The importance of customer loyalty

After the purchase is before the purchase

An international study concludes that customer retention is just as important as customer acquisition - and often fails. We asked Peter Pawlick, Head of Strategy at R/GA Berlin and co-author of the study, what tips he can give furniture companies to win over newly acquired customers in the long term. 

Jun 08 2021

Peter Pawlick has co-created a sophisticated global study for the consultancy R/GA 2021 to help brand managers build good relationships with their customers. He is a luminary in the field, having led retail giant Walmart in the U.S. through its transformation from brick-and-mortar supermarket to omnichannel leader between 2016 and 2019, and oversees numerous retail clients. Based on a survey of around 16,000 participants in six industry categories and nine countries, the report aims to answer two fundamental questions: How do brand relationships develop and what does it take to convince customers to return to a brand after a purchase? 

Pawlick defines brand as "the part of a company with which customers have a relationship and which occupies an important place in their lives. That is, there is a connection to the heart, mind, behaviour, dreams, goals, memories and so on. By 'brand relationship' we mean a deeper exchange of values between a customer and a brand that becomes more intense over time."  

One finding of the study: in 2020, many marketers focused more on customer retention rather than acquisition. According to Pawlick, this is particularly successful when a living relationship is established, because: "All human relationships are based on interactions that 'accumulate' over a period of time. Strong brand relationships also function according to the same principle: They provide relevant and valuable interactions that enable customers to live happier and more fulfilling lives." 

If companies want to live up to these high expectations, they need to shift their mindset so that the second purchase is more important than the first. This makes the first contact even more important, because only if it is successful and a relationship is established, customers will come back. 

This is especially important for the furniture industry. Furniture is bought less often than other consumer goods and where it is bought is considered more carefully than usual. Thus, retailers "usually don't get a second chance if the first shopping experience doesn't go smoothly. The stakes are much higher, so it pays not only to get it right, but to provide truly outstanding service," Pawlick is convinced.

In addition to personal advice during the shopping experience, customers want a familiar relationship with the companies whose goods and services they need. © Foto: Unsplash/bbh singapore

Insights and strategies to strengthen customer relationships 

The study derives strategies from the survey results on how brands can build lasting relationships with people. Peter Pawlick gives concrete tips for ambista on how furniture companies can implement them.  

Community is important

The majority of customers - 68 percent of German customers and 72 percent worldwide - are interested in the people behind a brand. Unfortunately, very few brands seem to succeed in giving their customers the feeling that they belong. Only 27 percent of those surveyed worldwide and 18 percent of those in Germany consider themselves members of a brand community after making a purchase.  

Seamless is the absolute baseline. With rising standards come rising expectations. By this we mean that a flawlessly executed buying process is not enough. It must also contribute to the customer's enthusiasm for the brand universe and all it has to offer. For a furniture company, this could mean, for example, inviting a customer to its community after the purchase, where the customer will find something to appreciate. It is better to say "join our community" than "follow us on Instagram". 

Many customers regret their purchase

60 percent of all customers are not sure if they would make the same purchase decision again if they had the chance.

It's love at first use – or not at all. Without helpful, proactive onboarding, regret on the part of the buyer is inevitable. By this we mean that the entire post-purchase journey – from receiving the product, to unpacking it, to using it and enjoying it – is the brand's responsibility. If a customer buys a light that needs to be wired, or a shelf that needs to be hung, and the brand shrugs and says, "Good luck with that," that undermines the relationship. 

This is not to say that every furniture retailer must offer a full-service assembly or installation service. But it should be empathetic, anticipate the customer's steps and be helpful in a meaningful way that reflects the promise and goals for a future relationship. If you behave like a big-box retailer, you will be seen as such. If, on the other hand, you prove yourself to be a companion, you earn the right to be one. 

Personalisation desired

More than 80 per cent of respondents want some form of recommendation or curation from the brands they shop with. They want their individual needs and goals to be seen and supported. The data collection and maintenance required for this is time-consuming and worth the effort. So is the very personal advice. 

Communication beats convenience. First, make it easy to talk to you. Then make it easy to buy from you. By this we mean that customers often don't know what they don't know. Service staff should therefore be equipped with empathy, knowledge, practical tools and ideally a little leeway to sweeten a deal with a little reward.  

A customer looking for a comfortable chair for her home office may have clearly defined criteria for the perfect home office chair. But she may at the same time lack an idea of what else she could do to improve the comfort of her home office. By focusing on the client's goals rather than just the sale, a service representative can provide deeper value here. For example, by not only helping the customer find a chair for her needs, but also bringing in a little something extra like an unexpected gift. 

Loyalty and related programmes overrated

According to the R/GA survey results, customers consider loyalty offers important, but hardly use them. The vast majority of customers (82 per cent of German customers, 88 per cent worldwide) believe that brands should offer loyalty programmes and promotions, but only a small percentage of them actually sign up for such programmes (ten per cent of German customers and 13 per cent worldwide). 

Loyalty is a misleading marketing term. Because the way they are currently structured, loyalty programmes fail to create real customer loyalty. Our tip: Reward the relationship and nurture the community.

Peter Pawlick, Executive Director and Head of Strategy at the consultancy R/GA. Born in the USA, he is responsible for the development and quality of the company's strategic services and lives in Copenhagen. © R/GA

We asked Peter Pawlick which of these strategies can be implemented most quickly and how long it takes to steer communications towards effective customer loyalty. His hands-on answer: "All of our recommended strategies can be scaled down to be feasible for a small furniture shop or scaled up to be applicable to the largest global retailers. None of the strategies are particularly labour or capital intensive. Frankly, the biggest effort is in applying the necessary discipline to prioritise properly." 

Author: Christine Sommer-Guist

Write the first comment