How does the retail experience influence loyalty?

Terry Sutton: I think about this in a couple of ways. One, is it easy to do business with you? Do you remove the friction in the process? Two, as a retailer, do you make the conditions or expectations clear? Are you burying things in fine print or are you making it straightforward and easy to act on the offer that you present?

Finally, and probably most important, do you deliver on your promises? Do you stand by your brand? Do you back up what you promise in the way your brand is communicated and how you execute against it? Everything needs to fall in line, and when it does, it helps build loyalty.

Ruby Anik: It’s great merchandise that inspires customer loyalty. We make sure we have the right assortment and that it’s presented in the right way. That brings us to the customer shopping experience, and our philosophy at JC Penney, which is to make sure that our associates put the customer first when they are in the store.

Cammie Cannella: People everywhere appreciate the old-fashioned gestures: time, attention, a smile, recognition, a warm welcome. At Kiehl’s, we make sure that you leave with all the information and product samples you need to make an informed decision.

Creating loyalty at retail is a combination of the interaction, the personal advice and care, as well as offering something that is fun, memorable and unique. It’s a real comfortable approach with customers that creates word-of-mouth, and there’s no question that drives loyalty.

Russell Winer: Companies that do a great job with the retail experience enjoy greater loyalty than those that don’t. The great thing about Apple stores — and other retailers like Abercrombie and Fitch and Disney — is that they replicate the consumer experience with the products (or in Disney’s case, at the parks) in the store. There is a consistency between the brand, the product use and the experience in the stores.

Obviously, it’s more difficult for food and drug retailers to create that kind of experience. But to the extent that they can, it definitely has potential to enhance loyalty. It’s not just price; it’s also the experiential aspects of the brand, which many companies are trying to develop today as a way of differentiating themselves.

Spencer Hapoienu: The shopping experience is the most crucial part of loyalty. The customer expects a high level of service and quality, whether it’s an online or bricks-and-mortar store, a big store or a small store. Big-box retailers have tried to make up for what they don’t have in terms of service with low price or just having everything in one place, but that’s now wearing thin.

Costco is an exception because they do everything well. The shopping experience is a good one and they have very high quality products. Their pricing is good and they’re consistent. It’s all about execution. How well can you meet expectations when delivering the product or the service? More than anything else, that is what building loyalty is all about.

What are the greatest untapped opportunities to build loyalty at retail?

Sutton: Personalizing the treatment that each customer receives is the greatest untapped opportunity to build loyalty. That means making use of the information you have to make more relevant offers to your customers, and showing them that you know who they are and what they like.

Eventually, the goal is one-on-one marketing — although I’m not saying that we will ever get there completely. It’s more economical to personalize at the segment level, but there are things that we can do with existing data to trigger personalized treatment based on past activity. That’s definitely in our future.

Anik: The greatest opportunity is to create that element of fun and delight that comes with always discovering something new and different. We spend a lot of time understanding the customer’s wants and needs and doing research around that.

We’ve also created surprise with our Sephora and Mango partnerships, as well as our “Call it Spring” partnership with the Aldo Group.

These partnerships rose out of the understanding of what our customer wanted from us, and what would keep them coming back to us.

Cannella: The challenge is developing ongoing relationships through follow-up that builds on the relationship that was started in the store. The goal is to have a thread of continuity around the customer; the more that your staff supports that, the more customers appreciate the follow-up. That’s the biggest opportunity for everybody.

It’s not a mailer or a points program. If you really find a way to intrigue people so that they want to come back — imagine how that would affect loyalty! Even if you get just a small percentage of those customers to come back more than once, it makes a big difference.

Winer: Multi-channel marketing is the name of the game today. Recreating the kind of experience you want shoppers to have in the store, on the web and in a catalog, is really a challenge. The stores that are doing this well are profiting.

J Crew is a great example. If you look across their website to their stores to the kinds of products they have, it is a fairly uniform good experience and good value for the money. JC Penney has also done a nice job integrating the customer experience across channels.

Hapoienu: Training store associates has to become a much more important part of the loyalty-building process. That’s what makes Apple so great. Being trained to work at an Apple store is like going for a PhD. There are certain words you can’t use, like “unfortunately.” Most other retailers have the exact opposite attitude about their staff.

If the store staff is incentivized, educated and trained properly, and given the responsibility to build relationships with customers, that’s a huge opportunity to build loyalty. But most retailers don’t think of store associates as anything other than a barrier to success. They think of them as problems, not opportunities.

Has social media changed your view of building loyalty at retail?

Sutton: We’re still trying to sort out what social media really does for the business. It expands the conversation with the customer, and it expands the field for having that conversation. The voice of the customer becomes more accessible and prominent.

It’s also a vehicle for allowing our brand loyalists to say things about us that we would be reluctant to tout because it would be too self-promotional. It makes the message much more powerful than if we were saying it.

Social media keeps the conversation alive and allows customers to talk to each other. You also start to put your finger on the pulse of what makes a brand loyalist. In that way, social media has been great for us.

Anik: We continue to evaluate what it takes to play a leadership role in the digital world and how it enhances loyalty. It’s a digital explosion and obviously it has transformed the way that our customers spend time when they’re shopping — whether it’s online or in-store. They’re all accessing Facebook daily and smartphones have really changed the way people are interacting with retailers.

Social media helps us build loyalty at retail because we can leverage new touchpoints to further entice customers to shop at JC Penney in the way that they want to shop with us. It enables us to be where they are and available to them whenever they are thinking about shopping, browsing or whatever.

Cannella: Social media really hasn’t changed my view. Kiehl’s has always approached each customer individually, trying to do whatever we can to make that customer have a memorable experience. We’ve already built a reputation on word-of-mouth. Social media is a new platform for our customers, but it doesn’t change our approach so much.

Social media is not a scary thing for us because we’ve never been the ones trying to tell customers how to think about us. We’ve always given our customers all the information they need, and then let them decide what they think and what’s right for them. That builds much stronger loyalty and that’s always been our approach.

Winer: Social media has had a large effect, particularly with the use of consumer-generated content and people’s ability to weigh in with product reviews. That’s had an impact on loyalty because it engages people more. A retailer that’s not using social media today is obviously a little bit behind the times.

However, it’s not clear to me yet how building a page on Facebook is going to matter. It’s not clear to me how using LivingSocial or Groupon is going to matter at retail. I’ve seen Groupon help small retailers get visibility, but I haven’t seen it have much influence on the larger retailers yet.

Hapoienu: If a high percentage of your business comes from people under 30, then social media is probably more important. But over 30, it’s not there. If your customer base is over 30, your ability to reach people on Facebook is probably no more than six percent. I recently saw a study that said response to QR codes in magazines is four percent.

For those people who are very active Facebook users, it’s fine. It’s another opportunity to co-mingle your loyalty marketing and information about the business. But I don’t see it making a big change in the majority of what you do to drive loyalty. I’m not sure that’s going to change. Social media has been overhyped; it’s just another arrow in the quiver.

Are loyalty cards still a viable way to build loyalty at retail?

Sutton: I definitely think loyalty cards are viable, depending on how they are executed. With our card, you get free shipping both ways and the coupon dollars that are earned are good for a whole year. We make it easy to understand, so the benefits make sense to our customers.

Personally, I resist having a lot of cards in my wallet. So, the offer needs to be worthwhile. The cards where you redeem points and that give you some specific benefit on every order are smart ways to keep the customer coming back to you versus somebody else.

Anik: Our loyalty program is unique in that it is not restricted to one payment method. We allow customers to receive points by registering up to three credit cards with our program. So, they can use their JC Penney credit card, or up to two other cards.

It’s really about letting them shop and interact with us in the way that they want to do it and works best for them. Our customers tell us that they find shopping at JC Penney convenient because it limits the number of cards they have to carry with them.

Cannella: We don’t feel that traditional loyalty programs are of great interest or value to customers — if anything they are rewarding already-loyal customers. We feel that a loyalty program has to reinforce things that we know that people appreciate about us.

For example, we have a program called “Recycle and Be Rewarded,” where if you bring in an empty bottle, we’ll punch a card and give you a lip balm. If you bring in five bottles, we’ll punch your card and give you two products, and so forth. It’s a very straightforward program that ties into our values and it builds loyalty.

Winer: For grocers and drug stores, loyalty cards definitely work. There’s a CVS near where I live and I use their card to pile up points. I get gas discounts and two dollars off on the tape when I check out. It works.

But I don’t see loyalty programs as being as useful or as important for fashion retailers. People aren’t likely to be persuaded to shop for apparel because of a loyalty program. They’re more concerned about how they look than whether a store has a loyalty program.

Hapoienu: Loyalty cards are still viable and going strong in the face of all the technology. Most retailers are still issuing cards because it’s something to hand the customer. Cost is not a factor and it creates some interaction between the store associate and the customers, which is important.

A time will come when technology eliminates the physical card, but that won’t change anything as far as the concept of loyalty programs goes. Until somebody comes up with a better method of building a database of customers with a promise of a reward, you’re still going to have loyalty programs.

If you give us your name and address and information about your pet’s birthday, we are going to send you something for free. When you spend $500, we’re going to give you a free drink or a free ride. That process will probably live as long as there are human beings buying stuff. Whether or not the physical card continues is another matter.

What earns your loyalty to a retailer?

Sutton: My loyalty goes to high quality, dependable service and a personal touch. I’m loyal to companies with quality products that know who I am, care about me as a customer, and then follow through and do what they said they will do.

Treat your customer like you want to be treated. That’s our golden rule around here. You treat people the way you want to be treated, and you treat every customer as a human being, and it makes a huge difference.

Years ago, I got into a running-shoe loyalty program. I paid a small one-time fee, got 10 or 15 percent off on orders and they would upgrade me to two-day shipping. They got all my running shoe business and I’d change shoes every two to three months. For years, I bought all my shoes there. I was really loyal.

Then they started monkeying with the program. They changed the benefits and stopped carrying some of the prior year’s models, which are discounted — that’s important when you’re buying four or five pairs of shoes a year. As a result, I’ve completely left them.

Was I considered too much of a deal seeker? Maybe. I don’t know. But I don’t think they even put that kind of thought into it. They just changed their program, changed their mix and didn’t realize that they would lose somebody who had been loyal for 10 years.

Anik: For me, loyalty is an integrated experience that’s always there for customers wherever they are. It’s the complimentary experience of interacting on the mobile device, online or in-store to create an experience that builds loyalty.

Personally, I love reading, and my loyalty is to Barnes and Noble. Even though I can go to Amazon and order online, I love the atmosphere of that store and the smell of books. I don’t have a Kindle or an e-book because I just have a passion for holding a book and reading.

In a plane, I’ll read my hardcover and somebody will say, why don’t you just get a Kindle? Isn’t that hard to carry around? Yes, it is, but there’s nothing like the way a book smells and how it feels. You remember when you got it and how you anticipated the purchase of it.

Cannella: Loyalty, for me, starts with a product because that’s usually what drives me to a store. Most times I’m looking for something, or I know I like a certain brand or edited assortment. But then it’s absolutely the personal touch that I get after that.

It’s being comfortable in the store because there’s such a psychology of feeling comfortable in the store. I’m completely fascinated by where you go when you walk in and how safe you feel.

I think most retailers understand that people are looking for much more than product knowledge. They are looking for a personal connection, but not one that’s too personal. Don’t overstep your bounds and don’t script your connection. I’ve had what feels like a scripted attempt to connect or give me a tour of the store. I don’t want that either. It has to be genuine. There are huge expectations in terms of what will make me super loyal, but if I get it, then I will be absolutely loyal.

Winer: What earns my loyalty is consistent quality and service. I just won’t go back to places where the service is bad. I expect to be treated well. I expect to have knowledgeable sales people. For me, it’s knowledgeable service and obviously the quality of the merchandise.

Hapoienu: Consistency of execution earns my loyalty. The product or service has to be the same or better than it was the last time. If something goes wrong, then the customer service has to be really good and fix the problem. You can end up building stronger loyalty with customers who had a problem because it’s an opportunity to exceed their expectations.

If you have a problem with something you buy, you shouldn’t have to wait on a long line. Bed, Bath & Beyond does that very well. Whatever it is, they’ll take it back with no questions asked, for the most part. They also have a lot of good merchandise. I can always find people to ask at Bed, Bath & Beyond, versus so many other stores where you can’t find anyone, or they don’t know anything.

It’s the simple gestures that make a difference. My father owned a bar, and even on his days off, he’d go down there for a couple of hours. And I’d say, why? And he’d say because the customers like to see the boss. All he did was walk up and down the bar, pat a guy on the back and say, hey good to see you. He’d hand the guy a free beer and walk away. And that guy would be on cloud nine for two months.