NEW YORK, July 25, 2019 /PRNewswire/ -- New research conducted by alternative payments provider Klarna across 2,000 US consumers and 250 retail decision makers, reveals that retailers are struggling to retain their customers as consumers today increasingly have zero tolerance for a poor retail experience.
55% of shoppers say just one bad experience would stop them returning to a brand. A third (29%) say shopping isn't as fun as it used to be, with 36% feeling that what shoppers today have gained in convenience, they've lost in experience.
Where brands used to think of loyalty in terms of reward schemes or points, the findings show that for today's shopper, the drivers of loyalty run much deeper than a transaction or offer. And when it comes to what drives disloyalty, a bad returns process (46%), and a drawn out online checkout without payment options (28%) rank much higher for shoppers than retailers perceive them to be.
Retailers are recognising this shift and starting to evolve the way they think about loyalty. 39% of retailers agree that loyalty is no longer solely driven by rewards and 69% say they have to work harder than ever to retain customers. But, many (36%) are struggling to keep pace with changing consumer expectations around experience and are being held back by outdated tech (33%) and a short-term focus on sales (29%).
Shoppers demand more
This new research gives retailers some of the insights they need to help win the loyalty stakes and deliver the standout shopping experience demanded by consumers. It reveals that whilst the traditional drivers of loyalty remain important, it is no longer enough to only deliver value for money, quality products and a good online UX.
Shoppers today want more - craving things like brand values they can align with (49%), human engagement (28%) and flexible payment options (36%). This is especially true of millennial and Gen Z shoppers who care less about value for money, and more about brand image (22%, compared to 13% of over 45 year olds) and flexible payments (32%, compared to 21% of over 35 year olds).
Can retailers keep pace?
These insights demonstrate how important it is for retailers to focus on these broader concepts of experience to win back loyalty. It's encouraging to see forward-thinking retailers are already starting to invest in these 'newer' elements of experience. The top areas for investment over the next 12 months are a smooth online UX (33%), additional payment options (34%), a curated experience (39%) and brand content (34%).
Michael Rouse, Chief Commercial Officer at Klarna commented: "Consumers now demand more convenient and flexible ways to pay for purchases. With over four million users in the US and counting, Klarna is proving that our pay later options - such as letting shoppers pay in interest-free installments - are integral to a great shopping experience. It's also clear that retailers must better understand their customers' needs in order to build a seamless commerce experience; not only to drive sales and loyalty, but differentiate from competitors in the current retail climate."
For more insight on the research and advice on how you can create a standout experience, download our full report - Experience is the new loyalty - here: www.klarna.com/us/business/new-loyalty
About the research
Survey of 2,065 consumers and 250 retail decision makers across the US conducted by Censuswide in May/June 2019.
It's all about smoooth (yes, with 3 ooo's). Klarna is a leading payments provider and a licensed bank, which wants to revolutionise the payment experience for shoppers and merchants alike. Founded in Stockholm, Sweden, in 2005, the fintech unicorn gives online consumers various options to pay later — offering trusted, frictionless and smoooth checkout experiences.
Klarna now works with 130,000 merchants to offer payment solutions to users across Europe and North America. Klarna has 2,500 employees and is active in 14 countries. Klarna is backed by investors such as Sequoia Capital, Bestseller Group, Atomico, VISA and Permira.