Customer Engagement for Retail in 2019 – What’s Working and What’s Not

By akshatha-kamath
28 March 2019 | 26 August 2019

When the e-commerce giant Amazon made a foray into brick and mortar shops in 2015, the retail industry was in for a surprise. Natalie Berg, the co-author of ‘Amazon: How the world’s most relentless retailer will continue to revolutionize commerce,’ explained, “Very few people exclusively shop online or only in store. They marry the best of both worlds.” Macy, an American department store also discovered that customers who bought in-store and online were 8x more valuable than those who shopped from a single channel.

The retail industry is steadily shifting its focus from brick and mortar to a click and mortar business model. Today, the brands are focused on creating micro-moments for the shoppers by leveraging upon omnichannel marketing. For example, a shopper would prefer to check a product online before buying it from the closest retail shop.

Customer Engagement for Retail in 2019

The focus has shifted from selling products to selling experiences. A study by Walker, a customer intelligence consulting firm, reveals that customer experience will overtake price and product as the key brand differentiator by the year 2020.

The key to success is building a blended customer experience, and retailers can no longer afford to ignore it. As customers use more and more connected devices to shop, retailers have to find a way to tie all the channels together to create a unified and personalized experience for the customer. They can no longer focus on just one channel for their business.

There is stiff competition among the small and big players in the industry, and the global retail market is expected to reach $31,880 billion by 2023 according to a study by Mordor Intelligence.

It is time for you to don the hat of a CEO (Customer Experience Officer) and think of ways to strengthen the customer engagement strategy. We connected with some retail marketers to understand their priorities, challenges, and strategies for retail customer engagement in 2019.

Customer Engagement for Retail in 2019 - What's Working and What's Not

1. Importance of customer engagement and retention

Costco, a warehouse club based in the United States is known to be one of the safest retail stocks to invest in the NASDAQ stock exchange. What makes the company unique is its customer loyalty program. The company’s warehouse works on a membership model, just like Amazon Prime, which has earned more than 100 million subscribers worldwide. While customer acquisition is an indicator of success, the truth is, customer retention is 5 to 25 times cheaper than acquisition. With so many retailers vying for your customer’s attention, it’s essential to engage the existing customers and retain them with benefits and loyalty programs. We asked our experts for their opinion on the importance of customer engagement and retention for retail brands. Here’s what they had to tell us.

“Customer engagement and retention for retail brands is extremely important. Retaining and engaging with customers help brands keep them happy, stay loyal and up to date with new arrivals, latest promotions, and product recommendations. Moreover, when retaining and engaging with customers, brands are able to keep our ears and heart close to their demands, needs, and expectations. From a data point of view, customers give us feedback on the website, UX, merchandising ranges and stocking labels. For content, customer engagement provides us with user-generated content (UGC) such as testimonials, videos, images, and blog posts. In terms of marketing, it helps brands improve ROI of marketing campaigns, nurture brand loyalty and grow customer referral.”

Albert Mai, Growth Marketer, GlamCorner

Customer engagement and retention for retail brands is extremely important. - Albert Mai, Growth Marketer, GlamCorner Click To Tweet

“As seen on the example of Amazon, the customer experience is paramount. It is essential to building the trust and sense of comfortability similar to welcoming and almost nurturing atmosphere, that I believe, Sigmund Freud would be proud of. A great example of the company using AI to find this is YOOX, altering the customer approach in the luxury fashion world like as a storm. I believe that results always speak for themselves and you don’t have to be a designer any more to make a great design as the most honest form of creation. All is achieved and mastered through trial and error. As for the newly established but dynamically developing brand, Raycon Global (featured by Google as a great customer success in January 2019), customer experience is very important too. Raycon designs some amazing true wireless products at a fraction of the cost from the big players, and we believe that this success is achieved by customer engagement and customer experience orientation.”

Frank A. Di Olivero, Global Director – Marketing, Raycon Global

2. Challenges in retaining existing customers and driving repeat purchase

Today’s customers have many options to choose from while shopping. So, despite the loyalty programs or membership plans, retailers find it difficult to retain the existing customers. According to a survey by Retail TouchPoints, here are a few challenges that retailers faced while driving repeat purchases in North America.

customer engagement

As the competition between the retailers grow fierce and with longer purchase cycles, retail companies have to think of new ways to retain existing customers and drive repeat purchase. Here’s what our experts have to say about the challenges.

“In our industry (high-quality phone cases) the number of competitors is very high and additionally branding for phone case companies is difficult. So our main challenge is branding – finding ways to get and keep the customer a) excited about our products and b) be as a brand present in the customer’s mind when he needs a new phone case. There are plenty ways to do this and as stated before we are going for a personal relationship towards our customer, as well as giving him the opportunity to personalize the product, e.g., writing his name on the phone case, choose between thousands of backgrounds, etc. Personalization is key for us which leads to the issue not to be the same as all the hundreds of competitors on the market. Because if you look and talk like everyone else, why should the customer choose you?”

Nina Rittinghaus, Social Media Marketing Expert, DeinDesign GmbH

Customer Engagement for Retail in 2019

“From owning a successful e-commerce brand myself and now talking to other retailers every single day, I’d say one of the biggest challenges is differentiation. Very few retailers will win by competing on price these days. So the challenge is providing something that keeps the customer coming back to you, as opposed to just going to Amazon or Walmart.”

Matt Warren, Founder, Veeqo

The challenge is providing something that keeps the customer coming back to you, as opposed to just going to Amazon or Walmart. - Matt Warren, Founder, Veeqo Click To Tweet

3. The customer engagement practices to follow in 2019

Customer engagement is going to be of paramount importance for retailers in 2019. A survey by NewVoiceMedia shows a whopping $41 billion loss in the US alone due to poor customer service. Nancy Friedman, a customer service expert and president of The Telephone Doctor Customer Service Training Inc. said, “Retailers spend lots of marketing dollars trying to convince us to buy their products, but if that contact is not handled just right at the point of sale, all that money is wasted. Customers service failures not only impact sales and return business, but can damage a brand and lead to online shaming on social media.Having an omnichannel strategy is not enough; retailers have to rethink how they will connect the dots between in-store and online environment to create a truly memorable experience for the shoppers. We asked our experts what kind of customer engagement practices will be adopted in retail this year. Here’s what they had to say.

“The checkout experience is one of the fastest evolving components of store transformation and customer expectation and loyalty. 2019 is expected to bring more humanization into stores as technology is implemented to eliminate shopper stressors like waiting in line, sharing personal data, having the right forms of identification, etc. the likes of facial recognition and artificial intelligence are providing retailers with the technology to transform their stores and checkouts into secure spaces for personalized transactions and experiences. Facial recognition tech can protect shopper identity, prove shopper age and speed up the overall checkout experience. As tech advancements in the retail industry continue to become more complex and connected, businesses must ensure they are using customer data appropriately to minimize the data they request and own.”

Robin Tombs, Co-founder & CEO, Yoti

2019 is expected to bring more humanization into stores as technology is implemented to eliminate shopper stressors - Robin Tombs, Co-founder & CEO, Yoti Click To Tweet

“I believe that companies that focus on the economic cycle to address customer engagement practices will have an advantage. AI is a must. If you don’t have and utilize it, you will not be able to compete. We know that feelings drive economic cycles and now we are at the end of this cycle when we are experiencing a recession (guided by the feeling of fear), trust is extremely important. The great example to prove this theory is Hyundai, which during the great recession (then all the car companies fell on average by -40%), it grew by ~37%. Key factors will be building trust, providing better return policies and better product/service warranties.”

Frank A. Di Olivero, Global Dir. Marketing, Raycon Global

4. What’s challenging? Customer acquisition or customer retention?

While the 2018 survey by Retail TouchPoints show that retailers spend almost 10%-40% on both acquisition and retention, nearly three times as many retailers preferred to allocate over 50% of their budget on an acquisition. As indicated in image 1, retailers find it challenging to retain customers and drive repeat purchase. However, we wanted to hear directly from our experts on what they thought was more challenging. Here’s what they had to say.

“New customer acquisition will be more challenging in 2019. With the rapid growth of direct-to-consumer brands in the last few years, and no sight of this stopping in 2019, more are becoming increasingly well-funded and aggressive with trying to grab market share through advertising. It doesn’t matter if they aren’t your direct competitor, as they are flooding the market with funds and raising prices for advertising on Facebook, Instagram, television, and radio. Companies focused on specific customer acquisition costs will see these increased prices harm their ability to deploy funds to acquire customers.”

Chad Siovaila, Director of Performance Marketing, One Click Ventures

New customer acquisition will be more challenging in 2019. - Chad Siovaila, Director of Performance Marketing, One Click Ventures Click To Tweet

“Customer retention will be very challenging. The market is very competitive, and people are working on their marketing campaigns constantly. Not only do you have to have a strong marketing campaign to encourage repeat purchases, but you also need to have great customer service too! Customer service that is personable and professional will help you retain your business.”

Brian Sheehan, Sales Manager – Retail and eCommerce Fulfillment, Hollingsworth LLC

Customer Engagement for Retail

5. The winning formula for acquiring and retaining customers in 2019

Michael Brenner, the CEO of Marketing Insider Group, said, “In today’s age, everything is a commodity. Nobody cares about your product, your brand, or the color of your logo. Experiences are the only way to differentiate yourself. Experiences are the only thing we are willing to pay a premium for. So, customer experience has to be the #1 priority for every business, every marketer, every brand. Research from a number of analyst firms proves that Customer Experience is identified as either the #1 priority or the top challenge for businesses today.” From real-time personalization, building loyalty to leveraging upon technology to offer a seamless experience, creating best-in-class customer engagement will be the core focus of the retailers. When we asked our experts about the one thing that marketers should do to win and keep more customers, here’s what they had to tell us.

“Treat their online product information like brick and mortars treat their window displays. This is where online browsers come to make a judgment call about the necessity, availability, customizability, and trust of what you’re offering. This is also the time to focus on the emotional connection over the tangible product, until a customer receives a product in their hand, their purchase was purely based on information and connection forged online. From an online web page, particularly one where you are listed among your competitors, an emotional connection and consistent, relevant and accurate brand information will sway the browser. If a consumer is unable to find or trust your product information then you are missing out on your biggest revenue driver.”

Steve Gershik, Chief Marketing Officer, inRiver

Customer Engagement for Retail in 2019

“There is no one thing that marketers do to win and keep more customers in 2019. In a competitive landscape and increasing expectation from consumers, marketers must work on optimising end-to-end customer journey across multiple online and offline touchpoints from ads they see, landing pages they view, products they browse, the checkout process they go through, customer support they experience and the messages they read, to products or services they receive.”

Albert Mai, Growth Marketer, GlamCorner

Marketers must work on optimizing end-to-end customer journey across multiple online and offline touchpoints. - Albert Mai, Growth Marketer, GlamCorner Click To Tweet

Conclusion

The message is loud and clear – customer experience has to be at the core of all your marketing strategies. No matter which technologies you use and whether your focus is to retain or acquire customers, you have to tie down all of it together into building a positive, seamless experience for your customers. We have tried to bring opinions from marketing experts so you can think of new ways to engage with your customers. You can download the ebook for full details.

MoEngage is committed to helping retailers improve their conversion rate through personalization. So, for the latest updates related to the retail industry, subscribe to our blog. It will help you to sharpen your marketing efforts.

Akshatha Kamath

About me
Akshatha Kamath leads content marketing at MoEngage. She's one of "LinkedIn Content 50", has been recently featured on the list of "The Most Influential Content Marketing Professional" by World Marketing Congress and is among the “100 Fastest Growing Marketers” identified by Adobe. She is a content marketing specialist with close to 12 years of experience in writing, strategizing, and managing content for various organizations. Before MoEngage, she’s steered content marketing teams for companies like Simplilearn, Vizury, and Conzerv helping them with content, brand, and communication strategies that are aligned with their business goals. Akshatha volunteers with AMA SF as a writer. She is also a published author with publications such as Clickz, Digital Market Asia, Get Elastic, and e27. She is an avid reader and a traveler who enjoys experiencing the flavors of life in different places.

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