How to Build Customer Loyalty in Retail

The famous proverb, “The more things change, the more they stay the same,” wasn’t written about the retail industry — but it might as well have been. Because, while the technology retailers use to grow their business has improved by leaps and bounds, the underlying goals have not: Whether you’re using newspaper ads or augmented reality (AR), you still need to create loyal customers.

Packed with the latest retention-boosting tips, tactics, and examples, here’s how to build customer loyalty in retail.

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What is customer loyalty in retail?

How to build customer loyalty in retail: 5 proven tactics

3 tips for building a loyalty program

3 examples of successful retail customer loyalty programs

How to increase customer loyalty in retail with AR

What is customer loyalty in retail?

Customer loyalty in retail is when a consumer has some degree of preference for a particular brand. This preference could be as minor as the brand being among several top options or as strong as an exclusive customer relationship. In fact, consumer loyalty even includes cases where the preference is expressed through word of mouth and little else. In any case, some level of loyalty is better than none, and maximizing consumer loyalty is a top priority for most — if not all — retailers. The more loyal the customers, the greater and more consistent the revenue.

How to build customer loyalty in retail: 5 proven tactics

Even small gains in customer loyalty can make a massive difference in the bottom line, and one reason is because existing customers are about three times easier to sell to than new ones. Here are five proven tactics retailers can use to win more favor with their shoppers:

1. Improve staff interactions: While there are some innovative methods of boosting customer loyalty, the fundamentals will always make a big impact. For example, if your staff isn’t doing their best to make your customers feel like family, don’t expect them to start thinking about your store as a home away from home. So give your employees the training they need to connect with every consumer and watch your set of regulars grow.
2. Offer fantastic product value: Like any relationship, your customers won’t want to stick around if what they’re getting isn’t worth what they’re giving. This principle doesn’t mean you have to slash your prices, but it does mean you should ensure that your customers feel the products they purchase are worth every cent.
3. Create engaging branding: Branding greatly impacts customer behavior. It’s why millions of consumers chose Nike, Apple, and Lululemon over cheaper alternatives. To start gaining this kind of pull, you must do in-depth research on your customers to understand who they are, what they believe, and where they go in life. Positioning your brand as a logical extension of those deeply-held beliefs will go a long way to cultivating loyalty.
4. Elevate the in-store experience: Why do over 150,000,000 people visit Disney’s attractions every year? The amusement parks rarely fail to deliver a memorable experience. Although it would be hard for a retailer to create a Disney-level experience in-store, there are ways to significantly improve the quality of a visit. One of those methods is augmented reality (AR), which can be used to create anything from interactive games to hybrid virtual/physical exhibits. Read our ebook, “A Guide to the New Digital Infrastructure for Malls & Retail Properties,” to learn how you can increase customer loyalty with this approach.
5. Develop enticing reward programs: Loyalty programs are probably among the most effective ways retailers can win greater allegiance from their customers. Often delivered through a mobile app, these programs use points, discounts, promotions, and other incentives to encourage consumers to see shopping at a retailer as an investment. Because this tactic is so important, we’ll spend the following two sections giving tips and examples to help you develop your own reward program.

3 tips for building a loyalty program

There’s a reason 90% of businesses have some form of a royalty program: They work. Here are three tips to keep in mind as you develop a loyalty program for your brand.

• Emphasize ease of use: Your program will never gain traction if you don’t make it as simple as possible for your customers to use it. In this era, that means developing web and app experiences that take the best features from proven programs and relentlessly optimize them using A/B testing and customer data analysis until every element is smooth and straightforward.
• Deliver personalized experiences: Reward programs generate enormous quantities of consumer data that can be leveraged in numerous ways, but one of the most immediate — and effective — is to improve the experience of your program’s members. Nearly every data point your customers give you, from demographic information to their purchase history, can be used to personalize messaging, promotions, and more. Do this well, and you’ll reap massive benefits: Research by McKinsey revealed that personalization can increase revenue by 40%.
• Leverage email and text messages: To maximize the probability that your loyalty program members will engage with your offers, you must go multichannel. And when it comes to channels, email and text messages are two of the most effective: Marketing email has an impressive open rate of 21%, and SMS messages boast nearly perfect open rates.

3 examples of successful retail customer loyalty programs

DSW, The North Face, and The Body Shop have all built great customer loyalty programs. Here’s what makes each of them so effective:

• DSW VIP: Shoe retailer DSW has built a robust rewards program using gamification and personalization. DSW VIP gamifies its members' experience through a tiered reward system, which encourages them to keep spending to earn the next level — and new benefits. The program uses its customer data to send highly personalized emails that remind members of, for example, how much DSW VIP has saved them so far or how close they are to the next tier.
• XPLR Pass: In the spring of 2021, outdoor apparel giant The North Face rebranded its old loyalty program, VIPeak, as XPLR Pass, and the result was one of the top customer loyalty programs in America. XPLR Pass combines generous reward points with unique benefits — like the option to try clothing out on a hike before buying or access to exclusive items.
• Love Your Body Club: Beauty retailer The Body Shop tapped into their customers' altruistic side with their loyalty program, Love Your Body Club, to build an authentic connection. Unlike other programs where the points earned translate to product discounts alone, members can also donate the dollar value of their rewards to charity.

How to increase customer loyalty in retail with AR

The retail space has never been more competitive, and brands must get creative if they’re going to build enduring customer relationships. This pressure has inspired forward-thinking retailers to use emerging technologies — like AR. Retailers can leverage AR tech to create compelling in-store experiences that can leave a lasting impression on customers.

Read our ebook, “A Guide to the New Digital Infrastructure for Malls & Retail Properties,” to explore how technology can enhance your retail business.