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Market Movers A Discussion on the Importance of Customer Retention and Understanding of Behavioral & Attitudinal Loyalty

Al Lalani, Co-Founder of Annex Cloud talks with Amit Venugopal, Chief Revenue Officer at ECENTA about the importance of having a ‘digital first’ mindset and what brands & retailers should be doing now to leverage their ecommerce presence. Plus, the distinction between ‘behavioral’ and ‘attitudinal’ loyalty.

Transcript

Al Lalani:

Welcome to another edition of Annex Cloud Market Movers. Today I have with me, Amit Venugopal. He is the Chief Revenue Officer at ECENTA. ECENTA is an amazing partner. Amit has a wealth of knowledge that he can share today, specifically as it comes to this environment and talking about how we can have brands and manufacturers and retailers and other companies navigate through this tough time, and plan for the future. Amit, welcome to Annex Cloud Market Movers.

Amit Venugopal:

Thanks for having me today. Good morning to you and yeah, crazy times, but happy to have a fireside chat with you on a web meeting. I didn’t think that it would come down to this, but it is.

Al Lalani:

Absolutely. We're all virtual for the last six to seven weeks now in different parts, but I'm glad we are able to do this. We all know we've been hit pretty hard on certain sides, and there are brands that are significantly taking the brunt of this, and we also know there are some brands that are seeing some positive upsurge from this piece as well.

As you look at the impact for what's happening, and when you look at the impact in the short term which is defined as three months, mid-term defined as let's say the next 12 months, and then sort of longer-term defined as the next three years. You were working with a lot of your customers, advising them on these things, what's your advice to people in those different terms of how to think about their businesses overall?

Amit Venugopal:

Yeah, Al, it's a great question. I mean, every business, including ourselves are planning short-term, mid-term, and long-term, as you just mentioned. Every day, the news cycle just gives us, crazy stuff thrown to us, and it's just a bit difficult to predict does short-term really mean three months is sort-term actually the next nine months? Just today, we heard that the GDP has fallen by 4.8%, right? And they're predicting it to fall by about 30% in Q2 because Q1 and those impacts that were felt towards the end of Q1. Consumer spending has been fallen by about 7.6%, and consumer spending drives 70% of the GDP in North America. So these are very, very stark numbers. So that's why I say, when we say short-term, I have no idea whether that's three months or nine months.

So what we are doing as a company, and I guess I would advise that to every other company out there, is to basically understand where you are today, who your customer base is, how are they impacted, and then react to that at this particular point in time. And then to constantly monitor what's their situation, as they come out of the same problems that we all face. And so the three-month timeframe, in your perspective, for short-term, for example, is as a company, we are looking at what is known as essential services that are still required in these times. And that would be the same for any of our customers looking at their end customers, what are the essential things that their end customers need? And how do you focus, and instead of having a very wide diversified portfolio, maybe being a little bit more focused in the short-term and, and basically having a steady flow of revenue from those short-term services?

And then when you step into the medium-term, as companies start pulling out of the recession, and I have to use that word because we will be in a recession. We just don't know for how long. As companies start pulling out of recession, consumer spending comes back up, there will be certain moments, over the year, I think that there will be some pent up demand. People are keeping money tight, I guess, at this point, because a lot of people have been laid off, so there is a tendency not to spend as much. But at some point, people will want to spend, they will want to go to their favorite coffee shop again, they will want to go out and purchase clothes again or continue shopping online like they're doing these days, for things that they are not shopping today.

And that's going to come because you have Black Friday, which is what's later this year and you have Christmas and you have all these different events. And the U.S. markets is geared around shopping at these various points in the year, right? Memorial Day sales and Labor Day sales, Black Friday, and all these other events. But we are hoping that coming in July, August as we get into summer, some states have already eased restrictions. So that could be the medium-term, is planned for those events as a retailer, especially, at those points in time. And then in the long-term, you have to see how has this permanently impacted your business? Where are customers are shopping these days? Are they going to come back into a brick and mortar store, or are they going to get so uncomfortable with this online world that your brick and mortar business, as you know it, is less influential, in the future of U.S.?

And so, yeah, you have to have those conversations. You have to poll your end customers because they are the ones who drive your revenue and business, whether it's B to B or B to C, and make a sense of when the business will rebound and also focus, which products and services do you need to focus on and reduce some diversification that you might have invested in.

Al Lalani:

That's great. And I think you mentioned a little bit about diversification, and we've been talking about digital transformation for a long time, but just in the last six weeks, the acceleration of digital or the movement toward digital has taken a monumental speed up, right? There has been a lot of news around about two years worth of work being done, within the last six weeks, whether it's in the terms of mobility and having employees being able to work from where they are or other ways. And so as you look at it, specifically from a place where you come in for digital transformation and focus on that, and maybe specifically within that digital commerce acceleration, how do you see that as a channel? From our perspective, I'll give you one example, we have a good number of retailers that are using us, that have brick and mortar presences, just like you mentioned.

And these companies have transformed, literally overnight, from an Omnichannel company, do a digital-first company, and they're directing all their consumers to now buy online. So they've had to really ramp that up very, very quickly. We've seen the news from Target and other companies saying it's Black Friday, every single day, on their website now. And so that ramp up has been very, very quick. How are you looking at this for companies that haven't done that yet? They're not prepared, and the companies that have leads up away, but not completely there. How do you advise them to move forward?

Amit Venugopal:

Yeah. I can tell you for sure that the companies that have not gone digital yet, in the way that looks and be a little bit recession-proof, obviously they're getting it now, right? Because they are in a position where they don't have the digital channel, explicitly out there. Maybe they do have something, everyone has a website these days. But there's a far cry from having a website with your products with actually providing a shopping experience. But the good news is, you can get from that talking point to actually have a shopping experience. Right? It doesn't have to be a long protracted project. In some industries, yes, these are long projects, but in other industries, you can spin up a commerce website pretty fast. And that should be the goal, right? You don't want to have, at this particular moment, the perfect commerce website with the perfect customer experience, because the goal is to move product.

And if you don't have a digital website that you can actually sell products, then you don't have anything. So yeah, that is an extremely important channel and people that are thinking about it. I have two examples of two of our customers we're working with.

One's a brick and mortar company based in Canada with retail stores, where people just go in and buy a whole bunch of different types of products, and they did not have a digital commerce experience, and they still don't. And so we are now putting together a fast track project for them to get them up and running with e-commerce, as soon as we can. And yeah, but they should have done this maybe a few years ago. So they're a little bit behind the ball, but now they're kind of forced by this event to work fast, but it would be for the good of the company. But the other interesting aspect of this particular company is, they want to have a buy online, pickup in-store because delivery times are also unpredictable these days. So you cannot guarantee delivery in a day or two days. Even Amazon cannot guarantee that anymore because they are prioritizing special equipment and personal protective equipment over everything else.

Now, so if you will want something in a couple of days’ time, you might just might as well just order it and go to the stores yourself. That scenario is becoming really, really relevant. And then if you are picking something up, isn't that a point when you can do some cross-sell and actually have a touch with the customer? You might be socially distant. You might be wearing a mask. You might be just there just to pick up something, but it is a place where you can have a conversation, where you can actually start trying to build a relationship with your customers, and hopefully bring them back into the store when all of this becomes a bit better managed by the different countries and cities.

The other customer I have is in the retail fashion industry. And there, of course, hit, right? The stores are closed. Everything is shut down at this moment, but they do have a digital presence. Retail has been always first to be upfront with commerce and digital. So they have a really nice digital presence, but what they are doing now on their digital presence is, what they call a style advisor. So typically you would go in and build a relationship with the person in the store. So that's a style advisor who gives you some things to think about on what to buy and to mix and match different types of clothes. Now you'd have an electro style advisor. So the same person who you would meet in the store is now available for an appointment, but online. So do through an online booking system. Book an appointment with your favorite style advisor, and then that person's going to walk you through the ability to actually make a purchase online and get you really comfortable with the fact that you're buying something without actually trying it.

So these are some things that customers seem to be innovating, and these are, to your point to the earlier discussion, short-term things. These are critical short-term things they have to put into place, because who knows how long retail's going to be shut down and when they can actually get back to business as usual.

Al Lalani:

And those are both very, very good examples, and specifically, when it comes to the two retailer examples, you mentioned. I mentioned to you about the example for us as well, where are they transformed a digital-first company with the stores being closed. One topic that's near and dear to our hearts is the retention of customers, and during this time, even more so than ever. It's more important to retain your customers and re-earn their trust. One of the examples I like giving is I tell my wife, I realized I have way too many jeans, and I probably don't need the next one. And when I do, I'll probably buy it from a brand that I've trusted, first rather than going out and trying something new. And so, re-earning that trust and keeping those customers around is extremely important. Even channel shift, as we talked about, like the moving to online, getting your in-store customers who trust you, are going to be the first people, hopefully, that buy from you online, when you focus more on the digital channels now. As you look at loyalty or retention, as part of digital transformation, any specific thoughts or advice as you think about these customers, thinking about retention, being forefront in a marketing space moving forward?

Amit Venugopal:

Yeah. So ECENTA, as a company, deals with both B to B and B to C. In B to C, the concept of loyalty is pretty well known, right? Whether you're flying in an airline, your favorite airline, you have a loyalty program there. If you're going to a supermarket, you typically have a points card, right? So you are used to this concept of collecting points and you gravitate towards spending money with vendors that give you the points and that you've built a relationship with. But I think that's not enough these days, right? That's just, it's one layer of rewarding customers to keep coming back and doing business with you. But retention and loyalty for me, are slightly two different things. Retention is, someone might be loyal to your brand, not necessarily because they like your products. They might just like your loyalty program, right?

Which U.S. airline do you really like flying with, right? Because you go there and the best you get is these miles and you keep coming back for them, but they're not really doing a fabulous job of customer experience. So I think we need to really think about retention and loyalty as two very complementary topics, but a little bit distinct from each other. And retention is important in the aspect of providing great customer experience, making sure they see the value from the relationship you have built with your customer. And this is regardless of industry, regardless of B to B or B to C. Even in the B to B world, either resellers or other distributors, you want to build a relationship with that comes to you to buy your products. How do you do that is by creating a customer experience, attention to detail when you're talking to that new customer and really knowing your customer. And then, of course, complementing that with the behavioral loyalty program, which gives them benefits to come back and do business with you besides the fact that they like doing business with you, right? You want them to like doing business with you, but you also want to give them this loyalty program, loyalty card that helps them to get some discounts, promotions.

I think these are two topics every brand needs to make the center ourselves. We did our own brainstorming, like everyone else, right? Everyone's doing what they call as think tanks. We did our own think tank and said, "What are some of the most, from our perspective, services that will be an important medium to long-term, and help us six months down the line, maybe three or so. Loyalty is one of those top things of people who have not embarked on a retention and loyalty program, they need to start thinking about this, not as a nice to have, but it is really part of the entire digital transformation exercise. It is a unique spoke in that wheel, and that spoke is missing when digital transformation is not complete. So that's how you need to think about it.

Al Lalani:

Thank you. And I'll just mention two things to your points. We use the term attitudinal loyalty and behavioral loyalty. So every unit that you are aligned with, you're behaviorally loyal. You just go there, but no one loves it. And attitudinal loyalty is Apple. You line up when their new products come in, and you really want it. You love the product. And so brands have to think about attitudinal loyalty and behavioral loyalty takes it only so far. So that's a great point. And when it comes to retention, I think you are spot on. And that's something that these brands have to start thinking about as a spoke within sort of the entire digital transformation space.

This was all amazing advice. We really thank you. If people want to reach out to either to you for advice, or to ECENTA for some help, how do they reach out to you?

Amit Venugopal:

Oh, well just contact me on my email and directly. I think we can provide that towards the end of this video. Our website has a Contact Us form and some great information about our case studies and our customers who have been successful in working with us. We are looking forward to adding value, that's really it. If we can add value to our customers, then we are happy.

Al Lalani:

Wonderful, Amit. Thank you so much for all the amazing advice today. This ends our next series of Annex Cloud Market Movers. If you want to check it out, please go to annexcloud.com/marketmovers, and I will bring great advice from amazing luminaries and market leaders, like Amit moving forward. Thanks again, and bye for now.

Amit Venugopal:

Thanks, Al. Nice talking to you. Bye, bye.

Featured Speakers

Al Lalani

Co-Founder, Annex Cloud

Amit-Profile

Amit Venugopal

Chief Revenue Officer & Board Member, ECENTA

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Since 2010, Annex Cloud has provided industry leading loyalty solutions to more than 250 leading brands and retailers, including Jenni Kayne, Hewlett-Packard, Bed Bath & Beyond, e.l.f. Cosmetics, Olympus, Sugarfina, Mizuno, MacKenzie-Childs, VF Corp., with the ability to engage tens of millions of their customers one-to-one at scale.

The Annex Cloud platform provides fully integrated Customer Loyalty, Referral Marketing, and User Generated Content (UGC) solutions that seamlessly work together to optimize the customer journey and deliver a unified customer experience that is designed to accelerate revenue growth, retain valuable customers, increase average order values (AOV) and drive repeat order frequency.

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ECENTA is a global, award-winning SAP technology systems integrator and consulting practice supporting the entire SAP C/4 HANA suite of products. An SAP Gold Partner and 2020 SAP Customer Experience Partner of the Year, ECENTA was founded in 2000 in Germany by ex-SAP employees. In its 20-year history, ECENTA has completed thousands of successful projects and together with ECENTA Digital—the organization’s digital marketing and commerce strategy practice — ECENTA helps clients create meaningful customer experiences that are powered by technology.

To learn more about Ecenta visit ecenta.com