When retailers close brick-and-mortar locations, it’s usually for one of two reasons. Either a company is in the unfortunate position of having to shutter stores to cut costs or the brand is going through the natural process of transformation and optimization of their store base, eliminating underperforming locations and investing in high potential areas.
When retailers are strategically shuttering select locations, however, there are critical steps that can — and should — be taken to increase customer retention and lifetime value by transitioning customers to digital channels and nearby stores. Here are five things retailers can consider:
1. Run a promotional campaign encouraging impacted customers to transition to new channels.
When thanking shoppers for their loyalty in informing them their local store will be closing, retailers should run segmented promotional campaigns targeting affected customers, incentivizing them to keep shopping — either online, in app, or in person at a different location. Incentives, such as free shipping or discounts, can help encourage the first sale via the new channel or location, which can then be tracked and help retailers see what contributes to retention and longer-term profitability.
2. Personalize the digital experience, leveraging brick-and-mortar customer insights.
Retailers should use what they already know about their customers from their brick-and-mortar data to personalize the e-commerce experience, which can come from integrating in-store customer data into CRM platforms. Whether it be through marketing campaigns or the branded experience on their company’s website and app, this is a surefire way to make customers’ journeys more personalized.
3. Pay attention to differences in the customer experience by generation.
According to Salesforce research, more than half (53 percent) of customers say they prefer shopping via digital channels. While the transition to digital-only will likely be relatively easy for digital natives like millennials and Gen Zers, it may be more disruptive for baby boomers and Gen Xers, who may need further assistance. Retailers need to ensure they’re offering a simple online user experience and making it easy to find FAQs and get help from a real person, either online or via a call-back, for these older generations.
4. Use digital channels to communicate with empathy and foster human connections.
Ensure customers feel heard during this time of transition by leveraging video, SMS, in-store, online or in-app surveys to ask how shoppers feel about their store closing. By recreating the feeling of interacting in person with customers online using live chat, retailers are able to personalize these customers’ online experience, helping them with things such as finding new stores they can visit, pointing them in the direction of the items they’re trying to purchase, and more.
5. Lean into the power of the community to increase engagement and sales.
Understanding customers’ needs is a business imperative during times of transition. One simple yet effective way to gather these insights is to ask online customers or loyalty members to become part of a community of users who regularly share their thoughts on products, services, and other company news and initiatives.
Other often untapped resources for key community insights that can help drive engagement and sales include social media comments and online reviews. This unstructured feedback can be mined using technology like artificial intelligence to identify emerging themes, analyze customer sentiment, and uncover actions that can be taken to optimize experiences.
While it’s never an easy decision, shuttering store locations is a normal, ongoing part of sustaining a healthy retail business. Though it can impact the customer experience, brands that use digital channels strategically are able to ensure the transition is a smooth one that helps improve customer retention and loyalty.
Mike Debnar is principal of retail and digital innovation at Medallia, an experience management software platform.
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