Articles

Closing The Loop.

The best retailers in the world – virtual and physical – understand that power comes from foot-traffic. After all the profile, volume and frequency of foot-traffic is what creates the opportunity to sell. From the 1950’s until the year 2000, most retailers spent the vast majority of their promotional budgets mass-marketing foot-traffic stimulation which treated both new and existing shoppers the same. But in the 21st century something has changed.

Best practice has seen the re-discovery of the power of the store and the re-instatement of the role of the store at the centre of the foot-traffic model.

Rather than seeing the customer relationship as a linear model that starts each time with mass-market promotion and ends in a purchase visit, best practice retailers are viewing their customer relationships as a loop that begins with the first purchase visit. A communication medium, a provider of goods and services, the store is also a capture point and the beginning of a long-standing relationship.

The closed loop view begins with an objective of making each customers foot-traffic behaviour frequent and habitual. It then sees the identification of the individual shopper and their profile as nothing more or less than a means to create a more relevant and productive shopping experience for both the shopper and the business where direct, multi-channel communication works two ways. The closed loop view provides relevant information to the shopper and the retailer that allows both to alter their behaviour and produces a more mutually beneficial relationship.

Under the closed loop approach, mass-marketing or promotion done outside the loop is undertaken to attract new relationships or to support other stakeholder objectives. But the strength of the closed loop is direct, tailored communication both in the store and outside it.

The first part of this is giving the shopper a tangible and compelling benefit or set of benefits to enter the loop. Some retailers call this a rewards program. Others call it a club. The shopper then provides the retailer an opportunity to begin a relationship in return for something that they perceive is worthwhile for them.

The second part of the loop is direct communication, consistently reinforced across all channels the shopper comes into contact with (physical & virtual). This step relies on integrity and relevance because it can only take one mistake in this area to turn a shopper off.

Understanding the shoppers existing and potential shopping behaviour is the key to a successful closed loop. It affects the tone of the communication – in-store and ex-store, physical and virtual – the scope of the communication and the content.

In retail all growth comes from changing behaviour and all behaviour change requires stimulus. The closed loop approach means you have an efficient, direct method of stimulating the shoppers who are already shopping with you. Correctly used, the dialogue with your shoppers produces the insight that makes you their most relevant retail choice. That is the most productive communication you can achieve.