Inflation, interest-rate hikes, shortages, and a looming recession are all wreaking havoc on consumer sentiment toward the economy and their own personal finances. This is causing consumers to tighten their purse strings and limit their spending on all goods and services, and coming off of a banner year makes this an even harder hit for the furniture retail space. According to a recent Morning Consult Research Intelligence report, 54% of U.S. adults said they were concerned about inflation in the home furnishings and appliance category. A combination of consumer fear and uncertain economic conditions may spell trouble for the furniture retail industry if brands are unprepared.
But, with every challenge is an opportunity, and for furniture retailers, building and maintaining customer loyalty during this time to maximize the lifetime value of these relationships should be a top priority. If you’re a retailer, you should plan on having a long-term relationship from the first encounter by using digital technology to refine profiles, improving your focus on ideal customers and creating value and trust from day one. Here’s a closer look at five ways home furniture retailers can implement a successful customer loyalty strategy.
- Use first-party data to create a comprehensive customer profile: From the moment a customer first encounters your brand, it’s important to be intentional about building a long-term relationship. This starts with gathering first-party data, i.e., information the customer shares directly with you, to build out the most complete customer profile you can. Next, listen for clues that indicate where each customer is on their individual journey. Collecting and analyzing the data people voluntarily share is essential to building a single view of the customer so you can serve them more efficiently.
It’s a classic sales technique: in the old days, salespeople handling a purchase gathered broader information about the customers’ future needs, goals and pain points. The modern version is a digital profile created by gathering contact information like an email address and phone number, not to mention consent to contact the customer via their preferred channels. This is a must to keep the conversation going, as is the technology that allows you to integrate customer data and keep profiles current.
- Consistently deliver value — and gather rich data — through customer communication: Customers are willing to share first-party data if they get something of value in return, and with the right automated technology and integrated workflows, savvy retailers can communicate and track responses by IP addresses, segment data across household members, etc…, to further refine the customer profile. With social shares and link-backs from customers, you can get insight into who they are.
Social media channels like Pinterest and Instagram are excellent venues to showcase seasonal lines or debut striking color palettes and new design trends to generate interest, drive traffic to your site and help customers set aspirational goals. As a retailer, you can send email tips and tricks to inspire and help home decorators understand what it will take to achieve the look they want, from paint to carpet to product care. With this type of personalized data, furniture retailers can deliver even more value to each specific customer and become a valued partner throughout the customer journey.
- Be forthright when things go wrong: Keep in mind that customers don’t expect you to be perfect, but your highest-value customers do want you to be their perfect partner in their quest to build the home or space of their dreams. So, if something goes wrong — like a delayed delivery or the temporary unavailability of an item — proactively communicate it to manage the customer’s expectations.
If you fall short on service at any point and there’s an opportunity to make it right, like providing discounts for future purchases or offering a premium gift, this can be a great way to show your commitment to the customer relationship. Communication is critical at every phase of the customer journey, including when things are going well and when something goes wrong, so make sure you continue the conversation.
- Survey employees and customers: Keep in mind that a lot has changed over the past few years. Retail operations typically have high levels of churn, especially in a tight labor market. Employees are the face of your brand to your customers, so frequent surveys can help you understand whether employees are enthusiastic about their jobs and feel that you take care of them. Happy employees will be the brand ambassadors you need them to be when they interact with customers.
Customer surveys can help you detect changes in your ideal customer profile as well. Simple surveys like the Net Promoter Score (NPS) are a terrific way to get insight into your evolving customer base and provide a snapshot of how customers feel about your brand by asking the likelihood of them recommending you to a friend. This type of feedback lets you know where you need to make improvements and what your employees are doing well during the sales process. It’s also crucial to use these surveys to help you identify customers who don’t fit your ideal customer profile or if the profile needs to be revisited.
- Beware of cherry-pickers: Speaking of customers who don’t fit your ideal customer profile, keep an eye out for cherry-pickers or people who take advantage of feedback requests to try to get one-way benefits in a value exchange that should work both ways. Cherry-pickers are in the conversation for a short-term advantage, not a long-term relationship, at least initially.
When you conduct surveys and close the loop with a response, you’ll find out which customers are truly interested in building a long-term relationship with your brand and which are after a one-time deal. Get opt-ins for further communication and focus on improving the customer experience for people who are more likely to deliver lifetime value.
Furniture retailers are dealing with a number of challenges, some of which they can address, like offering preferred interest rates to blunt the effect of inflation, and others that are harder to manage, like long lead times in acquiring stock. Staying on top of design trends is one way to address longer lead times since it gives you a head start on competitors who are reacting to demand.
The strategy will vary according to your brand’s priorities, but it’s important to pick an approach and communicate it proudly to customers. Ask for their feedback and listen to what they’re telling you. If you use the right technology to manage customer consent for communication and collect and analyze data, it will be easier to identify and focus on your best customers, which builds loyalty that delivers the lifetime value your brand needs.
Tara Kelly is the founder, president and CEO of SPLICE Software, which offers a cloud-based solution that specializes in using big data and artificial intelligence, through the scalability of cloud storage and secure API connections, to create messages that drive customer engagement and the desired call to action.