Through a special arrangement, presented here for discussion is an excerpt of a current article from In-Store News, a U.K.-based online news portal specializing in retail marketing and design stories.
Retailers will need to focus on keen pricing, rewards for loyalty and paramount customer service to keep consumers happy in the post-recession world.
According to Experian's latest Insight Report, consumers are less loyal and more doubtful about retailers than before. Additionally, more than 80 percent of shoppers are increasingly aware of the price of goods and services. Both sentiments are likely to stick around after the recession.
"In the post-recession U.K. we are going to see the rise of the promiscuous, bounce-back consumer, one whose loyalty has to be won and re-won every day," says Future Foundation planning director Joe Staton.
In the grocery sector, U.K. consumers are already scaling back. A Nielsen study found 32 percent of shoppers will continue to cut back on food expenses after the recession.
This focus on value has decreased brand monogamy. Historically brand-loyal consumer groups are demonstrating "volatile and promiscuous" shopping behavior.
"The recession will mean different things to different people, but there are some things that are certain," says Bob Bayman, a director and partner of brand consultancy i-am Associates. "If you have customers, you must keep them."
It costs five times as much cash to get a new customer as it costs to keep a current one, yet Mr. Bayman says many retailers are more focused on winning new shoppers than establishing loyalty.
Regardless of the economic climate, he says, losing customers and spending extra money to try and attract new ones is a waste of precious resources.
Experian's report listed three elements key to winning bounce-back consumers: Price, loyalty and service.
Post-recession consumers will be more price-savvy so brands will need to keep costs transparent, highlight benefits and revisit all-inclusive and package deals.
Sainsbury's "Feed your Family for a Fiver" campaign and expanded Basics range with many £1 items has helped grow the company's like-for-like sales 4.5 percent. Already 70 percent of customers buy into Basics, making it the chain's fastest growing sub-brand this year.
Caring for a consumer during the recession, however, will not guarantee loyalty later on. Reward points schemes, personalized discounts and targeted one-to-one communications will help establish customer allegiance.
Bounce-back consumers will be able and willing to look for the best customer service experience in addition to good value.
"True customer loyalty comes out of an emotional bond," says Mr. Bayman. "So therefore think of building a brand that has character, human traits and personality. This leads us to giving unconditionally without expecting or talking about a deal."
Discussion Question: How might customer loyalty and retention change after the recession ends? What strategies will best win back customers post-recession?