Going Shopping? You Probably Don’t Count

Remember the days when you’d open your mailbox to find a pile of flyers from stores as diverse as Williams Sonoma, Bath & Body Works, Auntie Anne’s and Claire’s? Sure, the flyers were annoying, but the ads were reassuringly inclusive.

Enter today’s retail-loyalty programs, most of which probably—simply put—don’t care about you. National retailers are increasingly discovering that most of their profits come from fewer than 10 million shoppers (often more like 3 to 7 million) and are finding it profitable to focus their attention on them. Not on you. “There’s so much efficiency in reaching the people they want,” says Jennifer Rosenberg, a principal in the Global Marketing Officers practice at Korn Ferry. Sure, they’ll miss some potential shoppers, she says, but “retailers don’t need to be all things to all people.”

Retail mass marketing has been floundering for a couple of decades now, with marketers’ efforts falling flat via diverse mediums including snail mail, email, TV, digital ads, radio, and newspapers. Today’s consumers tend to prefer a genuine relationship with a brand, which is why 92% belong to at least one loyalty program, and half belong to five or more, according to data from EY. “The customer wants to feel that a retailer knows them,” says retail expert Denise Kramp, senior client partner at Korn Ferry. And the retailer wants to think in terms of the long haul, building lifetime loyalty and value with customers who will become more engaged over time.

Though the world of retail loyalty would seem to be exclusive, it’s actually quite competitive—especially for customers who order regularly from multiple retailers. Loyalty programs center around constantly creating enticing reasons to shop, such as new product drops, sales, or in-store events. “Consumers are getting these promotions from everyone they order from,” says Craig Rowley, senior client partner at Korn Ferry. It’s a tricky calculus for retailers, who need loyalists to buy products at full price, so promotions often involve a discount for buying three at a time, or some other kind of package deal.

Loyalty programs come with great risks for the retailer: Potential shoppers outside loyalty programs can easily feel left out. And firms fear they might accidentally alienate their most valuable customers. The challenge is to make shopping easy, seamless, and engaging without overburdening or annoying consumers, who dislike receiving too many communications and can experience a phenomenon known as “loyalty fatigue.” “After being bombarded, people just don’t open those emails anymore,” says Rowley. 

Another challenge is to make sure that the right ads reach the right shoppers. Anyone with an email address likely receives multiple email ads intended for others every day, which suggests that retailers still haven’t gotten this right. Retail firms are turning to the expertise of consulting companies to help them build customer relationship-management systems, identify customers, send offers, and analyze impact. “If you’re gonna do it, you gotta get it right,” says Rosenberg.

AI will soon make it easier for marketers to personalize their offers and promotion frequency. In the meantime, many marketing teams have found outreach to a smaller group to be much more manageable and pleasant than cold calling: The marketer’s role essentially becomes to preach to the converted—to encourage a targeted group that is already interested. “That’s the name of the game today, more than ever before,” says Rosenberg.

Learn more about Korn Ferry’s Organizational Transformation capabilities. 

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