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7 Customer Engagement Trends for Retail Businesses in 2021

  • Updated: 02 July 2021
  • 7 min read

2020 has been an unpredictable year. It has forced retail brands to rethink the way they conduct business overnight, shining a huge spotlight on improving customer experience. According to Forrester, the number of brands that improved CX almost doubled, to 27%. And customers have been rapid to adapt to new trends and technologies, which has meant that brands who’ve failed to keep up have struggled. So, to keep you ahead of the curve, we’re going to be talking about seven customer engagement trends for your retail business to take notice of in 2021. Let’s dive in!

Bonus Content 

👉 Beginner’s Guide to Omnichannel Marketing for 2021 [Download Ebook]

👉 Retail Strategies and Omnichannel Engagement Frameworks [Download Ebook]

7 customer engagement trends for retail in 2021

1. Customers will engage with brands they can trust

In 2020, customers are paying much more attention to how they’re going to ensure their health and safety. And this means that customers will not hesitate to walk away from experiences they don’t deem to be safe. 

Surprisingly, only 13% of people trust retailers’ ability to provide useful guidance through the pandemic. So if you can draft health and safety protocols that closely align with your customers’ requirements and enforce them, this is an area for your retail business to stand out and shine. 

Besides physical safety, another huge talking point of this year has been data privacy and security. Customers are well aware of possible cybersecurity and privacy risks and are extremely cautious when choosing who they do business with. 85% of consumers will not do business with a company if they have concerns about its security practices.  

So it’s of utmost importance for your retail business to:

  • Have a robust data privacy structure.
  • Be transparent about how you’re going to be using customer data.  

Customers will engage with brands that ensure their physical and online safety. You should set policies and systems that align with their requirements, make sure they’re effectively enforced, and communicate them to your audience. 

2. AI will continue to be used to deliver hyper-personalized experiences

AI and Chatbots aren’t exactly new. But it’s certainly starting to become commonplace with more and more retailers using it. The market size for chatbots is projected to grow from $2.6 billion in 2019 to $9.4 billion by 2024.

And the reason for this is simple. Chatbots can provide your business with several benefits like:

  • Being available for your customers around the clock
  • Providing quick resolutions to your customers’ simple queries
  • Reducing the burden of work on your customer support agents
  • Delivering a personalized experience to each of your customers

We also see a massive shift in how chatbots move from simple user-based queries to more advanced predictive analytics based real-time conversations. 

A one-size-fits-all approach to customer engagement just doesn’t work anymore. 76% of customers expect companies to understand their needs and expectations. 

Amazon is one such player who has laid out a great blueprint on how to increase customer engagement through hyper-personalization. Based on their historical and real-time interactions, shoppers can experience a personalized homepage, product recommendations, and check out page. 

customer engagement trends for retail businesses in 2021

By 2025, 95% of all customer conversations will be supported by AI. Not only will it be used more widely, but the scope too will expand to deliver shoppers with hyper-personalized experiences at every stage of their journey

3. More brand will switch from multichannel to omnichannel marketing

In this year alone, we’ve seen thousands of businesses completely transform the way they conduct business. Whether it’s taking their store online, moving to a distributed team setup, or altering their supply chain systems, the changes are continuing to be rolled out.

And with all these changes, the customer experience delivered must remain personalized, consistent, and across platforms. This is where omnichannel marketing has come in. 

A robust omnichannel marketing strategy uses data to seamlessly integrate online and offline communication channels to provide a unified experience from the first to last point of contact.

And the benefits are clear to see. Companies with omnichannel customer engagement strategies retain, on average, 89% of their customers. 

One brand that successfully leveraged a holistic Omni-experience in 2020 was Decathlon. They did this by empowering users to be autonomous in their purchase journey and eliminating any unnecessary physical interactions by adopting two omnichannel marketing strategies:

  • Scan and pay shopping experience
  • Contactless pickup option

customer engagement trends for retail businesses in 2021

With customers demanding a seamless and consistent experience in person and across your website, email, phone, live chat, or social media, it has grown from a ‘nice to have’ to a ‘must-have’ for every retail business.  

Your retail business needs to provide a personalized, unified, and high-quality customer experience from the first to last point of contact across all your channels. 

4. Augmented reality will be used to deliver fully digital experiences

Augmented reality has provided a pathway for retailers to translate in-store visits into digital experiences. Whether it’s furniture, clothes, or apparel, customers will want to understand, see, and experience your product before purchasing it. 

75% of consumers expect retailers to offer an AR experience. And why wouldn’t they when they can enjoy benefits like being able to:

  • Browse 3D products from the comfort of their homes
  • Virtually try on 3D products.
  • Gather product information like reviews, pricing, color options, etc. 
  • Use Virtual trial and fitting rooms.

So it shouldn’t come as a surprise that customers using AR are eleven times more likely to make a purchase. 

Additionally, AR provides retailers with the ability to:

  • Overcome barriers of location
  • Save costs on real estate, infrastructure, and other operational expenses. 
  • Boost brand recognition and differentiate themselves in the market

When we talk about successfully using AR in retail, the first name that comes into most peoples’ minds is IKEA. Through their app IKEA place, customers can view 3-D renderings (and how it looks in their room) from different angles of over 2,000 products before reserving the ones they want.

Augmented reality provides retailers with an avenue to convert in-store visits into digital experiences helping you save costs, expand your market, and boost customer engagement. 

5. Visual engagement will be the norm

Video has been one of the biggest winners of 2020. We’ve seen everything from team meetings, sales calls, and events moving from in-person to video.

Additionally, we see more and more retail businesses make videos central to their marketing strategies. And it’s hard to argue with when 85% of millennials say they’ve purchased after viewing a marketing video.

So we’re increasingly starting to see retailers use a variety of video types to engage customers like: 

  • Explainer videos 
  • Product demonstrations and FAQ videos  
  • Promotional videos
  • Customer testimonials videos
  • Company culture videos

Retailers are also redefining the online shopping experience with interactive shoppable videos. They empower consumers to immediately purchase a product directly from the content with a few clicks without ever leaving the video.

customer engagement trends for retail businesses in 2021 | MoEngage

Another important area where we see the use of visual engagement is customer support. And retailers are doing this by combining video chats and co-browsing, where agents view customers’ screens in real-time and guide them through transactions, processes, forms,  and demos. 

For example, retailers use co-browsing for e-commerce customer support to help consumers find the products they want and thereby reduce cart abandonment. 

Retailers use video to build trust and engage customers through explainers, product demos, promos, and interactive shoppable videos. You can also use visual engagement tools like co-browsing and video chat to guide customers in real-time. 

6. Brands that share the same values as their customers would be winners

These days customers pay close attention to what you stand for and how you do things besides selling them awesome products. 

87% of consumers said they’d purchase a product because a company advocated for an issue they cared about, while 75% would refuse to buy a product if they found out a company supported an issue contrary to their beliefs.

Customers are looking to engage with brands that share the same values as them. And they want to know:

  • If your practices are environmentally friendly 
  • Where you stand on social and political issues
  • What you do to ensure employee safety and welfare
  • What you do to promote and aid the causes you say you care about
  • If your hiring policies and design practices are inclusive and promote diversity

One player that has always been at the forefront of championing environmental and social issues is Patagonia, the outdoor clothing brand. They’ve long spoken about the environmental threats the world is facing and highlight what they’re doing to combat them through reports, case studies, videos, and social media posts.

customer engagement trends for retail businesses in 2021 | MoEngage

Customers care about your policies on diversity, sustainability,  social and political issues. You should communicate what you stand for and be transparent about how you do things.

7. Retailers are leveraging data to personalize and guide their campaigns

Companies leading the way in data-driven marketing are six times more likely than the competition to achieve a competitive advantage in increasing profitability.

Retailers have an incredible amount of access to customer data. And they’re making the most of it by using AI and predictive analytics  to personalize campaigns by:

  • Using historical data to predict needs and events
  • Detecting patterns to identify risks and opportunities
  • Generating insights and forecasting trends and behaviors

Personalization plays a huge role in a person’s purchase decision. 78% of consumers will only engage offers if they have been personalized to their previous engagements with the brand. And you too should be using data to:

  • Guide product development
  • Improve customer experience 
  • Optimize sales and marketing funnels
  • Customize campaigns with the right message at the right time 
  • Identify cross-selling opportunities and segments for targeted campaigns.

A classic example of a brand leveraging data to personalize campaigns to great effect was Topshop, the clothing retailer, during the London Fashion week in 2015. Digital billboards across the country showcased live content pulled from Twitter data and a curated collection of Topshop products based on what the fashion industry was tweeting about during the event.

Additionally, customers who tweeted Topshop with a specific trending hashtag (like #pleats, #utility, etc.) would receive a curated collection of styles that fit the trend they could purchase immediately. 

You can use the customer data you collect to guide product development, optimize your funnels, customize campaigns, and identify opportunities to personalize and improve customer experience.

By understanding these customer engagement trends for retail, developing a robust strategy around them, and selecting the right customer engagement tool, you’re staying ahead of the curve and setting yourself up to provide the best experience possible to your customers. Win-Win!

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About The Author
Jayanth Padmakumar is the Content Marketing Manager for DelightChat, the omnichannel customer support tool for small eCommerce brands. He’s spent the last half-decade living across Peru, Colombia, Vietnam, and India. When he’s not geeking out on all things copywriting and content marketing, you can find him at the nearest watering hole watching sports and talking philosophy.
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