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For Happy Online Customers, Deliver Meaningful Benefits

We recently wrote about customer frustrations with online shopping experiences and the related opportunity for businesses to foster delight. In a survey-based study titled “The New Reality: Understanding the Retail Consumer Experience During a Pandemic,” Wharton Marketing Professor Thomas Robertson finds “about a 10% increase in problems from before the pandemic to the middle of May, with some decrease in loyalty. As the percentage of online sales was going up, many retailers weren’t ready for the onslaught and had trouble coping with it.”

Actually Rewarding Rewards Programs

Specifically, Robertson identifies poorly executed customer loyalty programs as a source of annoyance. In another article titled “Why Personalization Matters for Consumer Privacy,” McKinsey partners Phyllis Rothschild, Julien Boudet, and Gadi BenMark take a deep look at customer attitudes towards data use and personalized reward programs. (That article is part of a compilation from MITSloan Management Review called Creating Great Online Customer Experience.)

Their main takeaway: “By understanding what people value, companies can do more to create trust.”

While privacy concerns are different than service concerns, there are instructive parallels for understanding how customers decide what is or isn’t worth their time and money. To find out, Rothschild, Boudet, and BenMark conducted a survey of 1,012 U.S. consumers between the ages of 18 and 70 who had made an online purchase in the last six months.

Levels of concern diminish as the benefits of personalization go up, the McKinsey researchers find. That might sound obvious, but personalization is hard to get right. You need to actually understand something about the person you’re rewarding. To deliver meaningful benefits, businesses need to make sure the advantages they’re offering are important to their customers.

What do online shoppers want?

“Not surprisingly, receiving individualized pricing in the form of discounts for a product or service that consumers really wanted was among the most favored benefits for data use, with 57% expressing excitement,” according to Rothschild, Boudet, and BenMark, “Coming in second, with 55% expressing excitement, was receiving a free product or service that consumers wanted but felt was too indulgent or not high enough in priority to purchase themselves. Interestingly, receiving dedicated concierge services and personalized advice came in at the bottom of the list of customer delights (less than 25% excitement each).”

Furthermore, younger shoppers, shoppers who live in urban areas, and shoppers who spend more time on social media were more comfortable with online purchasing and rewards programs. Depending on your business’ demographics, you may need a closer look to really know what your customers will appreciate in a loyalty program.

Understanding and Communication are Key

Rothschild, Boudet, and BenMark conclude with two pieces of advice:

  1. 1.Understand your consumers’ preferences “Companies need to analyze consumer preferences to develop a clear understanding of what benefits each demographic values the most. By delivering on those benefits through personalized offers, companies can mitigate some consumer concerns. This requires companies to invest in deep consumer research, ongoing testing of the effectiveness of offers, and advanced analytics to provide deeper levels of insight.”
  2. 2. Communicate and educate “Companies that do this best focus on communicating in simple terms, clearly defining the benefits, and being transparent about the types of data collected and how it is secured. They often communicate this information within the typical user’s onboarding or sign-up experience.”

 

 

Challenge and Opportunity in Online Customer Experience

A recent study by Wharton’s Jay H. Baker Retailing Center and WisePlum suggests rising consumer frustration with retail as shopping shifts online. The survey-based study, “The New Reality: Understanding the Retail Consumer Experience During a Pandemic,” finds mounting customer impatience and decreased loyalty. In a Knowledge@Wharton interview, the study’s co-author, Marketing Professor Thomas Robertson, says these findings are related to underprepared online shopping and loyalty program customer experience and the tech that underpins it.

The Challenge

We have written before about the importance of (and some ways to) deepen customer relations during this time. But Robertson raises an excellent point. “Loyalty programs will not compensate for poor service or a poor product. They will just add cost,” he says. “You have to have the IT in place. Point of sales data, for example, has to be in place for you to be able to use loyalty programs. And if you’re transitioning to online, you have to be ready for it. You have to design integrated online-offline programs.”

As health concerns ferry more and more commerce online, customers’ expectations for a positive virtual shopping experience are on the rise. But businesses have struggled to meet these expectation.

“It’s about a 10% increase in problems from before the pandemic to the middle of May, with some decrease in loyalty. And there is a difference,” says Robertson. “Before, when consumers had problems, the focus was in-store. They would have problems not being able to find things, or they would complain about the messiness of stores or that the salespeople were not helpful. As we got to May, all of this had changed, and what people were now sensitive about was having to pay for shipping to return things, that you needed a receipt to return things, and that the website was difficult to navigate. This seemed to suggest that as the percentage of online sales was going up, many retailers weren’t quite ready for the onslaught and had some trouble coping with it.”

The Opportunity

The takeaway, according to Robertson? “Service recovery is absolutely critical.”

There are some significant bright sides to this story. By smoothing out kinks in your online systems, you can really differentiate your business. There is also a tremendous opportunity in “transforming disappointment into delight.”

In Creating Great Online Customer Experience, a compilation of research by MIT Sloan Management Review (available for download here), Stefan Thomke writes about creating the kind of customer experience that stays with someone:

“When employees are taught to be in tune with the customer’s emotions, they can notice changes in emotional state and respond quickly. As their alacrity accelerates the shift from disappointment to delight, the intervention creates a sudden contrast that makes experiences sticky.  Magicians, who constantly think about the audience experience, understand the emotional value of rapid shifts from disappointment and confusion to happy resolution. They have developed techniques to change people’s emotional states. Momentary disappointment at failure to “catch” the magician quickly transforms into delight in his excellence. Disappointment to delight: Magicians know that this emotional transition will wow audiences more than a constant flow of technically perfect tricks. The former creates memorable moments, while the latter may cause eyes to glaze over.”

In upcoming posts, we’ll share more tips on online customer experience. Stay tuned!

6 Tips for Managing a Positive Customer Experience

Customers are venturing back out to shop, dine, and feel a semblance of normalcy. However, the consumer experience has changed since the onset of stay at home orders. Social distancing requirements, masks, and ubiquitous hand sanitizer are reminders of why we need these precautions. We know that emotions strongly impact purchasing decisions. Anxiety and frustration are common, and disappointed expectations can make things worse. Make your business feel good. It will help customers be comfortable now and build loyalty that carries into the future. Here are six tips for welcoming your customers back into a positive experience, even if things are different.

Make sure your business looks and feels clean

Many people are still very worried about their and their family members’ health. You can cheerily model healthy behaviors at your business to help customers feel safe. Calmly make your efforts to protect customers visible. Employees can clean surfaces while customers are shopping. Anyone at a register can frequently use hand sanitizer. Friendly signage can even be an opportunity to deliver messages about your brand’s values and care for your community,

Remind customers the rules apply to everyone

New  Mexico currently requires masks to be worn in public. If you own or manage a business, you may have already observed that some customers resist this. Consistently insisting (politely, of course) that everyone in the store follows the rules helps communicate the fairness— and unavoidability— of your policy. Having signage may help to avoid extra conversations as well.

Be transparent about changes, challenges and delays

If your customers don’t know the rules — or the reasoning behind them — they’re less likely to follow those rules.  To cut out annoying surprises, use complete honesty and transparency with customers before they come into your store. This rule also goes for any potential delays or supply chain shortages you may be experiencing.

Train employees to be helpful and answer questions

Customers are still adjusting to the realities of post-pandemic retail shopping trips. To minimize anxiety, designate some employees to help shoppers navigate your store, in addition to posting clear signage throughout the premises. Businesses should  also tell customers how to best share their questions and concerns.

Set reasonable expectations

Even if your business has the resources to continue performing at the highest level, your vendors and suppliers may not have the same capacities. It’s important to be realistic about what’s possible and set customer expectations accordingly. It is better to under-promise and over-deliver than to inflate customer expectations and fall short. Here again, transparency helps!

Make it easy for customers to provide feedback

As the pandemic evolves, so must your business’s policies and procedures. Things may continue to change in the coming months, and while communicating these changes to your customers is essential, it’s equally critical to invite feedback.