There’s no such thing as customer loyalty to a retailer. People are often fiercely loyal to brands, but not to retailers. Try to bribe customers to be loyal to you as a retailer and you risk wasting money. It’s time to change our frame of reference; forget customer loyalty and start thinking about winning First Visit Advantage (FVA) instead.
Why customers are never loyal
Customer loyalty has become shorthand for the processes and investments retailers make in trying to get customers to stick with them each time they shop.
But the phrase is dangerously misleading. The word loyalty implies strong positive feelings and constancy – a truly loyal customer would return to the same retailer whatever the situation, whatever the service.
But customers aren’t loyal. They rarely have strong feelings about retailers and will happily choose an alternative if a situation prompts it. Customers buy from a particular business because it meets their practical and emotional needs at a specific time.
But if a retailer stops meeting those needs, or a competitor meets them more effectively, customers will choose an alternative without a second thought. Customer “loyalty” only lasts while the customer doesn’t have a more relatively attractive option. And once the customer chooses away from you, the relationship that you nurtured and invested in is potentially dead.
Retailers can’t be complacent about loyal customers; in a choice economy, no retail business has a guaranteed set of customers who can be relied on to always shop with us. All we have are a set of people who, at a particular moment, make the choice to interact with us.
The only fundamental in retail is how we make ourselves attractive enough so that customers choose us. It’s time to forget customer loyalty and start talking about First Visit Advantage (FVA).
What is First Visit Advantage?
There is a fundamental difference in approach between attempting to incentivise customers to always shop with you and incentivising customers to generally try you first.
Trying to bribe a customer to always choose you through a customer loyalty scheme is expensive and will only be successful until the customer has a reason to shop elsewhere.
Instead, energy and investment should be directed towards inspiring customers to choose you first – to come to you first on a given shopping mission and give you the first opportunity to sell to them.
At Uncrowd, we call this First Visit Advantage – the edge you gain from positioning yourself to be the first place a customer thinks to go to meet their need. It’s the old saying, the first bite of the cherry is always the sweetest.
How to win FVA
Customer choice is influenced by the inputs a customer makes, and outputs they get – frictions and rewards. Rewards are everything a customer gets from shopping with you. Frictions are all the things they have to go through to shop with you. Frictions and rewards might be tiny forces at play in the customer journey, but in a choice economy, where choosing where to buy is trivially easy, those small forces have a big influence on how a customer acts.
To win First Visit Advantage, retailers must reduce friction, so it easy to shop them. And they must increase reward, making their format compelling and focused.
There are a range of different strategies for winning FVA, and retailers usually use several of them at once. But what they all have in common is the fundamental relationship between friction and reward.
Seven strategies for winning FVA
1. Sector expertise
Customers who have a need to fulfil but don’t know the best way to fulfil it will often go first to a retailer who has positioned itself as an expert in the sector. These customers want expert advice on what to buy, or they want to know that they’re choosing from an expertly curated range.
If you’re after a great bottle of wine to go with roast lamb, you know if you walk into a Majestic Wine store, the staff will sort you out with a good choice. Majestic win First Visit Advantage because staff are trained to know their stuff, and the range is curated to offer you the best choice.
2. Charging for benefits
Paid customer convenience schemes are becoming increasingly popular; Amazon Prime, ASOS Premier and Barnes and Noble Membership are good examples of schemes where customers pay a subscription for exclusive benefits such as free delivery.
Once a customer has spent money on subscribing to a premium service, they are more likely to visit that retailer first because they know they will benefit from the perks of membership they’ve already paid for, like free and fast delivery.
3. Product range
Amazon have inserted themselves into almost every retail market on the planet with this approach, making their product range so vast and comprehensive that when a customer doesn’t want to put any thought or invest any time in their decision, they come to Amazon first.
Winning FVA with product range is a tactic employed by large retailers like Amazon or Target, but it’s also effective for small, specialist retailers – Ryman’s reliable range of stationary, or London specialist Duke of Uke with their hyper-specific but comprehensive range of ukuleles.
4. Every-day reliable solutions
Retailers who offer an affordable range of well-curated solutions to everyday customer problems win First Visit Advantage because they offer customers an easy, reliable choice. No need to worry about the latest trends or labels or worry about price when you shop with a retailer like Uniqlo and IKEA; their range of stylish, classic basics will offer a solution.
5. Frictionless delivery
With the growth of online shopping, delivery price and speed, and ease of returns has become a deciding factor in many purchases. Frictionless delivery and returns can win FVA with customers looking for a fast, easy and low-risk solution.
AO.com and Ocado are companies that rely on frictionless delivery, Ocado combining delivery with range to win FVA in online groceries, and AO.com making delivery and return of white goods as simple as any other product.
6. Price and range
Making yourself a one-stop shop for your sector can win you FVA. That means combining a wide product range with reliably low prices. Hobbycraft do this successfully in the crafts sector, offering knowledgeable staff and affordable solutions for a huge range of art and craft needs.
What comes after First Visit Advantage?
Knowing when and why you win FVA, and when and why you lose it, helps you drive effective strategy, propositions and experiences that make you first choice more often.
When you are winning FVA on a specific shopper mission, you can channel investment and strategy into converting that first visit into a sale.
Practical exercise: start thinking about FVA
Write down the shopper missions that are most common for your customers. Then for each mission, make a list of everything you already do to win First Visit Advantage. Now make a list of things you could be doing to increase the chance of FVA for that shopper mission.
Richard Hammond is CEO of Uncrowd, the customer analytics platform that shows why customers make the choices they make, and what retailers can do to influence that choice. He is the leading global authority on friction and reward in retail, and the author of best-seller Smart Retail: Winning Ideas and Strategies from the Most Successful Retailers in the World, and Friction / Reward: Be Your Customer’s First Choice.
