Growing customer loyalty in an omnichannel world

In an increasingly digitized world, retailers are tasked with catering to a complex consumer. Competition is pushing retailers to invest in innovation that enhances buying experiences, creating streamlined customer journeys that blend physical and digital channels.

That same level of competition has given consumers more options regarding when and where they shop, creating a buyer that is quick to seek out alternative options if a purchasing experience saddles them with incremental expense or inconvenience.

According to the 2023 Carat Insights report, an increasingly cost-conscious consumer is driving demand for omnichannel experiences that have become pivotal pieces to the loyalty puzzle.

The survey, which polled 2,200 U.S. adults, gives a view into the latest omnichannel consumer preferences — including four trends that are key to customer loyalty:

No. 1: Price remains a primary consideration: For more than a year, consumers have felt an economic squeeze created by multiple macroeconomic factors, including inflation and global supply chain disruptions. With higher costs putting a strain on consumer wallets, shoppers have become very cost-conscious when buying goods. In fact, 59% of consumers said price is their biggest consideration when determining which channel to shop. While the costs of goods and services are primary drivers of price, businesses should also consider how added fees connected to digital buying experiences will impact their customers. For example, when using an app to buy online, 44% of consumers prefer using a retailer's app over third-party apps since retailer's apps typically have lower fees. This trend shows how merchants that influence multiple aspects of the customer journey are better positioned to drive customer loyalty.

No. 2: Consumer demand for omnichannel experiences continues to grow: Retailers that make it simple for customers to enjoy experiences that connect in-store and online commerce are businesses that will succeed over time. By delighting customers with omnichannel experiences such as Buy Online, Pickup In-Store, digital wallets, and in-app ordering, retailers are positioned to meet modern consumers when and where they want to engage. According to the 2023 Carat Insights report, a few omnichannel growth trends in 2023 include:

• 59% of U.S. consumers used BOPIS in the preceding month, up 2% from 2022
• 64% of consumers used digital wallets to purchase online in the past year, up 4% from 2022
• 50% of consumers ordered ahead on a retailer app in the past month, up 3% from 2022.

No. 3: Retailer apps are preferred by consumers: In today's connected world, delighting customers across the full digital landscape is critical. With their ability to enable frictionless sign-up and innovative in-app payment experiences, retailer apps have become the preferred digital engagement platform for consumers. In addition to enjoying the lower fees associated with retailer apps, consumers prefer buying directly from the retailer because of app-only discounts (43%) and personalized rewards (39%). These trends reinforce consumer preferences for buying experiences that streamline purchasing within a single platform, while also providing the customer with financial outcomes that lower cost and add incentives.

No.4: Embedded finance as a growing part of commerce: There's growing interest from retailers looking to embed financial experiences throughout the customer journey, and consumers are responding favorably. For a retailer, embedded finance can facilitate instant issuance of a private-label credit card at checkout, cash and rewards managed through a digital app, or even opening a new bank account for small business customers.

Instant issuance is growing as consumers search for flexible purchasing options and other financial incentives at checkout. According to the Carat Insights report, 61% of consumers say retailer credit cards with instant approval are appealing; younger consumers are particularly receptive with 68% of millennials noting they'd be interested. Popular benefits driving consumer interest include introductory offers, easy approval, and special discounts and promotions.

Retailers are also adding pay-by-bank capabilities to the payment options they make available to customers. Doing so allows consumers to directly transfer funds from their back account to a business to pay for goods or services. Nearly half of high-income earners are aware of pay-by-bank, with lack of debt accrual and the ability to earn additional rewards from a retailer as a popular driver for adoption.

Embedding finance will continue to grow as a practice as consumers become more accustomed to new buying experiences, and will allow retail brands to build deeper customer relationships and encourage repeat business.

Omnichannel innovation as a loyalty driver

Advances in technology have put more ways to pay, including digital wallets, retailer apps, and alternative payment methods at consumers' fingertips.

With each innovation adding complexity to the customer journey, today's consumers want the businesses they buy from to simplify commerce by offering an experience that streamlines everything from ordering to payment to reward redemption.

By integrating a range of commerce experiences within their own digital ecosystem, businesses can simplify how customers earn, shop, and save while engaging customers in value-added programs that increase loyalty and customer satisfaction.