Carlson Relationship Builder Study Reveals How to Get it Right in Retail

Minneapolis | July 10, 2007

Carlson Marketing Worldwide today released the results of its Carlson Relationship Builder(SM) 2007 study on the current state of customer relationships within the retail industry. In the most recent chapter of its ongoing research series, Carlson Marketing -- leveraging the expertise of Peppers & Rogers Group, its strategic consulting division, and its partnership with Zoomerang™, the pioneer in online surveys -- put the retail sector's consumer relationships to the test.

Nearly 1,200 consumers took part in a comprehensive survey providing a clear look at the current state of customer relationships within the retail industry.

The research report answers the question of whether or not customers are having relationships with retailers with a resounding "yes." Customers do have relationships with retailers, and the range of the strength of those relationships is broad. Among the retailers with the highest level of relationship strength are Barnes & Noble, Hallmark, Bath & Body Works, Best Buy, Old Navy and Target. In all cases, there remains substantial room for improvement. The study found that the strength of the relationship between a retailer and each of its individual customers is not uniformly equal. There is an opportunity to "raise the bar" on an overall basis, and individually based on the variances in relationship strength among customers within retailers.

Top ten things to remember in retail:

  • Loyalty programs drive incremental purchases. One-third (33 percent)of customers agree that direct participation in a loyalty program hasresulted in the purchase of additional products from a retailer thatotherwise would not have occurred.

  • Satisfaction is not sufficient. A large segment of customers(41 percent) are at least as satisfied with other retailers as withtheir primary retailer.

  • Here today, gone tomorrow. A majority of customers (51 percent) statethat there are many other good retailers, any one of which could serveas an alternative to their primary retailer.

  • Walk a mile in their shoes. Customers agree that "being easy to dobusiness with" (89 percent) and having "good customer service"(90 percent) are important attributes in preferring one retailer overanother.

  • Aim for alignment. When the interests of the customers and theretailer are perceived as resulting in a mutually rewarding experience,the alignment enhances the likelihood to recommend the store or companyto friends and family, remain a customer, and shop more at the retailer(68, 39 and 43 percent respectively, for those with high as comparedto low levels of alignment).

  • Brand is big. Almost two-thirds (64 percent) of customers agree thatfamiliarity with a brand name plays a role in the choice of a retailer.The effect is even larger for those with a high versus low level ofrelationship strength.

  • Customers are human too. Among the top three most importantconsiderations when interacting with customer service are staffcourtesy (59 percent), apologizing when something goes wrong(32 percent), and being empathetic (28 percent).

  • Morality matters. Customers agree that the reputation (70 percent) andthe moral values (50 percent) of the retailer are important whenchoosing where to spend their cash.

  • Websites work well. Almost two-thirds of customers (65 percent) use aretailer's website for activities such as searching for merchandise,learning more about the store, and reading about news or offers. Thepercentage varies considerably by the type of retailer (departmentstore, 71 percent; grocery stores, 44 percent).

  • Don't botch the basics. Customers overwhelmingly agree that having thebest price (93 percent) and a good selection / availability ofmerchandise (93 percent) play a role in determining where shoppingoccurs.

"Knowing that customers have varying degrees of relationships with retailers, the Carlson Relationship Builder 2007 study addresses the key question of whether it really matters if retailers get it right," said Luc Bondar, vice president of loyalty marketing, Carlson Marketing. "We all know that building better relationships in retail certainly makes common sense, but at the end of the day, does it actually enhance customer recommendations, retention and intent to shop more with a specific retailer The answer is a resounding 'yes.' Thriving and not just surviving in the retail marketplace requires more than just executing the basics. It requires building strong relationships that in-turn enhance customer recommendations, retention and shopping. Today, some retailers are already doing this better than their peers, but there's ample room for improvement across the board. The use of loyalty programs, improvement of communications, customization, relevancy and frequency are all 1to1® approaches highlighted in the study as mechanisms to 'get it right' and deliver results."

Participants in this research study answered numerous questions on a range of topics, including whether they would encourage friends and family to shop at a specific store, will they still be a customer of this store 12 months from now and how likely are they to shop for more products from this store within the next 12 months. In addition, respondents were asked about demographics and -- of course -- relationship strength as measured by the Carlson Marketing RSxSM relationship index.

About Carlson Relationship Builder(SM)
Carlson Relationship Builder 2007 is the most recent continuation of a 10-year research series across numerous vertical industries and global regions, each of which explores the role of customer relationships in driving business results -- and, importantly, in understanding the antecedents that enhance those relationships.

This current study was conducted in partnership with MarketTools, a leading research organization, using their Zoomerang online survey software and sample consumer panel that consists of over 2.5 million opt-in participants in the United States. Data were gathered from October 18-25, 2006.

At the core of the research approach resides a model of relationship strength developed by Carlson Marketing and founded on the seminal investigations of Dr. Robert Morgan at the University of Alabama. This model places customer relationships in a mediating role, residing between the marketing activities or antecedents that influence (positively or negatively) those relationships and the outcomes or consequents that occur as an end result of the changes in relationship strength.

Visit to download the research report.

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