Technology at heart of loyalty generation

Having worked across different sectors it is noticeable how retail is very much more about the transaction whereas with the travel industry experience is everything. The good news is that this could change because innovations in things like artificial intelligence (AI) and augmented reality (AR) are bringing a greater level of personalised service to retail.

It was noticeable in the recent ‘Retail Insider Digital Retail Innovations 2018’ report (sponsored by Webloyalty) how many solutions incorporate these technologies. At their heart is the use of customer data, and the insight that this generates, then being used to deliver a tailored level of service. It is this that can create the best customer experience and ultimately generate loyalty.

Retail has been driven to a large extent by price but it has been proven that it is not a particularly effective way to generate loyalty. Certainly my own loyalty to a brand is cemented when I receive a great experience.

Take my loyalty to certain coffee shops. It is based on four components: the breadth of product; personalisation, such as having my name on the cup; great service which enhances my experience; and an incentive programme that can be as simple as a card stamped and every 10th cup is free. When these elements come together it usurps price in the loyalty stakes for me.

What I think we could see is technologies like AI and AR feeding into this dynamic. Not in a gimmicky way but genuinely enhancing the customer experience through knowledge of their behaviours and preferences.

AI can absolutely help with personalisation – which could include creating dynamic landing pages on websites that only surface relevant content and products to each customer. AI can do the job of understanding people and be hidden in the background. The way it is ‘seen’ is through the retailer delivering a great customer experience.

Asos variable virtual models among many AI solutions in Digital Retail Innovations report

This could manifest itself through things like the Asos variable virtual models solution on its app that give a much better indication of what clothes will look on the shopper by placing them on a virtual model that is a similar shape to them. Behind the scenes it is a very clever piece of technology but for the customer it simply helps them with their shopping by increasing the chance of them buying a product they actually want.

Giving customers greater visibility of products is massively valuable in enhancing their overall experience. The likes of Hilton Hotels enable customers to see a hotel room via Street View-type technology, which helps them better understand what they are buying.

It’s similar thinking behind the AR solutions in home-wares such as that from IKEA that enables customers to visualise furniture in their own homes amid their own items, which enhances the buying decision. Sizing solutions at the fashion retailers again have technology working away to better inform the customer about what will fit them and thereby reduce the chance of them needing to return the items, which all contribute to enhanced experiences and generating loyalty.

What retailers will also understand better with their increasing use of AI solutions is the behavior of customers around things like returns. They could therefore tailor the experience based on this knowledge of the customer, which could see them reward customers who have a positive relationship – much like airlines reward frequent fliers – and equally make it not quite so frictionless to return goods for the worst of the serial returners.

Communicating the message that there are implications for constantly returning goods is necessary though. Highlighting that the customers’ actions are detrimental to the efficiency of the retailer, its ability to meet environmental objectives and to economically deliver a superior level of service across its entire customer base, is absolutely necessary. Delivering gradated levels of service between the best and worst customers is inevitable – we see it in Uber today with dual review scores – are we are likely to see more of this in the future.

What this all comes down to is the use of technology to better understand consumers and for this to then feed through into the delivery of a tailored experience that leads to greater loyalty. This highlights the fact that we have moved on from an environment where price were the primary motivator and into one where exemplary service is now most desired by shoppers – just as my favourite coffee shops have long since understood.

 Ben Stirling, managing director of Northern Europe at Webloyalty