Has there ever been a better time to build or kill customer loyalty?
The novel coronavirus pandemic has been a time of testing for all retail businesses. It has also been a period of great opportunity for retailers to show long-standing and new consumers that they are there for them at a time of need.
In an interview on CNBC, Etsy CEO Josh Silverman said, “This is a moment when we have a chance to win the loyalty of millions of people and we’re working so hard to do that.”
The online platform for independent sellers of handmade goods and crafts has seen its active customers jump to more than 60 million, a 41 percent increase, as sales of face masks on the site took off along with the rise in COVID-19 cases across the U.S.
A new study by the Wharton School’s Baker Retailing Center and WisePlum found consumers questioning their loyalty to retailers following disappointing omnichannel interactions in recent months.
Thomas Robertson, a professor of marketing at the Wharton School, told RetailWire that 66 percent of consumers experienced at least one issue on their last online shopping trip in the second quarter, up by 10 percent from the first three months of the year.
The most frequently cited problems were related to product availability. Consumers listed among their complaints being able to only purchase the item they wanted online instead of in a store. Others included finding a product they purchased not available for pickup or, if available, at a distant store.
While product availability has been an issue, Prof. Robertson said, “The most damaging problems were related to the returns process and website and mobile app navigation.”
Chief among these complaints were purchasing an item online and having to pay for shipping to return it, difficulty navigating websites and apps and not being able to return items without the original receipt.
Prof. Robertson issued a caution to retailers regarding customers who participate in loyalty programs.
“Members of loyalty programs tend to have higher expectations and therefore experience more problems than that of non-members,” he said. “We believe that this is because members typically are more engaged and have higher customer lifetime value than non-loyalty members. Losing loyalty program members may lead to long-term degradation to the brand and may have significant financial impact to the retailer.”
- This is the moment to ‘win the loyalty of millions of people,’ Etsy CEO says – CNBC
- Etsy’s stock jumps to record, tripling in three months on surge in face mask sales – CNBC
- Consumer Disappointment with Retailers Runs Deep – Wharton School at the University of Pennsylvania
- The New Reality: Understanding the Retail Consumer Experience During a Pandemic – Baker Retailing Center at Wharton/WisePlum
DISCUSSION QUESTIONS: Do you think retailers have risen to the occasion in recent months in the eyes of consumers or have they largely fallen short? What do you see as the best ways for retailers to “win the loyalty” of consumers at this point in time?