A critical moment to build customer loyalty

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The promise and power of personalization is always based on relevance, which requires the most robust understanding of how customers shop and their ever-changing needs in terms of categories, products, brands, information, price, value and channel. Throughout the pandemic, there have been tremendous changes that impact almost every way these customers shop — from their behaviors and needs to their shopping patterns (time, day, channel), and this change is continuous. Now that there is substantial progress being made to address COVID and a return to some semblance of normalcy is in the offing, drug store retailers need to start planning for the new ways shoppers will expect to be marketed to.

Brian Ross

During the years immediately prior to the COVID outbreak, personalization was an increasingly important and integral part of how drug store retailers engage with their customers. This trend was primarily powered by advances in technologies such as the cloud, in analytics through the use of artificial intelligence (AI) and with digital tools such as mobile and digital displays — all delivering on the promise of building relevance with customers that increases value, better meets shoppers’ needs and creates long-term loyalty.

At the store level, personalization is attained through better assorting each location to meet the specific needs of local customers and through customizing price and promotion through targeted marketing content. It is also achieved with tailored offers at the checkout for each shopper, based on what they buy, what they should buy or might buy, based on an understanding of their needs and desires.

The most significant advances in personalization at the store have been enabled through delivery of 100% personalized content, information and offers to customers through mobile platforms across the entire path to purchase. This includes digital browsing/shopping, individualized offers delivered to encourage shopping at a retailer and customizing the in-store experience through enhanced navigation and facilitating checkout, all executed to create a highly curated experience.

To deliver fully on the promise of personalization, retailers have had to ensure they innovate in how they deliver offers that align to changes in customers through real time or real-time analytics and innovation in offer strategy. For example, we know shoppers have changed items they buy from switching to larger sizes/pack-sizes; significantly shifting more purchases online for delivery or pickup; fewer trips; larger baskets; and a heightened focus on value/convenience.

Retailers have had to accelerate and expand scale and cadence of analytics to ensure most accurately understanding customers’ needs and ensure personalization keeps up with the customer. This is critical to both in-store and online. In-store, retailers have to focus on optimizing assortment to best meet customers’ needs and streamline to maximize in-stock position — as well as significant changes in pricing/promotional strategies to deliver best overall value to customers.

With the start of the pandemic, these personalization trends adjusted to dramatic growth of e-commerce through BOPIS or delivery. Personalizing the digital experience, from managing shopping lists and the shopping experience to communicating with customers more often and providing key information during phases of COVID to deliver superior customer service at all steps of the purchase cycle, is quickly becoming table stakes for drug store retailers.

The truth is there has never been a more important time to build loyalty for today’s customers through COVID. Customers are dramatically reducing the number of retailers with which they do business as they try to limit their store trips and simplify their shopping. Leading this change is the overwhelming shift to digital/e-commerce in high-frequency retail versus shopping in-store.

As customers make the leap to more digital shopping, they quickly establish new habits and expectations and build early foundations of loyalty. This is a critical opportunity to build on and strengthen customer engagement and loyalty, though it also represents a risk for those that don’t understand and act on customer changes. Those retailers who best understand changes in customer behavior, react to those changes to best meet customers’ needs and engage with customers are those retailers who have been able to build loyalty.

The digital transformation in the retail drug channel impacts every aspect of customer engagement. To win in the future, drug store retailers must meet their customers’ needs at these points of change, and that requires executive level transformation and organizational alignment from the C-suite through to the store.

Brian Ross is president of Precima, a NielsenIQ company. Precima is a global retail strategy and analytics company. For more information visit precima.com.



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