As inflation rises in Australia and around the world, there’s a tug-of-war happening between consumers’ preference to buy from the brands they know and love, and the need to manage the household budget.
For a third of Aussies, their strategy this year is to stay out of the red by doing their holiday shopping earlier, before prices rise even further, according to recent data from Salesforce.
This is a similar forward purchase trend we saw during the onset of the pandemic, previously driven by supply chain issues, including products being out of stock, leaving customers empty-handed.
With shoppers more selective about how and where they spend their hard-earned money, retailers need to invest in data-driven strategies to retain their loyalty.
This challenge is compounded by the high standard of experience customers have come to expect, with customers willing to switch to brands in favour of retailers that understand their unique preferences.
In fact, 40 per cent of customers will ditch a brand after just two bad experiences, while 61 per cent have already switched brands at least once in the last year, Salesforce’s State of the Connected Customer Report reveals.
The research suggests that as simmering challenges come to a boil, those retailers that deliver the best experiences will score the biggest shopping baskets.
Prioritise the customer experience to capture customer’s wallets
Today’s customers expect connected experiences across in-store and digital channels. While they’ve shopped online more than ever in recent years, physical stores are here to stay with customers returning to stores for the in-person shopping experience they’ve missed.
Today’s in-store experiences however are increasingly converging with digital experiences. Aussies are buying products online to then pick up in store, researching products online using a mobile device in store and scanning QR codes to learn more about products, according to Salesforce’s Connected Shoppers Report.
With 81 per cent of consumers saying the experience a brand provides is just as important as the products on the shelf, retailers need to remove friction points between these channels, ensuring the experiences across both are connected and consistent.
Showing you know your customer is also a crucial part of the experience. The State of the Connected Customer report reveals over half of Aussies prefer products and services that are personalised. Yet, less than half of retailers have personalisation in their customer experience strategy.
The good news is it’s not a mystery what customers want if retailers can connect the dots in their data. When businesses centralise their customer data, they can stitch together all of a customer’s interactions from in store and across digital channels, in real time, to uncover actionable insights that help to create personalised experiences that make customers feel special.
It’s increasingly important to deliver these experiences to build trust, with 71 per cent of customers losing trust in a brand when there are inconsistencies across multiple touch points in an organisation. Furthermore, 48 per cent lose trust when they receive communications that don’t match their interests.
Activewear brand Lorna Jane is one example of a brand that is reaping the benefits from personalised experiences. By using AI the brand can now provide recommendations based on customers’ previous browsing history and past purchases. Additionally, it’s using AI to suggest product pairings based on what other customers have purchased — resulting in higher average order values.
Rethink value to create rewarding experiences
With inflation forecast to peak towards the end of this year and interest rates continuing to climb, cost will be one of the key deciding factors for purchases.
Aussies are already spending less than they were a year ago with shopper spend down -7 per cent – signalling the possibility of the trend continuing this holiday shopping season. As consumers hold out for a great deal, pricing and discounting strategies will play a crucial role if retailers are to capture their share of the holiday shopping revenue.
It isn’t just promotions and discounts however, retailers also need to reassess how they provide value with customers increasingly seeking out brands that have a positive impact on the communities in which they operate. Increasingly, this means connecting with customers — authentically and meaningfully — on issues such as the social and environmental matters they care about.
Over half of Aussies indicated that they’re likely to switch to brands with the same values according to our data. In particular, the vast majority prefer to shop with brands based on their environmental practices; actions on economic injustices and racial injustices; and involvement in the community.
For retailers, this means acting with society’s best interests in mind is good for their bottom line.
Customers are calling the shots
As economic challenges continue to loom, this year’s holiday shopping season will be all about giving customers what they want — connected, personalised and meaningful experiences.
By leading with a data-driven strategy retailers are better placed to adapt to change, drive stronger customer retention, and deliver the experiences customers deserve for spending their hard-earned dollars on a tight budget.
Jo Gaines is area vice president for retail and consumer goods at Salesforce.