Economic and social uncertainty caused largely by Brexit, is having a marked impact on retail.
Consumers are spending cautiously and calendar events such as Black Friday didn’t deliver the positive spike expected and hoped for. The IMRG reported that they had expected sales on Black Friday in the UK to rise by 13%, but they actually only went up by 7.3% (BBC, 14 Dec ‘18, ‘Why are people spending less this Christmas?).
With this gloomy outlook, what approaches can retailers use to win and retain customer advocacy and loyalty? Focussing on understanding what drives loyalty and a customer’s motivation to shop with a brand in the first place, can help focus marketing efforts.
According to a report published by Deloitte at the end of 2018, e-commerce made up 20% of all retail sales, and the bulk of retail sales growth was coming from online. Their report also states that discounts were broader than any seen in recent years in the run up to the festive period, suggesting that people would choose to buy on price rather than brand loyalty. And so for any retailer with an online presence, the opportunity to secure cut through by focusing on genuine approaches to engage and incentivise customers is huge.
Mention Me’s second annual survey into customer advocacy and referral trends was completed in November 2018. The study delved into what motivates UK consumers to share products, and the qualities a brand should possess in order to maximise recommendation. The importance of trust and credibility for referral rates high for the second year running. The report also revealed a rise in the ‘conscious’ consumer, less willing to engage with brands who don’t fulfil ethical codes of conduct around sustainability and ethics. How should brand marketers digest this and adapt their marketing approach to engage and retain customers? According to this survey brands need to be thinking carefully about their proposition and values. If they get these right and win loyal support, customers can prove to be their best advocates and become a driver for growth through referral. Referral Marketing offers a way for brands to develop their relationships with existing customers, while new ones are introduced in an authentic way which maximises the potential for future trust.
Businesses can successfully capture advocacy regardless of sector if they focus on their core audience, deliver a great experience and understand what their customers value. Indeed psychology overrides deep discounts when it comes to activating customer advocacy. Customers simply will not share a brand which might put their reputation at risk. Our research examined which brand attributes can help make a brand referable. The top three according to those questioned (2,000 consumers) were unchanged from 2017: great customer service, being trustworthy / credible and offering good discounts / referral offers. Loyalty came in a close fourth, highlighting the willingness of consumers to engage with brands who are able to give them a reason to purchase again.
The trend in the report of the growing significance for consumers of the ethics and social purpose of a brand, has already been reflected in media coverage surrounding key retail calendar events. Black Friday was accompanied by press coverage questioning excessive and unnecessary spending with brands we don’t already have a relationship with, fuelling an unsustainable throwaway production chain. The Christmas retail battle for hearts and minds also grabbed headlines this year after Iceland’s decision to partner with Greenpeace, for a campaign designed to raise awareness of the use of palm oil.
This apparent culture shift in the minds of the consumer appears to be having an impact on the types of brands that we would be happy to refer to friends and family. We are becoming more conscious consumers, less willing to engage with brands who do not fulfil ethical codes of conduct. Of those questioned in this survey, people would be more likely to refer a brand if they paid their workers a fair wage, are committed to work with local suppliers and hiring from the local community and are committed to scrapping the use of plastics and environmental concerns. For brands it is no longer just a matter of conscience to act by ethical values, it’s become necessary for customer loyalty.
We conducted this research in order to better understand both the motivations, and the blockers for referral and word of mouth. Trust has been a recurrent theme in the results, reflecting its rising importance in culture and media over the past twenty four months. The data highlighted that consumers don’t want to be sold to by influencer marketing, or by celebrities, but instead value trust and personal recommendation. The second theme that emerged about the ethics and social purpose of the brands we choose, suggests that brands need to think carefully about their proposition and values. If they get these right and win loyal support, customers can prove to be their best advocates and become a driver for growth through referral.
- Mention Me is a marketing technology business helping brands harness the trust that their customers have in them. The Mention Me refer-a-friend platform enables businesses to turn word-of-mouth into a controllable and meaningful marketing channel.