The ONE thing Retailers can Control in 2024 to Increase Profit

“Loyalty is dead.”

I was having a cocktail at a tradeshow with a customer after a long day of enthusiastic and purposeful walking, presenting and pointing. As a salesguy, It felt good to get off my feet and not talk about product for a little while.

I sat down with a buyer whose store was in its third generation of ownership. The grandkids were in charge now, and the market climate they served had changed over the past two decades. No longer were they the only game in town. New players had entered the market in the form of larger-format national brands and regional, shall we say, more gritty competitors.

“Customers are only shopping on price,”

Which leaves an interesting mindset dilemma. On the one hand, price is always a factor. We live in the subjective world of an ever-shifting definition of the word “value.” On the other hand, and as the cliché goes, price is only a factor in the absence of that same value we strive to pinpoint.

Taking a page or two from the playbook of category-dominant retail enterprises might be a great way to adopt some well-documented processes to defibrillate this dead loyalty of which we speak. It would seem like a great way for a business in our tiny little sector of retail to pull ahead of the pack. Perhaps even dominate as well. Challenging popular opinion is one thing. Swimming against the current of “ this is the way we’ve always done it” is oftentimes a bridge too far.

Here’s a tough question with a follow-up. Feel free to answer with your inside voice.

1. Do you deserve the loyalty of past customers?

2. Can you prove it?

In my opinion, a person isn’t truly a customer…. A close cousin to a “client”. … until they say so. If you conducted a transaction that met expectations, all you really accomplished was accommodate a need or a desire in an acceptable way. You sold something….congrats. If she comes back again of her own volition, she’s a customer.

If she brings a friend, now you really have something.

The good news is that this person who came back because something happened in your store or with your team that she liked is gold because you don’t have to market to her again. Her return is free, as are her purchases, which don’t have to bear the burden of the marketing dollars you spent to get her in the first time.

She referred herself….. which means…..

She probably bought more stuff.

She definitely spent more money.

She may have even brought someone with her who experienced your store.

Also, this customer will not bust your chops on minor annoyances because she already considers you worthy of her business and she wants you to do well. After all, she’s probably referred you to her friends and neighbors already.

Did your delivery driver leave a small scrape on the wall while moving in a bulky item?

It’s not a big deal for a customer who likes you. She’ll probably let it go and have it touched up herself. However, a first-timer who rushes home early from soccer practice to accept the delivery may not go so easy on your call center or may delay your driver. Can you even assign a cost to this? No? But you know there is one.

There are a ton of examples like this. We’ve all gotten angry or emotional at a company we wish we hadn’t done business with based on a policy that was enforced and affected us unfairly. It happens more and more each day.

Redelivery fees

Cancelation fees

Change fees

Restocking fees

Charges like this help the bottom line in the short term but crush the loyalty you may have had a chance of earning had the customer (a term we’ll use as a placeholder for now) felt like they were valued and appreciated. No one likes to be nickel and dimed, yet short-term accountancy almost demands it. Imagine eating a $100 redelivery charge and gaining a true customer who will raise the flag for your business because of how she was treated.

Most larger retailers spend well over $100 to get a customer to simply walk into their store, so that $100 is a wash.

Of course, one person had already done business with you, and the other is a maybe at best. Which opportunity would you rather invest in?

What kind of charges or fees are ingrained in your organization that you would not be happy to pay yourself?

Studies show that US companies lose half their customers in 5 years.

I’d say the rate for furniture stores ( the business I’m in) could be higher because our retail customer journey is so fragmented, with so many opportunities for operators to pass on poor information or set improper expectations to their customers.

Customer loyalty, like employer/employee loyalty, must be earned. Loyalty is not a given because you simply didn’t mess up.

Loyalty is powerful.

Loyalty is ride or die.

Loyalty is best friends.

Loyalty is 50% of marriages in the US.

Loyalty is Profit

Loyalty is not to be taken lightly or assumed to exist when chances are it does not.

There comes a time when a shift needs to happen. Think back to how independent retailers used to value their customers. Perhaps as far back as a time when the milkman would come into the home and put the milk in the fridge in the morning and drop off a bill at the end of the week.

This is the perfect time to shift back because Gen Z is coming into the workforce with a whole new set of values and expectations.

If you want to build or repair a brand, you do that by making sure your human assets believe that you care. Those assets include your people, your partners, and your customers. If they feel, by your words, actions and policies that you don’t care any more about them than the government does, you’ve lost. It starts today. It means you need to get inside the mind of each and every head in your organization and speak their language. It means you LISTEN to them…. Even when it hurts. Especially when it hurts.

Covet the bad and the negativity. Be grateful if people will tell you what they think. If you think there’s a chance you’re a bully, chances are good it’s true. Open up to the possibility that great experiences lead to amazing loyalty, and that loyalty will cost you very little in the aggregate. You should pay for a customer once and only once. If that first transaction doesn’t turn into a customer for life…. Shame on you.