Talking Retention is where we chat customer retention with some of the world’s biggest brands. We ask how they think about loyalty and retention so that you can apply that knowledge to your business.

In this instalment of Talking Retention, we are looking at Mattel. While you might know them for toys like Barbie, Hot Wheels, and Fisher Price, I’m most interested in how they approach retention with their retail innovation lab.

Below you can read the key takeaways from Ramy Nassar (Director of the Retail Innovation Lab) on retention, loyalty, and the future of commerce.

Views on Customer Retention

Here are Ramy Nassar’s views on retention and loyalty.

1. True Retention/Loyalty Can Cross a Generation

As one of the world’s largest toy producers, chances are you still have a Mattel toy from when you were a kid. Your Barbie doll or Hot Wheels are now in the hands of your children, or you plan on handing them down when you have kids. This type of loyalty is extremely powerful.

"When someone in their 30’s is passing their old Hot Wheels to their kid, they are giving a new meaning to customer retention. They are creating a new generation of customers for Mattel!"

When shoppers introduce the brands they love to their children, they are creating a new generation of loyal customers and brand advocates. This type of customer loyalty is not unique to toys, but it does require your brand to be old enough to span a generation!

2. Loyalty is an Emotion, Not a Program

I love when people make the astute observation that loyalty is not just creating a loyalty program (even though it helps!). Instead, true customer loyalty is an emotion that people feel when they interact with your brand and shopping experience.

As a result, Ramy believes a fantastic experience is the key to building that emotional connection.

“Customer loyalty does not mean you have a loyalty program. It is an understanding of the experience and emotions that someone feels during every interaction with your brand.”

You may find it surprising that I agree with this statement since I work for a company that creates reward programs. However, this statement carries a TON of weight. If you do not have an understanding of what makes your customers happy or why they buy from you, then simply introducing a rewards program is not going to help.

Before introducing a program, you need a full understanding of how you can create customer loyalty without a dedicated program.

3. Experiences are Key in a World of Transactions

Today it is almost impossible to compete on price or selection. Companies like Amazon and Alibaba will beat most brands at transaction-based advantages like price and shipping. This makes having an amazing experience the key to competing and ultimately succeeding.

It’s these positive experiences that generate repeat customers. They are shopping with your brand again because you gave them the exact mix of transactional and experiential benefits that they were looking for. One of the experiences that Ramy says is important to the CPG industry is the unboxing experience.

“If you want to see just how powerful experiences are in a purchase decision, take a look at all the unboxing videos that exist on Youtube.”

To showcase the power of unboxing videos and packaging, I want to highlight this unboxing video of 72 Hot Wheels cars. The packaging and variety of products is truly mesmerizing. The fact that there are only a certain amount of cars in each series adds an element of gamification as well.

This type of experience creates a lasting impact on both the unboxer, and everyone they tell about it. In this case a few thousand viewers.

The Future of Commerce

After discussing retention and loyalty efforts of Mattel, we asked Ramy to share what he thought some of the biggest trends in commerce were. Here are his thoughts.

1. Retail is Falling Victim to Showrooming

Traditional retail is changing! Ramy is not the first to share his thoughts on the concept of showrooming, which is the act of trying a product in store before purchasing it online for a cheaper price.

This is a big problem for offline retailers because they need to pay for the ability to show that product to you in person. They need to staff the store, pay the physical lease, and keep the lights on. These are all expenses that online retailers selling these products for less do not have.

“Traditional retail channels are falling victim to showrooming. Shoppers are coming into the store to look at an item with no intention of buying it there. They are going to buy it online, sometimes even while on their phone in the store.”

There are a few ways to combat this phenomenon. Retailers can invest in an ecommerce strategy of their own, or focus on the in store experience. If a shopper enjoys the in-store experience, they will have no problem making a purchase right then and there for a premium. The trick is understanding what customers are looking for, and exceeding their expectations with every interaction.

2. Don’t Mistake a Table Stake as a Competitive Advantage

By far the most impactful takeaway from Ramy was his closing remarks about the biggest mistake he sees in commerce. Too many retailers are treating table stake items as points of differentiation.

If anyone is saying that fast shipping or an ecommerce store is how they are competing… they are wrong. These are things that people expect, which means it is not truly giving them a reason to pick you over a competitor.

“Things like fast shipping and an ecommerce store are not a competitive advantage. Those are customer expectations. You need to create an advantage based on experiences. Experiences like an unexpected surprise.”

I recently experienced this type of surprise. I ordered 2 hair pomades, and when I received my order there was a note saying “thanks for choosing us, we gave you an extra tin as a thank you.” This type of experience is lasting and impactful.

Which brands have you seen excelling at customer retention and loyalty? We would love to feature them next, let us know on Twitter @smilerewards.

The opinions expressed in this article are Ramy Nassar’s and do not necessarily reflect the opinions of Mattel.