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Loyalty schemes trump social media at Christmas

By Peter Clark, Marketing Factbook

 

While consumers remain cautiously optimistic and holiday season spending is expected to rise only 0.9% over 2009's figures, perhaps of greater interest are the underlying shifts in consumer behaviour found in this year's holiday spending, as observed by strategy consulting firm Stax.

Stax surveyed more than 1,000 holiday shoppers in early November to gain a clearer picture of consumers' retail purchasing choices and decision drivers this holiday season, and three noteworthy trends emerged from the research:

  1. Traditional retailers risk losing out
    Traditional retailers are at risk of permanently losing customers without a more compelling value proposition. With luxury channels competing on brands and value retailers on price, traditional retailers may find themselves squeezed in the middle.
  2. Promotional 'arms race'
    The confluence of technology, retailers' emphasis on driving sales at all costs, and the economy has instigated a promotions 'arms race' that makes it harder for retailers to effectively reach consumers.
  3. Loyalty programmes still drive value
    While social media and mobility will be important platforms for retailers in the future, value is currently being driven through other, more familiar means such as loyalty programmes. Without a call to action, social media will continue to lag behind loyalty programmes in effectiveness. Customers enrolled in traditional loyalty programmes currently outspend social media users by a factor of 10 or more.

"While this holiday season is shaping up to be comparable to last year, it is critical for retailers to understand their customers more clearly," warned Sue Sung, managing director for Stax. "As this sentiment is unlikely to wane even when the economy recovers, retailers that engage with shoppers in multiple ways, especially in channel choice and loyalty programmes, will be seen as most valuable to customers."

The rough economy has had a clear impact on consumers' shopping behaviour, with 75% expecting to change the way they shop this holiday season. Other key findings from the US-based survey included:

  • 213 million adults are expected to spend an average of US$480 each on gifts and decorations between Black Friday and Christmas Eve, totaling some US$103 billion.
  • 142 million shoppers expect to buy at least 1 gift card this holiday season.
  • Consumers who shop with the same retailer via multiple channels (e.g. in-store, online, and catalogue) will spend an average of 37% more than those who buy via a single channel.

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Source: Stax
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