Customer loyalty and advocacy in retail

How brands are enabling customer experience excellence

26 October 2021

6 min read

Based on 11 years of KPMG global research, the global Customer Experience Excellence report utilizes six pillars of experience that explain how companies are navigating the new environment and how they have performed in terms of customer experience.

The two brands that stood out were: Vancouver-based Lululemon Athletica Inc., in terms of resolution and empathy; and, Quebec City-based Simons, which provides turnkey digital marketing services for local artisans.

Providing an excellent customer experience has always been important in consumer markets, but perhaps even more so during challenging times. During the pandemic, brands that have been most successful at this have created trust, loyalty and advocacy by mastering six pillars of experience.

The retail sector has been going through another market-shaping year, according to our Global Customer Experience Excellence (CEE) study, based on customers' perceptions of 123 direct-to-consumer brands across nine sectors serving Canadians. (Segments that were negatively impacted by COVID-19, including hotels, sit-down restaurants and airlines, were excluded from the research.)

Both non-grocery and grocery retail dominated the top 10 list of companies, as non-grocery retailers turned to e-commerce to weather rolling pandemic lockdowns and grocery retailers—deemed an essential service—saw an uptick in sales. Fast-food restaurants also saw an uptick in sales as drive-thru/pick-up ordering surged during lockdowns that negatively impacted traditional restaurants.

The six pillars of experience

We know through other research that without integrity, a brand will not earn customer loyalty or advocacy. A recent KPMG report, Me, My Life, My Wallet, found that convenience and product quality are not enough; customers shop based on their values and integrity, with 80% preferring to buy from brands whose actions align with their values.

Our CEE study highlights the performance of consumer market brands against the six pillars of experience: integrity, resolution, expectations, time and effort, personalization and empathy. These six pillars are based on 11 years of research showing that outstanding customer relationships have a universal set of qualities that are inextricably intertwined—and are strongly correlated to customer loyalty and advocacy.

While non-grocery retailers are strong across all six pillars of customer experience excellence, they get the highest scores for integrity (acting with integrity, being transparent with customers and not hiding behind the small print) and resolution (turning a poor experience into a great one).

Many top brands in the CEE study received high marks for resolution, such as 'no questions asked' return policies and accepting returns outside of return windows. The way a brand handles a customer issue, complaint or inquiry can turn what could have been a negative experience into an opportunity to establish a trusted relationship. For example, some brands scored top marks for resolution by anticipating when an issue might arise and then proactively resolving it—even before the customer requests it—taking what could have been a tricky situation and turning it into a 'wow' moment.

Brands that stand out from the pack

Several brands stood out in our survey, for different reasons. Lululemon is one brand that scored top marks for resolution and empathy within the Canadian market. At the start of the pandemic, Lululemon further invested in their digital ecosystem and rapidly rolled out new capabilities to support an omni-channel approach including mobile point-of-sale and appointment shopping.

As part of Lululemon's efforts to be more accessible to customers during the pandemic, they opened 106 pop-up stores and launched virtual waitlists so customers wouldn't have to wait in line outside a store. Lululemon also acquired in-home fitness company Mirror to offer an in-home fitness and interactive workout platform to new and existing customers, building personalized programs and delivering real-time feedback.

Simons is another brand that stood out, demonstrating integrity and empathy by providing a welcoming and inclusive environment in their department stores to drive deep rapport. They further boosted customer loyalty and advocacy through Fabrique 1840, a digital marketplace for local artisans. In 2020, they expanded Fabrique 1840 by enriching this e-commerce platform and offering turnkey digital marketing services for those local artisans—all to support the local economy and build wealth within Canada.

This aligns with Canadian consumers' desire to support local businesses. Our research on Keeping up with the Canadian consumer found that 79% of Canadian consumers say they will buy local for some or all of their products. Simons is focusing on both sides of the equation: enabling local artisans while empowering Canadians to support their local communities.

Building a foundation for customer experience excellence

The "basics" of integrity and resolution must be mastered before the value differentiators (personalization and empathy) can be realized. Notably, of the six pillars, personalization (using data about a customer to offer up tailored content, communications and solutions) has the highest correlation to loyalty among customers, while expectations (managing, meeting and exceeding customer expectations) ranked the highest for driving customer advocacy.

These days, customers expect data-driven experiences, which include personalization and tailored recommendations. This requires brands to make investments in data analytics, using high-quality data to drive insights that support decisions around the design of products, services, channels and experiences. Stronger trust over data usage can be built with customers by increasing transparency on what data is being collected and how it's being used.

After all, data is key: you need to know what your customers want and what they value so you can design excellent customer experiences. From there, you can capture information on customer behaviour and preferences to better tailor products and services—and taking those customer relationships to the next level.

When it comes to expectations, brands don't necessarily have to go above and beyond their competitors, such as offering same-day delivery if they don't have the capabilities to do so. For example, if they communicate to customers that delivery will take three days and the product is delivered within a three-day period, then the experience will be perceived as great.

But achieving success with all six pillars requires transformation internally: breaking down silos that create disjointed experiences, working with the ecosystem to create new value propositions, engaging the full supply chain toward a common objective and embracing digital transformation.

To build a foundation for excellence, the entire supply chain needs to buy into a customer-centric approach. For brands, that might mean investing in a more flexible supply chain or perhaps hardening the supply chain to get a full ecosystem of partners all working toward a common objective. An integrated, tech-enabled experience across physical and digital channels that is both convenient and customized for the customer will also positively impact consumer buying decisions.

When designing a customer experience strategy, ask:

How are you investing in capturing data and insights?
How are you integrating that data with other sources of information both internally and externally to get a better understanding of the customer?
How are you equipped to leverage this data ethically and respectfully—beyond privacy?
How are you ensuring your frontlines/channels are equipped with the right frameworks?
How do you anchor a product or service to a purpose or sense of belonging, so that customers feel like they're part of something bigger?
How are you creating multiple channels to engage and transact with customers, and do you know how your customers prefer to interact with you?
How are you working with your supply chain to improve the customer experience?

Contact us to learn more about how you can design excellent customer experiences around the six pillars, drawing on digitally-enabled connected capabilities to improve the end-to-end customer journey.