The post-purchase hierarchy of needs - The essential ingredients for building brand loyalty - Narvar
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Narvar Report 2019 The post-purchase hierarchy of needs The essential ingredients for building brand loyalty
Contents
Introduction 3
Brand loyalty is in decline 3
Building loyalty post-purchase 4
The post-purchase hierarchy of needs pyramid 5
1. Communication 7
2. Choice 8
3. Control 9
4. Connection 10
Post-purchase experiences that build loyalty 12
Owning the experience 13
Build a personal connection 13
Making the most of the post-purchase high 14
Best practice: Dollar Shave Club (DSC) 15
Best practice 2: John Lewis Retail 16
Conclusion 17
Introduction
In the UK, online retailers face an uncertain future. The fall If online merchants are to find a path to growth, they need to find
in the value of the pound since 2016 has increased the cost of a way to renew their bonds with customers and forge long-term,
imports, while the prolonged economic uncertainty caused by
1
profitable relationships based on loyalty. This is a well-recognised
Brexit is stunting growth in consumer spending—despite the fact, and many retailers and brands have been building new
fact that wage growth is finally on the increase. 2
online purchase experiences to delight the customer and secure
their loyalty. Indeed, a recent study suggests that by the year 2020
The resulting ratcheting up of competitive pressures means
customer experience excellence will overtake price and product as
that brand loyalty has never been more important. Always a
the key brand differentiator.5
good lever for growth (it costs five times more to acquire a new
“
customer than to keep an existing one)3 brand loyalty is fast
becoming existentially important for online retailers as they
seek sustainable growth.
Loyalty is a relationship, not a scheme.
Brand loyalty is in decline
- Deloitte6
The challenge is that customers today are far less loyal than
in the past. Choice is everywhere and it’s never been easier to
switch brands. A study by Accenture highlights what this means
in the starkest of terms: 83% of UK consumers are retracting
loyalty at rates that are impacting profits. Over half of the
consumers interviewed by Accenture had switched brands in
the previous year.4
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 3
Building loyalty post-purchase
However, at present, most customer experiences are designed This falls into four broad categories:
to lead up to a purchase. Then, job done, the experience stops.
This is a huge mistake. The purchase is not, in fact, the end of the
‘The Four Cs’
customer journey but the beginning of a relationship.
1. Communication
The experience from the time when the customer checks out Consumers show a preference towards retailers and brands that
to when the product arrives is a ‘moment of truth’ for online have delivered exceptional and proactive communications
shoppers: a positive experience at this time of anticipation
provides retailers and brands with the opportunity to deepen 2. Choice
customer relationships for the long-term. Conversely, a bad Delivery flexibility is a key component for consumers considering
experience will see customers look elsewhere for their next repeat-purchases
purchase: a 2018 Narvar report showed that UK consumers are
four times less likely to repeat-purchase from retailers that ignore 3. Control
them after a sale.7 Consumers want to have their preferences respected and they will
be loyal to retailers and brands that allow them to change their
So, what should online merchants do in the mind at the last minute
post-purchase experience to encourage repeat sales and drive
customer loyalty? To answer this question, Narvar commissioned 4. Connection
an independent study of 2,000 online shoppers in the UK to Recognition that consumers customers today want a strong
uncover the moments that matter most. The Post-Purchase emotional connection with their favourite brands and retailers,
Hierarchy of Needs identified by the report provide retailers and who should be providing immersive experiences at scale
brands with a roadmap to creating a rewarding and engaging
journey that extends beyond the ‘buy’ button. Addressing these needs gives retailers a new path to differentiation
and provides a platform for a growth strategy based on customer
retention and repeat-purchases.
Methodology: In August 2018, Narvar worked with Walnut Research to survey 2000 UK consumers
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 4
The post-purchase
hierarchy of needs
“
If I have a good experience with a brand or
retailer after I’ve bought something online,
I’m more likely to shop there again.
In Maslow’s Hierarchy of Needs, there are five main human
needs, each one desirable once the previous is secure. Our
research has uncovered a similar cascading hierarchy of needs
around post-purchase experiences, but with just four main pillars:
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 5
The hierarchy of post-purchase needs pyramid
Connect
• Alignment to Values
• Alignment to Ethos
Control
• Omni Channel
• Transparency
Choice
• Estimated Delivery Dates
• Flexible Delivery Options
Communication
• Order Tracking
• Proactive Notifications
The desirability of meeting these needs is clear: 86% of respondents to the study agreed that a positive post-purchase experience was fundamental to build their loyalty to a retailer or
brand. For consumers older than 55 years’ old, this need rose to 90%. Achieving the right engagement from branded communications through to the respect of preferences is vital before
real value, such as profits, can be realised. Let’s look at each pillar in turn.
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 61. Communication
According to the findings of our study, good communication is the foundation of customer Figure 1: Receiving proactive post-purchase updates
loyalty. As mentioned, brands and retailers focus heavily on the pre-sales experience in is important, and grows more so with age
marketing and engagement efforts, but often forget that the experience beyond the buy
button should be seen as part of the purchase.
Age 18-24 78%
Retailers that communicate regularly on the progress of an order are much more likely to
entice customers back rather than losing them to a competitor. In fact, 81% of participants
in our study agreed that receiving proactive updates on the progress of an order, rather Age 25-34 70%
than having to phone or email for updates, is critical in their decision to repeat purchase
(see figure 1).
For 80%, being proactively updated on delivery schedules, including information on Age 25-44 80%
delays, made them more likely to repeat purchase. Again, the importance of these updates
increases slightly according to the age of the demographic. The feature is very important
for people aged 55 to 75 (85%) and critical to those aged over 75 (93%). Age 45-54 81%
This trend ties in with wider learnings about consumer requirements of brands. We
know that 75% of UK consumers feel that the majority of retailers don’t understand their Age 55-64 88%
interests8 and this lack of relevance to consumer needs will damage their chances of
winning loyalty. What our new study shows us is that the desire for timely, relevant and
proactive communication is as important post-purchase as it is in winning the customer
Age 65-74 85%
in the first place.
Age 75+ 90%
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 72. Choice
The second pillar on our Hierarchy of Needs relates to that fundamental component Figure 2: Convenience, choice and information around
of successful retail experiences: choice. When it comes to the post-purchase process, delivery are a key priority—especially for women
consumers want to be able to direct the experience to suit their needs. This isn’t a new
finding: back in 2016, McKinsey found that nearly 25% of consumers were willing to pay
I am more likely to buy again online from a brand or retailer that
a premium for the privilege of same-day or instant delivery.9
shows me my estimated delivery time before I pay for my item
What our new study shows, however, is just how important choice over when and where
a package will be delivered is when it comes to building brand loyalty. Indeed, 80% of the
people we spoke to agreed that they were more likely to be loyal to brands and retailers
which offered a range of convenient and flexible delivery options.
Meanwhile, 74% of consumers agreed that online retailers and brands that provide
70% 77%
estimated delivery dates/times on a pre-purchase page was an important factor that
contributes to the likelihood of them making a repeat-purchase. Having this in place
allows them to choose a convenient shipping method that fits with their schedule Male Female
with more certainty. Interestingly, choice appears to be a slightly more important
post-purchase need for women than for men (see figure 2).
I am more likely to buy again online from a brand or retailer that
Our overall findings around choice chime with previous research conducted on this offers me a range of convenient and flexible delivery options
topic by other organisations. One study, for example found that 70% of consumers want
more flexible delivery options,10 while another suggested that 66% of shoppers bought
goods from one retailer over another because the delivery services on offer were better.11
Meanwhile, research by PWC suggests there might be an age element involved, with older
shoppers placing a greater premium on being able to choose their delivery times.12 This 76% 83%
was backed up by our own research, where the oldest demographic (75+) were also the
most likely to demand flexibility and choice when it comes to delivery options (86%).
Male Female
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 83. Control
One of the defining characteristics of modern retail is retailers at the pre-purchase end of the sales cycle. For
that it is driven by the empowered consumer. These example, consumers can now personalise their products
are a new breed of informed, proactive and challenging
customer that will go the extra mile to get the experience
to an extent not seen before (one in five consumers
will pay a 20% premium for personalised products).15
60%
they want. And if they don’t get it from you, they’ll simply And consumers have seized control over how brands of consumers are more likely to repeat
purchase when they have the ability to choose
go elsewhere: studies have shown that 74% of people are communicate with them, catalysing omnichannel
their preferred channel of communication
likely to switch brands if they find the purchasing process services (consumers now use nearly six touch-points with (e.g. email, SMS, bot, voice etc.).
too difficult.13
retailers—50% regularly using more than four).16
60%
“
Our new research shows the gap in the market for
providing consumers with greater control post-purchase.
In fact, we have found that providing consumers with the of consumers value brands and retailers which
ability to control their post-purchase experiences is continue to communicate directly with them
Today’s individual customers even after they’ve bought something, and don’t
a key building block for establishing loyalty. The brands
understand their commercial value, send them off to a carrier company website for
and retailers who interact with their customers during
and can no longer be conveniently the ‘anticipation’ (pre-delivery) and ‘honeymoon’
delivery tracking and updates.
categorised. In this culture of the (post-delivery) moments of their post-purchase
niche, all interactions, products and experience are likely to see a significant reduction
services need to be personalised in time before the next purchase takes place. Significantly, while the concept of the empowered
customer and their enduring quest for control is often
This includes after goods have been dispatched: associated with Millennials, we found that the need
-EY 14
retailers and brands that allow consumers to change the rings true for all age groups: while 67% of 18-24 year-olds
One of the things modern shoppers want is control of details of a delivery, such as the destination or delivery agreed that being able to use their comms channel
the purchasing experience. They want the experience to date and time, will empower customers and win loyalty. of choice is important, that was only six points higher
run on their terms and in exchange they will give brands Importantly, these services should be delivered to than the 45-54 bracket and three fewer than the 75+
loyalty. This demand for greater control has been met by consumers on their terms. According to our research: bracket (70%).
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 94. Connection
As with Maslow’s Hierarchy of Needs, once the practical needs of a post-purchase Figure 3: Shoppers want an emotional connection
experience are met, emotional needs come to the fore. This is particularly true when it with retailers and to share their values—particularly
comes to brand loyalty, as loyalty is to a large part driven by emotional factors. Research if they’re young
has found that 70% of emotionally engaged consumers spend up to two times or more
on brands they are loyal to. This compares to less than half of consumers with low
emotional engagement.17
Age 18-24 61%
So, while communication is an imperative foundation for the post-purchase experience,
an emotional connection with a brand or retailer is also fundamental when it comes to Age 25-34 59%
consumers committing to loyalty. This begs the question: what can retailers do in the
post-purchase phase of a sale to illicit a positive emotional response from their customers?
Our research offers some clues. We found that shoppers respond well to retailers
Age 25-44 58%
that communicate their values authentically and consistently at every purchase and
post-purchase touchpoint. In these cases, customers are made to feel they are more
than just an ‘order number’ in the eyes of the retailer, and this in turn drives long-term
Age 45-54 47%
profits. Two findings in particular are instructive here:
• Thoughtful and personal experiences are more important than discounts and coupons Age 55-64 41%
for 53% of consumers.
• 50% of consumers are more likely to buy again when they agree with a brand’s
values. This shows the importance of communicating brand values authentically Age 65-74 35%
and consistently.
Significantly, this is one area where younger shoppers do appear to have a slightly
Age 75+ 43%
different outlook to their elders. Marginally, the younger the shopper, the more important
it is for them to feel emotionally engaged (see figure 3).
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 10The hierarchy of post-purchase needs
Key: I am more likely to buy again from a brand or retailer online when:
53%
I am treated like more than
50%
Connect just another order number, I have an emotional connection
• Alignment to Values which is much more important with them, or I agree with their values.
than discounts and coupons
• Alignment to Ethos
60% 74% 60%
Control I’m communicated with directly after
• Omni Channel I can choose how they I’m shown my estimated
I’ve bought something, and I’m not sent
communicate with me eg. delivery tim before I pay
• Transparency to a carrier company website for delivery
email, text, messenger for my item
tracking and updates
Choice 80% 80%
• Estimated Delivery Dates I am offered a range of I am told about a delivery delay
convenient and flexible before it happens, so I’m not left
• Flexible Delivery Options
delivery options wondering where my order is
81% 86%
Communication I am updated proactively If I have a good experience with
• Order Tracking on the progress of my order, a brand or retailer after I’ve bought
• Proactive Notifications so I don’t need to phone something online, I’m more likely
or email for info to shop there again
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 11Post-purchase
experiences that
build loyalty
The Post-Purchase Hierarchy of Needs can be used to identify the
features and capabilities required for successful post-purchase
experiences. These will vary from retailer to retailer but as customer
needs are consistent across retail sectors, there will be a solid thread
of commonality to all good post-purchase experiences.
When it comes to building brand loyalty, our research demonstrates
several further elements are critical. First, customers want to be
able to choose the level and channel of communication. Second,
they want to communicate with the brand or retailer – not a third
party, such as a delivery company. And third, when communication
and connection are performing at their best, loyal customers can
become full brand advocates.
60%
of consumers are more likely to repeat-purchase
from a retailer or brand that communicates with
them directly after a sale.
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 12Owning the experience To achieve brand loyalty and repeat-purchases, it is
important for retailers and brands to consider how they
Thirteen percent, meanwhile, claim to be more loyal to
their favourite brand/retailer than their political party of
Communication being vital for brand loyalty is not a new can remain the owner of delivery communication. To an choice. This is a prize well worth winning.
concept. Many retailers and brands have programmes extent this should be something of a ‘no-brainer’. Most
An emotional connection is achieved through consistent
or schemes in place to ensure that regular and timely brands wouldn’t dream of relinquishing any control over
but also personal communication. From interactions
communication with customers takes place. However, the pre-purchase experience but have been happy to pass
that are brand-led; for example, the sharing of values and
a large focus of this is placed at the pre-sales stage and on the post-purchase experience to partners. This
authenticity, of personality and mutual trust and respect.
there are those who leave the post-purchase experience to makes increasingly less sense as ecommerce becomes
third parties. This is particularly the case when it comes more competitive. Again, these elements are all familiar when it comes to
to delivery, and it is here that customers feel let down. creating winning pre-purchase experiences online. The
Build a personal connection key now is for retailers and brands to approach their
Customers can unfortunately often feel abandoned
post-purchase experience with the same dedication,
following a purchase, especially when communications As mentioned, customers have more choice than ever
design-thinking and customer focus.
about the delivery doesn’t come from the brand or retailer before. The ability to compare brands, product details,
directly. As many as 75% of consumers that responded prices and peer reviews has resulted in loyalty being
to the UK study said they felt “catfished” when the harder to achieve and even then, it’s often transient.
post-purchase experience is handed to a third party.
However, the study identified that having an emotional
• Catfishing usually refers to luring someone into a connection with a brand or retailer drives at least 50% of
dating relationship by adopting a fictional online
consumers to shop regularly. This dynamic rises to 60%
persona. However, the respondents to the UK survey
believed that buying from one brand and then being for 18-34-year-olds and ultimately, with an emotional
looked after by another - without choice - with regards connection comes the added benefit of vocal and
to the delivery of their goods felt very similar engaged advocates.
• 35-54-year-old shoppers are more likely to buy The emotional connections brands can build with
again online from a brand or retailer that continues consumers are strong indeed. Our research indicated
to communicate directly with them after they’ve
that a fifth of Brits are more loyal to brands that provide
bought something and doesn’t send them to a carrier
company website for delivery tracking and updates good experiences than they are to the Royal Family.
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 13Making the most
of the post-purchase
high
Focusing on the lifetime of a customer, not just the one sale
will see retailers and brands reap long-term benefits. Not only
have studies shown that consumers are willing to pay more for
a better customer experience,18 but it is well documented that
increasing customer retention rates by 5% can increase profits by
25% to 95%.19
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 14Best practice 1
Dollar Shave Club (DSC)
Dollar Shave Club created not only a loyal customer base with a
curated, high-touch customer experience, but a community of
fans. The business is underpinned by a core business philosophy
focused on customer service, where customer experience is also a
main differentiator from competitors.
It is committed to providing the most convenient experience
possible, by providing easy-to-understand shipment status
information through to keeping DSC Members (their customers)
within the brand experience.
For example, DSC highlights select assets on their shipment
tracking pages, featuring a mix of editorial content, product
upsells, requests for referrals or app downloads, making this new
touchpoint deliver on multiple levels.
Dollar Shave Club boasts more than 3 million members, and
their average membership is 3.4 years – for a company that’s
only been around about 4 years. “What we sell is amazing razors
and grooming products, but to be honest, grooming products
are a commodity. We focus on the customer and on building a
sustainable relationship and club experience to stand out in a sea
of sameness,” says Nick Fairbairn, VP Marketing. “We try to bake
loyalty into everything we do.”
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 15Best practice 2
John Lewis Retail
Whilst Amazon continues to hold the number one spot in
customer service, it’s the customer experience that John Lewis
provides that keeps them at the all-important second.
‘Never knowingly undersold’, John Lewis is renowned for putting
customer service first. Most recently, it has been placing an
increased importance on ‘experience’ as part of the retail offer
with ideas like The Residence, a furnished apartment-style space
in three of its stores that consumers can apply to stay overnight or
host a dinner party in.
While this may seem to be focused on the pre-sales experience, the
invitation to take part in the programme is offered first to existing
customers. It is an initiative which incorporates personalising
individual customer interactions and behaviour to support the
post-sales journey.
Most importantly for customers, John Lewis spends £8 million a
year on ‘goodwill gestures’, acknowledging that while some things,
like a TV breaking during delivery, is not the business’ fault, it
will ‘take the wrap’. And while the £8 million may seem high, it’s
just a “fraction” of its marketing budget and an investment worth
making to ensure customers are kept happy – and encouraged
through trust and respect to repeat-purchase.
Key takeaway:
For retailers and brands who meet the post-purchase hierarchy of needs by achieving the right level of customer
Andrew Murphy, retail director at John Lewis, claims it has a net
communication, offering the best choice, providing the control that customers seek and building an emotional
promoter score of 71, the highest on the high street, and that 86% connection, successful profit performance will be realised.
of customers say they feel valued when they shop there20
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 16Conclusion
Customers value businesses that keep conversations going, provide helpful information and stay on
top of their concerns, whether it’s an issue with a delayed delivery or a question about exchange policies
or what to buy next. Brand loyalty is only achieved through consistency and direct engagement. The
product itself is often secondary, particularly when bought through a retailer.
Our Post-Purchase Hierarchy of Needs provides retailers and brands with a framework for building
brands loyalty. By focusing on the Four Cs, online merchants can better meet their customers’ demands
stand out from competitors and fuel repeat purchases.
Through rich, proactive and meaningful Communication brands can give customer peace of mind
while starting new and potentially profitable conversations. And by providing customers greater
Choice over delivery options they can create customer-first post-purchase experiences that better meet
the needs of today’s empowered customers. Brands and retailers can build further loyalty by giving
customers Control over their deliveries and the ability to change their mind over when and where their
packages are received. And finally, brand and retailers need to build a real Connection with customers
through compelling experiences that reflect the company’s values to win the hearts of consumers.
Meeting the needs of customers post-purchase is the last piece in solving the puzzle of exceptional
customer experiences. Brands and retailers that get in their first, stand to secure a significant
competitive advantage.
To learn more about how to build customer relationships – especially after the ‘Buy’ button is clicked –
visit www.narvar.com/about
The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 17References
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The post-purchase hierarchy of needs – The essential ingredients for building brand loyalty 18Narvar is on a mission to simplify the everyday lives of consumers. We help the most admired brands and retailers build lifelong relationships beyond the “buy” button. As an enterprise-grade SaaS platform serving 500+ retailers like Levi’s, Sephora, Estee Lauder, Coach, and TUMI, Narvar drives brand loyalty at scale by enabling immersive and emotional post-purchase customer experiences. From effortless order tracking, proactive communications, to seamless returns, Narvar applies machine learning across billions of interactions to simplify the everyday lives of consumers. To learn more, visit narvar.com
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