Retailers are struggling to retain customers that increasingly have zero tolerance for a poor retail experience, with 40 per cent stating that just one bad experience would stop them returning to a brand.

This is according to a survey of 2,000 consumers and 254 retail decision-makers across the UK conducted by Censuswide in May and June on behalf of Klarna.

It found that just under a third (32 per cent) of people think shopping isn’t as fun as it used to be, with 36 per cent feeling that what shoppers today have gained in convenience, they’ve lost in experience.

Where brands used to think of loyalty in terms of reward schemes or points, the findings show that for today’s shopper, the drivers of loyalty run much deeper than a transaction or offer. When it comes to what drives disloyalty, a bad returns process (30 per cent), and a drawn-out online checkout without payment options (21 per cent) rank much higher for shoppers than retailers perceive them to be.

The research also revealed that 41 per cent of retailers agree that loyalty is no longer solely driven by rewards and 76 per cent think they have to work harder than ever to retain customers. But a third are struggling to keep pace with changing consumer expectations around experience, with a third being held back by outdated tech and 30 per cent by a short-term focus on sales.

Shoppers today want more - craving things like brand values they can align with (40 per cent), human engagement (35 per cent) and flexible payment options (26 per cent). This is especially true of Millennial and Generation Z shoppers who care less about value for money, and more about brand image (20 per cent, compared to 13 per cent of over 45 year-olds) and flexible payments (30 per cent, compared to 25 per cent of over 35 year-olds).

For the retail decision-makers, the top areas for investment over the next 12 months are a smooth online user experience (39 per cent), additional payment options (38 per cent), a curated experience (37 per cent) and brand content (34 per cent).

Luke Griffiths, managing director at Klarna UK, commented that loyalty is no longer a ‘points’ programme. “It’s clear that consumers want to align themselves with brands who can offer them a deeper connection and understand how they want to shop, so retailers need to be investing in the right drivers of loyalty for their customers – whether that’s flexible payment options that fit with their lifestyle or curated experiences that put the fun back into shopping.”

Andy Mulcahy, strategy and insight director at IMRG, added that shopper confidence appears to be in a suppressed state and many retailers are under pressure to enhance the customer experience they offer to keep ahead in a tough environment. “The problem is that ‘customer experience’ is a term that can technically cover every aspect of a retailer’s proposition – identifying where to focus resource is a challenge.”

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