Brand Disloyalty: Why You Need To Adopt A Services-Led Approach

By Salmon

Hugh Fletcher - Global Head of Consultancy at Salmon 

It cannot be denied that the rise of online shopping has entirely changed the way that retailers and brands build relationships with the customer. As convenience and simplicity rise as top priorities, so brand disloyalty becomes more and more prevalent in online retail. Vendors must look to evolve their offering to meet the high demands of the modern-day shopper.

Shoppers are undoubtedly shifting towards online platforms and retailers should recognise this as an opportunity to embrace the new technologies available. Emerging technologies like the IoT (Internet of Things) and VR will continue to disrupt the way that retailers trade; a recent report released by Barclays found that British retailers were facing huge change with the rapid development of omnichannel shopping, and new technology-driven ideas like robotics and virtual reality changing rooms. 

However, as retailers look to implement a technology-led approach, a trend will begin to emerge that moves away from brand loyalty in favour of service-led platforms where customers grow less reliant on certain brands than the services that a company can offer.

Unsurprisingly, service-driven platforms aren’t a foreign idea. Just look at industry leader Amazon, which has loudly taken areas of the online retail sector by storm. The triumph of Amazon Prime doesn’t just offer customers a speedy delivery service but strives to lock them in to a single platform that has rapidly expanded from selling commodities to trading groceries and even on-demand content like film & TV.

Brands beware — Amazon is after your customers’ loyalty, and shows no signs of slowing down.

Will retailers and brands be able to catch up with industry leader Amazon?

The short answer (as it stands) is no.

There is no doubt that Amazon leads online shopping, with other online retailers playing second fiddle. It benefits from being digitally native and can scale its operations with ease — another reason why Amazon’s service-led platform thrive (not to mention the fact that its heritage allows it to be customer-centric in its development).

Amazon Go, Dash and its Echo device are just a drop in the ocean that Amazon is currently drifting through with ease. Jeff Bezos’ company has even grown to compete against innovator Elon Musk in space travel!
Amazon’s services are already shifting buying behaviour with new technologies revolutionising the way brands interact with each individual. It encourages purchasing through Amazon, rather than through competitor sites or via direct interaction with the brands themselves. And thus it creates brand disloyalty.

Technology and customer service

Technologies are also revolutionising the way that brands themselves interact with customers. The customer experience is becoming progressively crucial as brands turn to digitally-driven platforms to differentiate themselves from competitors. This is where having a dominant platform like Amazon will enable the retailer to prosper.

With services like Amazon’s becoming increasingly centralised on one platform, loyalty as a concept is becoming (and will increasingly become) incredibly important to retailers and brands. The relationship between the brand, retailer and customer is evolving, however.

Consumers compare loyalty with other instincts such as trust and convenience, and ultimately, retailers must aim to manifest loyalty through all platforms: in-store, online and mobile. The challenge posed to brands is in taking a personal approach, while ensuring services such as Amazon’s ubiquitous platform don’t charge miles ahead.

Concepts such as Programmatic Commerce — the automatic reordering of products via IoT-connected devices — are the sort of treatment customers will want to see. In short, online retailers can catch up with Amazon and turn back the tide of brand disloyalty if they embrace new technologies and provide millennial customers with the quick, easy-to-use service-led platform that is increasingly expected.

With so many new technologies and concepts, how can retailers find the needle in the haystack?

The disruptive digital age that we now all inhabit warrants more efficiency and convenience, particularly in the retail sector. Whether it’s online or traditional bricks and mortar stores, consumers are constantly expressing their desire for an improved experience.

Ever since the rise of the internet, we have accessed everything through phones, laptop or tablets. Yet, what Amazon’s Alexa & Google’s Home devices show us is that this is changing, and digital transformation is leading to an entirely new method of interaction, namely voice control.

Zero UI is an interface-less concept that utilises human senses and actions (voice, movements and, maybe one day, thoughts) to offer tangible actions. Amazon & Google’s shift into the home is one very clear example of the threat that voice-controlled services pose to brands. Personal assistants like Siri are eliminating the need for screen-based interfaces. These types of devices are designed to seamlessly slip into our digital worlds with little-to-no disruption.

Data will also be key to this working and one thing that is clear is that the shift towards a services-driven world is becoming even more evident. The aforementioned Programmatic Commerce, for example, can offer customers an instantaneous and easy way to reorder items; 57% of UK shoppers claimed they would be ready for IoT-connected purchases in less than two years! By using the customers’ data, Programmatic Commerce will offer a service like no other and lock in customers’ loyalty to an entire service. 

The customer service battlefield

Programmatic Commerce might also spawn the rise of another innovative concept: Interface Imperialism. Interface Imperialism is the idea that tech giants are looking to own all the interfaces with the customers in order to own the relationship and force brands and other competitors out.

Taking Amazon as an example, we have only really discussed the online retail player as a dominant retailer, but not as a dominant brand. When discussing brand names, we’re likely to think of Nike, Sainsbury’s, Pampers, L’Oréal etc. Yet, all of these brands have two things in common: they arguably lead the specific field they operate in and can all be purchased on Amazon.

Amazon as a brand is clearly leading other brands because its service is second-to-none. New technologies, the IoT and emergence of smart data have the power to create a vast, connected ecosystem. Google’s move into the home and Facebook’s shift to messaging are just two examples of how everything is becoming intrinsically connected.

As brands shift to service, the consumer’s shopping experience will entirely change

We are progressively seeing the rise of new technologies in the retail sector. Amazon Dash and Echo are just the beginning of what will rapidly become a massive, connected ecosystem; Programmatic Commerce strives to take this one step further, much like Zero UI and Interface Imperialism.

The rise of Amazon looks set to continue unabated and brands will continue to come second to online retail services. Customers will desire a quick, convenient and flexible shopping experience that caters to their needs and is on their own terms, and brand disloyalty will only increase.

Retailers have to sit up and take notice. It isn’t enough to just embrace all the new technologies and expect customers to remain loyal to one single brand. The challenges are quite clear: innovate, disrupt other vendors, and lead in the crowded market that Amazon currently dominates. How can retailers do this? With a services-led approach, of course.

Download Salmon’s 20 for 20 trends book for a view on the high impact trends set to drive change across sectors, touching on experience, society, technology and competition.

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