Emarsys’ annual Customer Loyalty Index shows that ‘Incentivised Loyalty’ is in decline. Short-term sales may have been a way to secure new customers during the busy January sales period but if retailers wanted to keep those customers, they’d have gone further than slashing prices and instead, focused on an elevated customer experience, according to Emarsys chief revenue officer, Thomas Harris.

“We’re all aware of the huge cost of acquiring new customers and with the plethora of new and returning shoppers during the Black Friday and January sales, successful brands like Puma will have introduced their loyalty schemes to capture customer data during February’s Valentine’s shopping spike,” he told Retailbiz.

“Retailers can leverage AI here, in a value exchange between retailer and customer, painting a comprehensive view of that customer to improve their shopping experience over time – whether that’s a personalised offer, free returns or VIP access to new products.

“Embracing an omnichannel approach to personalisation is essential, communicating with customers on their preferred shopping channel in a way that is relevant to them.”

Harris also urges retail brands to constantly review the channels their customers want to shop on and be ready to expand to new channels. 

“It can be incredibly hard to keep up with customers given the popularity of newer shopping channels like TikTok. From our recent research with Forrester, 46 per cent experienced improved lifetime customer value due to having an omnichannel strategy that is understanding of the customer and connecting all the channels that customers shop on,” he said.

“This is achieved through the power of data. Successful brands like Total Tools have a holistic view of their customers and all the data in one place, allowing them to use tactics to launch key data-driven automations that reduces their reliance on email and become more channel-agnostic, building synergy across communications and unifying multichannel delivery.”

A targeted value-driven sales approach is important year-round

Outside of sales periods, by consistently emphasising value beyond price, retailers can differentiate themselves from competitors and resonate with consumers seeking both quality and affordability, according to Harris.

“In today’s competitive retail landscape, customers are not only looking for products but also for a shopping experience that aligns with their values and meets their specific needs. This could even be a game to entertain the kids or an in-store café. The post Covid period taught us to expect more than visiting a store to simply make a purchase. This approach allows retailers to build long-term customer loyalty, as shoppers are more likely to return to brands that consistently provide perceived value above simple purchase transactions.”

This targeted value-driven sales approach also ensures that retailers remain agile in responding to market trends and economic fluctuations.

“While promotions and discounts may be more prevalent during certain seasons or events, a continuous focus on value allows retailers to adapt their strategies throughout the year. By understanding and addressing the changing needs and preferences of their customer base, retailers can get to know customers on a granular and personal level, sustaining customer engagement and driving sales even during non-peak periods. This approach fosters a customer-obsessed mindset within the organisation, reinforcing the idea that delivering value is a year-round commitment rather than a sporadic promotional tactic.”

The power of leveraging AI

When it comes to AI, Harris’ advice is for retailers to do their research. Businesses are presented with a myriad of options that can generate business growth and personalise experiences for consumers so it is essential to understand which AI tool will be most effective.

“SAP Emarsys has been working behind the scenes with AI for years, helping our customers to understand their customers to drive true loyalty,” Harris said.

“AI has tremendous benefits for retailers including increasing sale probability, cart sizes and checkout totals, and making product and catalogue management more efficient. Improved search results and product recommendations driven by AI lead to better cross-selling opportunities and larger order sizes. It can also reduce time spent on manual work to seconds, empowering retailers to use that time to focus on revenue.”

From the challenges of the economy to changing consumer behaviour, converting sales shoppers to loyal customers, AI can also reduce retail costs, optimise inventory management, and anticipate needs throughout the year.

“Whether or not they know these improved shopping experiences are because of AI, consumers now expect elevated experiences. For example, AI can provide more relevant results for image and natural text searches, as well as more personalised recommendations. This includes AI-driven styling buddies and shopping assistants who make shopping easier, faster and more satisfying,” Harris said.

AI can also appeal to new and younger buyers by driving experiences that flow from consumer’s lifecycles. For example, Gen Z want a more streamlined experience that takes them anywhere, anytime. They are also driven by values and are looking for used and refurbished goods like high-end luxury items for resale.

SAP Emarsys AI research (Elevating Art and Science) shows that Australian shoppers are beginning to embrace AI. In the study, 39% of Australian shoppers believe AI is having a positive impact on their current retail experience as it makes shopping easier for them and 36% indicated that AI helps them with recommendations.

“That is exactly what retailers aim to do – provide personalised recommendations and expedite the shopping process for consumers so that it is a seamless journey for them from start to end, converting sale shoppers to loyal customers,” Harris said.

“In 2024, the prominence of AI is set to continue, playing a greater significance in supercharging business operations. It is imperative retailers grasp the ways in which AI can help reduce costs, improve efficiency, monitor customer feedback, forecast inventory level, etc. as it is going to continue to revolutionise the retail industry as a whole. 

“To drive personalised experiences and business growth, it is paramount for retailers to educate shoppers on data sharing and the ways their data will be utilised. Being transparent enables retailers to ensure consumers know their data is handled with care and the value their data will bring to their shopping experience.”

Delivering personalisation at scale

Retailers can deliver personalisation at scale by leveraging AI to maximise the data at hand. Consumer data is an invaluable resource for retailers and successful retailers are ones that carefully understand this data and optimise it efficiently in customer engagement.

“Every interaction a customer has with your brand presents a tiny window into that their affinities, desires and behaviours. By gathering those insights from multiple touchpoints, including social media platforms, retailers can provide a personalised shopping experience that offers intelligent recommendations based on customer lifecycle stages, delivers consistent and personalised engagements that aid the consumer in identifying their need faster,” Harris said.

“Now is the time to get ahead of the customer and identify their need before they even realise it and to present the appropriate options at the right time and on their preferred channel. Through customer feedback, retailers can analyse and understand consumer preferences and the areas for improvement. This information can then be used to tailor the experience accordingly for each shopper.”