How Can Australian Retailers Survive Digital Transformation? Loyalty.

By Dr. Gero Decker | 27 Mar 2019

According to Dr. Gero Decker, loyalty is at the heart of the modern retail experience.

The complete and total transformation of Australian retail would be unbelievable if it weren’t so mammoth.

While Amazon may not have its claws on Australian subscribers just yet, the number of store closures is ramping up. Even the RBA is concerned over the banking sector’s exposure to retail properties.

Savvy retailers understand a new coat of paint won’t substitute for total digital transformation. Integrated and smart inventory systems, sophisticated service models and a leaner, more efficient shipping methodology are all pillars of 21st-century transformation.

But surely the heart of modern retail is complete and utter loyalty?

Customers have everything at their fingertips, and the ubiquity of lightning-fast technology requires an appropriately exceptional response. Cost is one thing. Service is more. The more you have to offer when it comes to personal service – in combination with modern technology and back-end systems – the more you have to gain.

It’s the only thing that will make you stand out in an age when start-up costs and technology are so accessible.

Loyalty programs are consequently a wise investment for retailers hoping to succeed (it’s little wonder Amazon does best in areas where Prime subscriptions are high). But these programs are expensive, so perfecting them is crucial.

Especially when McKinsey Research shows 70 percent of complex, large-scale transformation programs don’t meet their goals.

How can retailers escape this failure when it comes to creating high-value loyalty programs?

The first method is by understanding where many loyalty programs fail. Simply receiving product for free after multiple purchases won’t result in brand loyalty, only transactional loyalty – and in any case, the buying process is rarely the most important for customers.

Instead, retailers need to understand the entire customer journey and the processes that underpin it.

Customer journey mapping is the key here. Retailers need to understand and connect with customers at every single touchpoint, and that only begins by understanding how they act. By knowing this, retailers can begin to understand how their internal processes can change to encourage ongoing loyalty.

That way, instead of just offering benefits at a transactional level, retailers truly understand how to communicate and engage with customers when, where and how those customers want it.

Not only that but mapping out a customer’s journey can:

  • Help retailers stand out from mediocre competitors

  • Identify opportunities for where data and smart technology can enhance the entire customer journey, not just the buying process

  • And create a flexible process to allow loyalty models to change according to customer needs

Not to mention avoid bottlenecks. If you have any step that negatively affects your relationship with customers, a journey map visualisation will find it.

This way you’ll avoid short-sighted goals (which sink retailers) and instead focus on long-term loyalty, with unique touchpoints to gain revenue from customers who value that independent touch.

If nothing else, you should consider this: our own research has found retailers that implement process modelling and management solutions report a 50 per cent improvement rate.

The answer, as it turns out, is a simple one: simply knowing your customer becomes the linchpin for exceptional retail experiences.

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