Retail is all about customers’ experiences.
With the staggering growth of ecommerce platforms and with the time efficiencies of digital distribution, physical retail stores need to find a way to stay relevant.
As customers conduct most of their customer journey online, it can feel as if the visit to the retail store needs to add something to the table.
As a result, store managers invest time and money to create meaningful and memorable experiences for their customers. Store experiences can be educational, entertaining, aesthetic, or even escapist. Depending on your brands’ values, different types of moods and feelings can be evoked that reinforce the values and mission of your organization.
But one question remains.
How can we assess the return on investment of a rich, enjoyable store experience?
In business, we always need to tie our strategies to measurable performance metrics, to make sure our efforts are not in vain.
Store experiences can tie to a variety of metrics that directly impact a store’s revenue and profits, and n this post, we’re going to provide three examples of how that happens.
With no further ado, let’s dive into the subject.
#1 Lead generation.
A memorable experience is something you talk about.
We all talk a lot about some of the meaningful experiences we’ve had in our day, and memorable purchase experiences are no exception to this rule.
As we talk about what made an impression on us, we become propagators of the company’s message and unaware advocates of the brand.
As brand advocates, we increase awareness of the brand and contribute to its word-of-mouth marketing, so that many more potential customers may be prompted to visit our store.
This type of lead generation is very effective, as your own customers are spreading awareness of your brand and building on its reputation. Customers tend to take into consideration the reviews of other customers, as brands can’t control third-party opinions directly, and as a result, this word-of-mouth marketing tends to be very persuasive.
Not only that, but customers are likely to spread the word of a great store experience to other customers who may fit their same profile and characteristics, allowing you to better reach your target customers.
#2 Frequency of Shopping.
The indulgence and gratification we get from shopping create an addiction. Addiction alters our behavior.
For instance, fast-fashion retailers, because of their low prices, are able to provide a strong emotional stimulus.
As a result, we can see how fast-fashion retailers experience a higher-than-average frequency of visits by their customers.
This happens as the low prices create an addictive sense of “fear of missing out” on the latest discount sale or promotion.
Retailers can use their store experiences as a tool to develop habits that in time, make a visit to their store a weekly habit for their customers, increasing the frequency of shopping.
This is very important as it can be challenging to increase your average customer spend per visit. Increasing your average ticket sale requires a bit of strategy – as we’ve discussed in this post – but sometimes you’re fighting against a tight budget.
By increasing your customer’s frequency of shopping you can still build towards a higher customer lifetime value, by getting your customers to spend less money, more often.
#3 Customer Retention.
A strong track record of positive experiences will create a lock-in in customer behavior favoring retention over longer periods of time.
As we all know retaining a customer is always cheaper than acquiring a new one.
It is argued that retail follows the 80\20 rule, whereby, 80% of the revenue of a store is generated by 20% of its customers. These customers are the ones who are keeping the lights on, as they are accountable for most of the profits from sales.
You should always focus on understanding the particular needs and wants of your retained customers, as this may help you better understand how to present your products, or which ones to focus on.
By retaining your most loyal customers and building a strong relationship with them you can really delve in-depth into what makes your brand different and how your distinction and edge can be enhanced to acquire a broader audience.
By investing in positive in-store experiences, we can see how we can increase the number of customers that will contribute to the long-term financial sustainability of our store.
Great, now that we’ve touched upon all 3 examples, it’s time to draw a few conclusive remarks.
There you have it! In this post, we’ve looked at 3 simple but very effective examples of how your shopping experience impacts your profits and revenue.
First and foremost, by providing wowing experiences your customers will get to talk about your store to their friends and family, increasing the reach of your store’s communication.
Secondly, by making your shopping fun and engaging you will be spoiling your customers with experiences that will make them come back, again and again.
Thirdly, by building on a strong track record of positive experiences, you will be building up your loyal customer audience, developing a strong foundation of reliable business for your store.
If you’d like to learn more on how your store experience can be enhanced, starting from your visual merchandising strategies, here’s a book we recommend reading: Visual Merchandising: Window Displays and In-store Experience.
Moreover, don’t hesitate to visit our blog, where we’re sharing a wealth of information on retail management and experiential branding. Enjoy!