How European retailers can ride out the economic storm

With winter just around the corner, most consumers in Europe are putting away their summer clothes, ready to embrace the chilly weather that has already started knocking on our doors. For most of us, the cold weather also means purchasing warm knitted sweaters, hot beverages, and gifts for our loved ones. Unfortunately, this year, many might not be able to afford these payments.

In fact, customers all over Europe and the UK are struggling to cope with the cost of living crisis. The Bank of France has predicted a recession in 2023, while inflation rates in the UK are climbing through the roof, reaching a 40 year high of 9.4 per cent. As a result, customers are thinking twice before purchasing an item that isn’t absolutely necessary as many are struggling to make ends meet.

Retailers are also feeling the heat of the cost of living crisis, as retail sales volume dropped by 1.6 per cent in August in the UK, the biggest fall since lockdown. On top of that, retailers are also facing severe staff shortages and global supply chain woes, making it difficult for some to remain open without transferring higher costs to their customers.

To make it through the tough road ahead, focusing on customer loyalty will play a key role in ensuring profitability. As a matter of fact, studies show that a 5 per cent increase in customer retention rates increases profits by 25 per cent to 95 per cent. With European retailers already facing strong headwinds, customer loyalty will play a vital role in keeping business afloat. So, how can retailers achieve this?

It’s all about great experiences

During uncertain times, it’s not uncommon for customers to shop less and switch to cheaper alternatives. It doesn’t mean customers aren’t shopping, it just means they’re just more conscious of how they’re shopping. And while most retailers aren’t currently best positioned to be cutting costs for their customers, in large due to demand unpredictability, a focus on customer experience might just be key to retaining them.

In fact, exceptional CX can help a retailer differentiate itself from another, and can help attract and retain customers. According to our research, 72 percent of customers in Europe say that a positive experience would make them more likely to purchase another item. And, over half (52 per cent) also agree that they’ve made purchasing decisions based on the quality of customer service.

While there are many factors that can improve CX, speed, ease, and personalisation are the most important factors. Nearly 60 per cent of European customers expect their experience to be personalised, while 63 per cent say they’d return to a retailer if their experience didn’t entail ‘too much trouble’. A great example of great CX that encompasses these elements is Liberty, a legacy UK retailer. In fact, Liberty focuses their efforts on delivering fast, personal experiences to their customers, while ensuring superior customer service. In turn, this resulted in a 90 percent customer satisfaction score, ultimately increasing their profits.

Go above and beyond, even after the sale

The customer experience doesn’t end when the customer completes their purchase. In fact, that’s just the start. They can run into all kinds of issues after buying an item, such as product care queries and returning items. Plus, with 64 per cent of customers buying their clothes online, the risk for potential post-purchase issues is higher (payment issues, late deliveries, missing parcels etc.).

Customers running into an issue could jeopardise their loyalty towards a retailer. In an environment where customers are thrifty and sensitive about their spendings, running into an issue like a missing parcel with no way to reach customer service could just be the tipping point. In fact, half of European customers confirmed they would switch to a brand’s competitor after one bad experience.

Even though a bad experience could influence customers to walk out the door, there are still ways retailers can gain their trust back, and in turn, their loyalty. Offering support to your customers after a frustrating experience is a great way to win them back , as 65 per cent of customers say they would forgive a retailer for its mistake after receiving excellent customer service. A bad customer service experience isn’t a fatal blow to your business, as long as you make up for it with excellent service.

Invest in digital technology

Great CX should also be delivered regardless of whether customers shop in-store or online. With eCommerce on the rise, a record breaking number of customers (64 per cent) are flocking to shop online from the comfort of their homes. While shopping directly through retailers’ websites is very popular, 41 per cent of UK customers also enjoy shopping on social media, with 92 per cent of these respondents buying on Instagram. Hence, investing in tools to help retailers understand which channels their customers use in order to deliver great digital CX and support is crucial.

Support on social media and other digital channels such as SMS, chat, and help centres is one of the ways N Brown offers great support to their customers. In fact, using Zendesk, the retail group is now able to understand which digital channels their customers are using, and offer seamless customer support on these same channels through a single platform. Customers are now better serviced in realtime and customer email queries have decreased by 17 per cent, improving N Brown’s email customer satisfaction by 15 per cent, and chat customer satisfaction score above 90 per cent.

Zendesk’s new AI innovations enable the realisation of powerful insights and capabilities that take CX to the next level. This includes the launch of a new customer sentiment and intent functionality powered by machine learning that can provide more personalised experiences.

CX and EX go hand in hand

There are no great customer experiences without happy employees. If you customers enter your store, and are received by tired and unmotivated staff, chances are they won’t come back. However, it’s important to note that sales staff also suffer abuse coming from customers at times, which in turn affects their performance and mood towards customers. Hence, retailers should find ways to protect their staff to ensure they feel safe and satisfied in their role, as sales staff directly reflect your company culture when a customer is in-store and are an extension of your brand.

The same goes with customer service agents. If your agents are fulfilled, they’re more likely to demonstrate empathy and patience to your customers–even the frustrated ones. And that’s essential when it comes to customer loyalty, as 73 per cent of them say that empathic agents are the most important factor when they want to make a purchase. However, according to our CX Trend’s report, nearly 41 per cent of agents say their team isn’t treated as well as other teams in their organisation, which in turn might threaten their job satisfaction.

Retailers can’t ignore the importance of employee experience, and the role it plays in delivering great experiences to customers. Plus, with most European companies saying there’s a direct link between their business performance and customer service, investing in your employees can ultimately translate into an increase in sales.

Investing in customer experience isn’t an option anymore, it’s a survival tool. Customers are craving exciting experiences, and they’re willing to stay loyal to retailers if they give them one. Hence, meeting customer expectations through superior CX is how retailers across Europe will manage to keep their customers loyal in the long run, and also win new ones, even during uncertain times.