Low prices are more important than good service when it comes to developing customer loyalty, according to a new study from loyalty marketing experts Colloquy, but the overall importance of customer service might actually have increased for companies hoping to compete in an ever-tightening retail space.
The Canadian Retail Loyalty Index survey of 3,500 shoppers, shows that the importance of customer service has dropped by almost 20% since 2008 as discount retailers have grown and the overall economy weathered a recession. In its 2008 study, Colloquy found that virtually all demographic groups ranked customer service the most important factor in gaining and keeping their loyalty, with competitive price finishing a distant second.
The study asked respondents a series of questions to measure how often they shop at leading retailers, as well as how loyal they feel to those retailers.
According to Colloquy, the results illustrate a growing shift to discount retailers and low-price warehouse stores, though well-established retailers with strong brands and loyalty strategies continue to be well-represented.
In the grocery sector, Zehrs ranks highest for customer loyalty and No Frills is tops in frequency for Ontario, while Costco is the loyalty leader out West with Safeway winning the frequency race.
In Quebec, IGA tops both scores as does Sobeys in Atlantic Canada.
In response to the results, Colloquy compiled a list of suggested strategies for retailers to compete in an environment of low-price loyalty. The firm said that while retailers may not be able to beat Walmart on price, they can compete in areas such as selection and in-store service, as well as knowing and understanding who their most profitable customers are and what they want.
“Canadians are now much more careful and deliberate about how and where they spend their money,” said Kelly Hlavinka, author of Canadian Retail Loyalty Index and Colloquy partner. “Before people hand over their money, they are asking themselves fundamental questions. They are very aware that ‘I am the customer, and you’ve got to work harder for my business and even harder still if you expect to create a genuine and lasting relationship with me’.”
