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Unit 7: The Customers and the Retail Business: Knowing Your Customers

In a saturated retail market, ensuring that customers keep returning to your store or website is Notes
a vital ingredient of a retailer’s strategy, and as European markets have matured, increasing
focus has been placed on customer loyalty. Defining loyalty in retailing is not straightforward
because it can be measured in more than one way; frequency of visit, extent of switching and
expenditure levels all contribute to the extent to which a customer can be considered to be loyal
(Knox and Denison, 2000). Irrespective of the way loyalty is measured, loyal customers are more
profitable to retailers than other types of customers, and therefore every effort should be made
to maximize their satisfaction. This is a growing challenge; as consumers face increasing choice
through their own mobility and gain experience as shoppers, their loyalty levels are likely to
fall.

Select and Purchase

The extent to which a retailer can influence this stage of the process is closely linked to the type
of product being purchased. In low-involvement products, the consumer may be influenced by
some in-store promotional activity, whereas in medium involvement products, such as beauty
products, the matching of product benefits to customer needs by sales associates will play an
important role. In high involvement purchase decisions, such as a carpet, the shopper may
revisit alternative retailers a number of times to gather information on product attributes such
as price, quality, colour, payment methods and delivery before making a final decision.

Post-purchase Evaluation

Again, the extent to which the product or the retailer is judged after the sale will depend on the
type of purchase. For high involvement purchases, high levels of post-purchase customer service
can help to alleviate any worries about installation and use, whilst clear and generous return
and exchange policies can help to reassure the customer in the purchase of all types of product.

7.6 Mapping out Society

Companies are aware at some level that a minority of their customers account for the highest
proportion of sales or profit.

Figure 7.1: Types of Customers

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