Increasing Customer Frequency: Customer Needs as the Starting Point for Frequency Strategy

Customer frequency is a key figure for retail, allowing us to assess the attractiveness of a store over time and compared to the other branch locations. The greater the number of people who make their way from main street into the outlet, the higher the potential turnover and profit. The loss of frequency in retail did not only just become an existential factor for retailers through the coronavirus pandemic. This article explains how to draw up a frequency strategy helping increase customer frequency over the long term. The frequency strategy has the goal not of addressing advertising measures at an “average” customer, but of differentiating them by customer segments.

Plummeting customer frequency in retail

Customer frequency in bricks-and-mortar retail has been on a continuous downward path for years. The trend towards online shopping is just one cause among many. In addition, consumer behavior and expectations have significantly changed, something many retailers have not been able to keep pace with. In addition, bricks-and-mortar retailers are not only each other’s competition. In capturing customers, they also compete with cultural and leisure facilities and restaurants in pedestrian zones and malls.

In addition, the world of retail has been upturned by the coronavirus pandemic. Retail revenues have collapsed, while new highs have been achieved in online trading. More serious than the passing dip, however, is the long-term effect of the pandemic on retail. It is thus a red-hot concern for all retailers to overcome the challenge of making a lasting improvement to customer frequency.

Learning from online retail: demand orientation instead of supply orientation

Bricks-and-mortar retail can learn from online trading, not only becoming able to stabilize customer frequency, but even increase it. Online retail has known for a long time that customer behavior is multi-dimensional, and that different customer groups need to be addressed differently.

It is no longer enough to offer all potential customers an average product at a bargain price. Supply orientation and simplistic advertising measures with general discounts can stimulate frequency only in the short term. Lasting price wars also damage brand image and neglect customer groups aside from the bargain-hunters.

Instead, retailers need to target their messaging by the varying needs of their different customer groups and act in a demand-oriented way. A deeper understanding of the customer is enormously important. If you understand how individual customers perceive your range and brand, you can directly influence customer frequency.

This perception can ultimately be influenced by the retailer. The means include window and store design in themselves, the breadth and quality of the range, price policy, the quality of advice and the employees’ service orientation. The communication channels also play a decisive role in influencing customer perception. Creating a long-term frequency strategy will be able to manage the significant heterogeneity of customers.

Long-term frequency strategies to increase customer frequency

To establish a long-term strategy to increase customer frequency, first off, information on customers must be gathered and evaluated. Such information includes socio-demographic and psychographic characteristics. Some of these can be gathered using KRONOS solutions, for example, with age and sex detection or license plate recognition. Route analysis and receipt evaluation also deliver valuable information about existing customers. Often, analysis of loyalty cards provides additional information on your regulars.

Subsequently, customers can be segmented by their needs, preferences and purchase behavior. The differences between the segments could relate to quality appreciation, brand loyalty, price sensitivity or preferred product groups. The number and size of the customer segments always depends, first and foremost, on their heterogeneity.

To assign different customers to segments, access to a customer file usually makes sense. Then, retailers can appeal to existing customers individually using advertising over various channels. For new customers, use of a consumer database from a specialized service provider is helpful. Using scoring approaches, exactly those consumers with high similarity to the individual customer segments can be discovered. In addition, the advertising systems of social networks and tech companies offer targeted new customer contact depending on the customer segments that have been determined. For example, you can particularly target those consumers who tend to remain in the vicinity of a specific outlet.

Ultimately, retailers also have to develop special provision for the individual customer segments. This includes offering the right consultation, tailor-made products and suitable discounts. Once the special provision has been determined, it is time to develop the perfect mix of communication channels and advertising measures. To find the right mix, success evaluation is essential. In this, again, KRONOS solutions come into play. Using foot traffic and visitor frequency measurements alongside duration of stay information, data on the success of segment-specific advertising measures can be gathered.

Increasing customer frequency with KRONOS solutions

We are happy to help you understand your existing customers better and gather data using visitor analyses. After all, only if you know your regulars can you appeal specifically to them and increase customer frequency. In addition, this knowledge of the existing customer allows you to target new ones, further driving visits to your retail outlets.

Picture: George Bakos via Unsplash