale transformation programs don’t meet their goals. These programs can be hugely expensive, so ensuring they're executed perfectly is key.

Things like loyalty programs can be a clever investment for retailers hoping to succeed in this space. Just look at Amazon's success with the introduction of Prime subscriptions.

So, how then can retailers create high-value loyalty programs that drive revenue?

First, realize where many loyalty programs fail.

You're naive if you think giving free product in exchange for multiple purchases will result in instant brand loyalty. This only creates transactional loyalty in a market where buying process is rarely the most important consideration for customers. It's all about experience.

Retailers need to understand the entire customer journey and the methodologies that underpin it.

Retailers need to engage with customers at various touchpoints, and that only happens when you understand how they act. Here, customer journey mapping is vital to understand how a retailer's internal processes can adapt over time to encourage long-term customer loyalty.

Instead of simply offering perks at a transactional level, brands can better understand how to connect with customers in a way that creates a sense of loyalty, and in turn benefits the bottom line.

Mapping out a customer’s journey can also accomplish the following:

• differentiate retailers from competitors;
• identify how data and smart tech can enhance the entire customer journey; and
• create flexible processes to enable loyalty models to adapt to customer needs.

Not to mention aid with troubleshooting. If you have any step of the customer journey that negatively affects your relationship with customers, a journey map visualization will identify it before it costs you sales.

Implementing the right processes helps to avoid short-sighted goals and instead focus on ongoing loyalty, with strategic touchpoints to boost revenue from customers who value that quality service and personal experiences.

If nothing else, you should consider this: our own research has found retailers that implement process modeling and management solutions report a 50 percent improvement rate.  An improvement rate of this level could mean the difference between closing up shop and flourishing as a successful brand.

We all know that in a competitive space, understanding your customer is at the core of creating outstanding retail experiences.

As co-founder and CEO, Dr. Gero Decker is responsible for Signavio’s overall strategic direction. He's a business process management expert and passionate about product innovation. Before creating Signavio, he worked for SAP and McKinsey. Gero holds a PhD in Business Process Management from Hasso-Plattner-Institute.