For years, it’s been a battleground: brick- and-mortar retail vs. eCommerce, fighting for relevance in a world where consumer behavior changes as quickly as a Millennial swipes right. But, after all the punches and pivots, that fight for domination ended with an outcome that few saw coming. Instead of one existing player emerging victorious, physical retail and eCommerce are converging, forming a new, hybrid “unified commerce” model with customer engagement at its core.
Most physical retailers, large and small, now have websites, mobile apps and multiple ways to purchase product. Some eCommerce sellers are adding “click and collect” options, so buyers can pick up their online purchases at a local locker or warehouse, instead of opting for delivery. Others are opening showrooms, so consumers can both see the merchandise and, literally, try it on for size before placing their orders online.
But, the blurred lines of physical and digital are only part of this retail transformation.
Not only do consumers want to move seamlessly between channels, but, they want to make their shopping experiences personal. Whether browsing online or in store, today’s buyers won’t settle for an item, or an interaction, that’s one size fits all. No matter how they choose to interact with a retailer, shoppers want that experience tailored to their individual tastes, preferences and needs. And, they’re willing to spend money with companies that deliver on that promise.
Digital Trends reports that 73 percent of consumers prefer to do business with brands that use their personal information to make their shopping experience more relevant. Forty percent of consumers actually buy more from retailers that personalize the shopping experience across channels.
Failing to provide this personalization appears to have the opposite effect. The CMO Council reported that more than half of U.S. and Canadian consumers consider ending their loyalties to retailers who do not give tailored, relevant offers. Translation? In today’s environment, customization is no longer a differentiator. It’s critical to retail survival.
Personalization then vs. personalization now
Although personalization is not a new concept, its interpretation has dramatically changed. Not that long ago, it meant pushing out offers based on demographics; segmenting the buyer population by age, community, marital status and other factors. Twenty-five-year-old, single apartment dwellers got different messages and images than 50-year- old, married homeowners. Better than generic marketing, yes; but reliant on an assumptive pack mentality. Instead of zoning in on the individual, retailers marketed to a collective of peers who may or may not think and behave alike.
Today, the type of personalization customers seek extends well beyond the offer of a similar product or a home page festooned with banner ads. Buyers want a seamless, custom-tailored experience across all channels. They want to walk into a retail store and get an offer for a product they looked at on line; and suggestions of other items of interest. They want pure eCommerce companies to engage in new ways, like one U.K.-based etailer that shows a custom homepage for each returning customer. In a world that is decidedly “all about me,” retailers that use every interaction to continuously refine the individual customer experience will be the ones that come out on top.
Thankfully, a number of sociological and technological shifts make this transformation possible for nearly every seller, regardless of size.
Data collection in a “to know me is to love me” world
Effective personalization efforts begin with quality, comprehensive data, collected across all channels: physical, virtual and social. What did the customer look at? How much time was spent browsing a certain type of item? What was purchased? What was returned? Do purchases increase when specific motivators are in place, like a sale, a limited-time discount offer, or free shipping?
The more data collected, the more potential to truly understand the individual customer; from how he or she shops, to favorite colors to personal style. Not only do people know that retailers, eCommerce sites and other vendors are tracking their interactions, but, most customers embrace the attention. We’ve moved from a very private world to one in which nearly everyone is happy to share—what they’re eating, what they’re thinking and what’s going on around them. By capturing and analyzing channel interactions, sales transactions and social posts over time, retailers can fast-forward customer relationships from casual acquaintance to the commerce equivalent of BFF status in record time, and reap the subsequent financial benefits.
Some individual stores, as well as shopping malls, are taking data collection to a whole new level with proximity beacons. These Bluetooth-enabled devices, installed at strategic points, track customer movement via smartphone app, and can even transmit personalized messages to those individual customers in real time, if they opt in for these offers.
From a single store perspective, this data provides a clear picture of how that customer navigates through the various departments, how long he or she spends in each area; and what that shopper looks at versus what he or she eventually buys. It also sheds light on aspirational purchases.
Shopper X may always visit the handbag department to check out the Louis Vuittons, then continue on her way. Shopper Y may start in the luggage department, then head to resort wear, indicating a vacation in the offing. Not only do beacons help retailers understand shopping patterns, but give them the option to push out real-time offers to help close the sale before that customer heads out the door.
Many malls are now installing beacons to track how customers shop on a grander scale. The data illustrates specific patterns; like whether customers walk the entire mall, or consistently visit only a handful of stores. Do they visit the stores in any particular order? What’s the average time in the mall versus time in each store? Even documenting whether or not a shopper stops for a latte or pretzel while pondering a purchase provides useful insight, and could become the catalyst for cross- promotional activities.
Beacons level the playing field because they give retailers of all types the same window into customer activity as eCommerce sites have had since their inception. When a person logs onto a site, the etailer can track that activity. Until recently, when a person walked into any physical retailer, from department store to drugstore, the only trackable transaction was the customer purchase.
Of course, collecting customer information is one thing. The real test comes in how effectively sellers can use that information to impact revenue and loyalty.
Insight for everyone: More agile, affordable data analytics options
In the past, sophisticated analytics programs were cost-prohibitive to all but the largest physical and online retailers. As analytics matured, not only has the price come down substantially, but the model has become far more agile. Instead of requiring a massive budget and a year or more to affect outcome, now, sellers can start small, quickly test out concepts and track results before scaling up. These “sprint” programs reduce risk, but also allow retailers to test multiple ideas at one time, without making a large financial or time commitment.
For example, one large online retailer wanted to reduce the number of abandon carts by understanding the root cause. Using analytics, this company was able to test numerous solutions, ranging from sending out multiple reminders instead of one, to optimizing the mix of products suggested in those abandon cart emails— more accurately matching suggestions to the customer’s unique browsing and purchase history. This seller also tried reordering the way they showcased the abandon items in the follow-up email. Instead of presenting the items historically, with the oldest item appearing first, it reversed the order. This seemingly simple change alone made a significant impact.
Another company had invested in artificial intelligence (AI) tools to help customers choose the right size, but still had a high return rate on apparel and footwear. By analyzing return reason codes, the use of the AI tools, as well as each customer’s propensity to buy, this retailer had the insight to proactively turn its returns into sales.
If the customer returned the item because the style was unflattering, the retailer included other style options, based on previous purchases, along with the follow-up email. When the data indicated frequent size and style returns from the same customer, the follow-up encouraged the buyer to leverage the AI tool for highly personal recommendations. And, if the customer appeared to return the item because it was priced beyond his or her budget, the retailer offered free shipping on a subsequent purchase, even if that purchase was a lower-priced item.
In addition to solving problems, companies are employing analytics to personalize the customer journey from the first interaction on, to more effectively advance them to the next step in the purchase lifecycle. These techniques include everything from follow- up emails based on gallery pages and showcasing specific items for unregistered visitors, to adding credit options for those customers whose online search began with key words linked to credit.
But, it’s not only online where analytics are making an impact.
Some retailers are now equipping their stores with tablets so shoppers can log in, get a virtual tour or be guided to products they were looking at online. They’re also using analytics to arm their sales associates with in-depth customer intelligence, so they’re up-to-speed on the customer in their area by the time they say “hello.”
Others are applying analytics to improve internal functions, from optimizing store layout and merchandising to combatting fraud.
Although cyber attacks are on the rise, employee theft still accounts for a significant percentage of loss throughout the retail industry. Although more concrete conclusions typically require a few months of refinement, expert analytics can identify patterns in a matter of weeks—specifically, which employees and managers are repeatedly on duty during periods in which fraud occurs.
That’s the real beauty of analytics programs today. Whether the company is trying to increase sales, reduce abandonments or improve engagement, they can get actionable insight within the first 90 days.
Getting started: Moving from the present state to your personal best
If you’re part of the retail commerce ecosystem, you’ve seen the trend yourself. The days of generic marketing and your- name-here interactions are as out of date as the cash register. But, how do you move your organization from where it is today to an analytics-driven enterprise with the customer journey at its core?
Begin with the basics:
Start with what’s NOT working
In a perfect world, a retail analytics program would start with A, B, C and D goals, clearly laid out based on company objectives. In the real world, these programs typically begin because the retailer wants to fix a problem:
- We’re spending more on blanket marketing campaigns and aren’t seeing a lift.
- We have data but we can’t put it together for meaningful output.
- Our last five marketing campaigns have failed.
- We’re losing market share and want to stop the bleeding.
- Our abandon cart rates are escalating and we don’t know why.
- We’re discounting our way to margin erosion.
- Our customers look here and buy somewhere else.
- Our customer satisfaction ratings are lower than ever.
- We’re not effectively competing and we don’t know why.
Using analytics to solve a problem first is an excellent proof of concept.
Develop a strategy
Where are you today with your customer journey and where do you want to go? Start with seamless channel integration and then create your vision for the ultimate customer journey. Design your analytics program around that vision, with the flexibility to change and refocus that vision, based on customer response, as you go.
Refine your data collection methodology
Effective analytics programs depend on good, comprehensive data. Examine your current data collection process. Are you collecting customer interactions from every channel and funneling this into one database? When was the last time that data was scrubbed to ensure you’re working with accurate information? If you can’t answer these questions, engage with a qualified third-party provider to set up a database and data collection process for you.
Analytics is a science, requiring a well- defined structure for acquiring and analyzing information, and an environment that tracks customer feedback, documents improvements and identifies needs. Putting that structure in place from day one is critical to success.
Test multiple options
Although offering a personal customer experience is now table stakes, companies can differentiate themselves by getting creative, and testing out new ideas. With the agility and affordability of today’s analytic programs, many retailers pilot 10, 20, or more offers and options simultaneously and track response. When they execute a full roll-out, they know they have something that really resonates with their customers.
Keep a close eye on social media
In the pre-mobile world, the contact center was the barometer of customer satisfaction. Today, it’s social media. If something goes wrong, or goes right, chances are, it will be shared, and re-shared before anyone at your organization knows what’s going on. Carefully tracking customer sentiment on social media, and responding quickly to issues, is critical to maintaining brand integrity. The most engaging website or optimized in-store experience mean nothing if the retailer reacts poorly, or not at all, to negative posts. Make sure you not only make following social media a priority, but integrate this information into your database, as well, to round out your customer personas.
Perhaps more than any other time in its history, the retail industry is undergoing a radical change. The convergence of physical and digital channels, in combination with consumer demand for personalization, shift the retail focus from “product, price and promotion,” to optimizing the customer experience. Through skillful application of analytics, and go-forward strategies that put customers at the core, retailers can build loyalty, improve sales and connect with their buyers in a new, very profitable way.