Peak season offers retailers an opportunity to not only increase sales but also cultivate lasting customer relationships. Balancing the need for short-term sales while building long-term loyalty is a significant challenge for most, if not all, retailers. To maximise the short-term and long-term potential of seasonal customers, retailers must focus on optimising the customer experience throughout their entire journey.
Retaining peak season customers can be daunting, as many are drawn by short-term deals rather than long-term brand loyalty. John-David Klausner, Senior Vice President of Business Development, Loop, comments, “Retaining customers during peak season can be especially challenging for retailers given the nature of peak season sales – it’s inevitable that some of these new customers are just there for the deal with no intention of becoming recurring customers. This also means brands that experience lower retention and loyalty face higher customer acquisition costs, as they need to spend more to attract new shoppers for each and every sale”.
Retailers must also maintain a constant eye on profit margins. This requires a delicate balance between staying competitive, avoiding unsustainable price cuts, managing suppliers and cost-effectively managing returns. Luke Fossett, general manager at GoCardless ANZ, says, “Businesses need to figure out how to participate in sales while still maintaining their margins. This is tricky as businesses need to stay competitive without undercutting themselves to the point that it’s unsustainable. Another key challenge is maintaining operational resilience, or ensuring the key processes and suppliers required to keep operations consistent don’t let the business down”.
Turning seasonal buyers into loyal customers
Customer retention and loyalty are influenced by emotional connections to brands. By understanding the power of emotional connections, brands can build stronger, more lasting relationships with their customers, leading to increased retention, loyalty, and advocacy.
Psychologist Dr. Maria-Elena Lukeides from The Wellness Fountain explains, “Customer retention is a complex process influenced by various psychological triggers. One of them is ‘attachment theory’, where a customer might have developed an emotional attachment to a brand (which is very similar to personal relationships! For example, a boutique bookstore that goes beyond just selling books, by hosting book clubs and author events. They are creating shared experiences while also fostering a ‘community’, thereby establishing a deeper emotional connection with their customers.”
“Savvy brand managers also know that this attachment can be exponentially strengthened by appealing to psychological archetypes and so the brand doesn’t just represent the product and its benefits, but rather it connects with the ethos of someone’s personality or character”, adds Lukeides”.
Trust is the bedrock of customer loyalty. It’s the invisible thread that binds customers to brands, fostering a sense of security and reliability. Building trust takes time and effort. It involves consistently delivering on promises, being transparent in communication, and prioritizing customer needs. Lukeides highlights, “Research shows that more than 80% of customers won’t buy from brands they don’t trust. So, when they do find a brand they trust, they keep coming back for more. For example, companies like Amazon have established trust through reliable delivery and customer service, making them a go-to option for many online shoppers”.
Leveraging the holiday rush for customer acquisition
To capitalise on the holiday rush, retailers should look at:
Personalising the customer experience: Use data-driven insights to personalise product recommendations, offers, and communications. This creates a more engaging and relevant shopping experience, fostering stronger customer relationships. Klausner says, “Data is a crucial component of the modern retail retention strategy – which is becoming increasingly sophisticated as tech and AI advance. Through AI-driven tools that can understand shoppers’ experiential preferences, identify patterns in return behaviour, and optimise inventory management, retailers can proactively better meet customer expectations from the start.”
Leveraging data-driven segmentation: Segment your customer base based on purchase history, return behaviour, and other relevant factors to tailor marketing efforts. This allows you to focus on high-value customers and implement targeted retention strategies.
Prioritising the post-purchase experience: The delivery and returns process are critical touchpoints that can either solidify or erode customer loyalty. Streamline the return process and offer flexible options to minimise friction. Recently, THE ICONIC was named Australia’s most loved retail brand, which was largely due to the post-purchase experience they offer customers. Joanna Robinson, CMO, THE ICONIC says, “We are proud of having set industry standards with our delivery and returns offering and our range of in-house tech solutions that enhance and personalise the overall online shopping experience (e.g. Follow the Brand, Snap to Shop, Wishlist Boards). Creating a better way for people to shop also means we are always reaching for the next thing and pursuing progress. Being better to us isn’t just about settling for good enough”.
She adds, “We understand that customers crave more than just a good price. They want to connect with a brand that reflects their values, identity, and the image they strive for. That’s why we have been building trust and confidence since our launch in 2011 by becoming a reliable online shopping destination that eliminates the stress often associated with online retail”.
Reward and recognition- loyalty programs
Rewards and recognition can play a crucial role in customer retention, because they leverage psychological principles that encourage repeat business and brand loyalty. “When customers receive rewards”, says Lukeides, “they feel inclined to reciprocate with continued loyalty. Plus, they are chasing that dopamine hit of points, or added brand dollars, giving their brains a little rush when they shop!”
“The McDonald’s Monopoly game is an excellent example of a rewards and recognition program that leverages customer engagement through gamification and exciting prizes. The game taps into people’s love for challenges and rewards, transforming a routine fast-food visit into an entertaining experience (this enhances customer engagement and encourages repeat visits)”.
“Then, add to that, the FOMO (fear of missing out) factor due to the limited-time nature of the promotion, and it creates a sense of urgency, motivating customers to participate before the opportunity ends. This scarcity principle makes the game more attractive and encourages frequent visits during the promotional period”.
Loyalty programs need to offer meaningful rewards like tiered rewards, personalised rewards, experiential rewards, and community-based rewards. Make redemption easy by offering flexible redemption options, clear and simple terms, and mobile-friendly redemption. Prioritise customer experience by providing excellent customer service, seamless integration, and personalised communication. Klausner advises, “Retailers should ensure their loyalty programs give true value to their customers that make them stand out in a saturated market. Successful programs could include gifts, discounts, or special perks like free shipping each time a customer hits a new rewards level”.
Understanding what your customers value
Sharing compelling brand stories that resonate with customers’ values and aspirations can help foster emotional connections. Klausner highlights, “Sustainability is also becoming increasingly important to Australian consumers – more than half (52%) of shoppers are more likely to return to brands that embrace eco-friendly practices, like reusable return packaging and carbon offset programs. We’ll likely see more retailers embrace similar sustainable practices as consumers come to expect it from the places they shop”.
Peak season presents a unique opportunity for retailers to not only drive immediate sales but also foster enduring customer relationships. However, striking a balance between short-term gains and long-term loyalty is a delicate art. To maximise the potential of the season, retailers must prioritise a seamless customer experience at every touchpoint, ensuring that every interaction strengthens the bond between the brand and the consumer.
