Integrating Data Is Key to Meeting Consumer Expectations
Featured in the Journal of Corporate Renewal
During the past several years, many retailers have identified a few common challenges as their most difficult to navigate. The prevalence of savvy shoppers who like to view products at stores and then turn to e-commerce and m-commerce (mobile commerce) platforms to find retailers that offer the best selection and price, coupled with the alarming reduction of foot traffic in malls, is forcing retailers to adjust their strategies by working smarter than ever before. Further, omnichannel retail continues to rapidly evolve, fueled by shifts in consumer behavior and expectations. This is compelling retailers to develop tailored experiences that are consistent across every channel with which a customer chooses to interact.
To keep up with the winds of change, retailers must invest in technologies that provide a single, cross-channel view of individual customers and then create an omnichannel strategy that focuses on personalizing the customer experience. Of course, pursuing omnichannel initiatives without accounting for their cost would be like focusing on gross margin instead of gross margin return on investment. That’s why a more comprehensive evaluation of omnichannel initiatives, known as optichannel, is warranted. This article discusses each of these strategies and the research that supports its importance.
Understand the Person, not the Shopper
Investing in a centralized database that allows a retailer to consolidate information from multiple channels into a single source is perhaps the most critical undertaking retailers can implement today. This creates a single record for each customer that can be instantly updated to reflect activity across all channels, providing the most up-to-date information on an individual’s shopping behavior.
A recent study by Forrester Research stated that modern marketing is all about acquiring more data on individuals, not just acquiring new names. The firm also predicted that cross-channel retail sales will reach $1.8 trillion in the U.S. by 2017. Historically retailers have had multiple sources of data from individual channels, but they typically have failed to integrate them. With cross-channel sales on the rise, retailers that have been slow to build and maintain a centralized source of customer data face future challenges. An immediate goal for these retailers needs to be developing the ability to deliver a consistent multichannel experience. Otherwise, they risk losing valuable consumers to competitors that are better prepared to execute on such a strategy.
Not surprisingly, a study by MasterCard found that 8 in 10 consumers now use a computer, smartphone, tablet, or in-store technology while shopping. Many retailers are missing opportunities by not understanding or catering to their customers’ shopping preferences. Arming themselves with the right data on the right customers at the right time provides retailers with a greater ability to understand customer buying patterns, ultimately resulting in higher conversion rates.
Without this valuable data, retailers cannot properly identify who they’re marketing to, let alone develop tailored strategies that cater to specific preferences. Retailers need to understand the importance of unifying data and then invest in providing personalized experiences across all channels.
The Multichannel Merchant 2016 Digital Commerce Forecast and the Internet Retailing Customer Experience Research Report both emphasize the necessity for retailers to start leveraging the data they already own to create more personalized omnichannel interactions that make customers feel like they are receiving a special service tailored to their needs and interests.
It is no surprise that fierce competition from e-commerce giants such as Amazon, as well as emerging technologies and shifting customer behavior, have outpaced omnichannel integration. However, once they have made the commitment to a centralized approach to capture customer data, the best way for retailers to capitalize on that investment is by personalizing all future interactions based on preferences extracted from the data.
In fact, shoppers are now demanding personalization in whatever medium they prefer. It is no longer sufficient to merely have a strong web and email strategy—shoppers are already accustomed to receiving content based on their preferences. Google often discusses the concept of being “useful,” as 73 percent of consumers say that regularly getting useful information from an advertiser is the most important attribute when selecting a brand.
For example, many retailers now send email reminders about items left in a shopping cart that are “going fast” or use a customer’s name in the subject line of an email to add that personal touch. Other approaches include the concept of “just for you” with “friends and family” discounts or offering “top customers” increasing levels of incentives based on their spending levels. Targeted emails based on inactivity, such as “we miss you” messages, are also frequently used to show shoppers that their lack of browsing is noticed. The same personalization strategies being used on the web and in email are also being leveraged via mobile strategies such as text messages and push notifications—all with tailored content.
Further, maintaining the brick-and-mortar experience will always be critical, even as footprints decrease. As such, personalization should be extended beyond the digitally focused channels mentioned earlier. To effectively serve omnichannel shoppers, retailers will also need to connect their store locations to their digital systems. As millennials continue to mature and enter the marketplace, they will expect to use their mobile phones for a growing array of purposes during their store visits.
For example, shoppers want to be able to order out-of-stock merchandise via their mobile devices while they are in stores, but very few retailers deliver this capability. And even though most consumers would like to receive promotions and loyalty points on their mobile devices while they are shopping in stores, retailers seldom provide this service. Something else consumers do when they visit physical stores: use their mobile devices to make purchases from competitors. This could be for a variety of reasons, including price, service, options, and availability. To combat these defections, it’s more important than ever for companies to be aware of what their customers want—and make it as convenient as possible for them to buy what they want while they’re in the store.
Successful retailers have come to realize that customers are going to interact with their brands in a variety of physical, geographical, and technical mediums and that they cannot control those preferences. Understanding that and therefore providing the optimal customer experience in all of those mediums is a strategy that all retailers should strive to achieve.
Providing Optimal Customer Experience
Data capture allows retailers to deploy personalized marketing messages across all channels, but that is not enough to guarantee a positive brand experience that ensures conversion and loyalty. And retailers agree. A survey conducted by Gartner for Marketers found that by 2017, 89 percent of retailers expect customer experience to be their primary differentiator. Forbes concurs, stating that customer experience is the future of marketing. The bottom line for retailers is that they must center their strategies around being the provider that caters to a customer’s needs when they arise and delivers the proper messages and experiences to meet those needs in that exact moment.
As if technology investments and providing personalized marketing were not enough to tackle, retailers also have to implement this flawlessly to ensure that the customer deems all interactions with the brand as positive. After all, it takes 12 positive experiences to repair the damage caused by a single unresolved negative incident, according to Forbes.
Consumers often take their experiences straight to the web by writing product reviews. If the customer experience was positive, the review can be amplified on the web and social media to encourage others to visit the retailer. Conversely, a negative review can be very damaging, as 88 percent of online shoppers incorporate reviews into their purchase decisions, according to Vendasta, which also found that 92 percent of consumers now read online reviews, further supporting the importance of this positive advocacy.
Understanding the customer and tailoring the cross-channel communication to him or her are now expected. But customers want much more than positive experiences—they also want to dictate the journey. Customers want to be able to pay however they prefer, whether that is by traditional credit card, Apple Pay, brand-specific app, PayPal, etc., and retailers must cater to their preferences. Other examples of what consumers expect include in-store pickup, expedited home delivery, free shipping and returns, and cross-channel consistency, to name a few. If these experiences are not delivered to the satisfaction of a customer, they move on to explore other brands.
The race to acquire and maintain customers is more competitive than ever. The result of the decline in mall foot traffic, product differentiation, and positive in-store experiences is clearly the deterioration of brick-and-mortar operations. Coupled with omnichannel interactions that are not well-executed, it could result not only in losing a sale but also in losing the customer altogether.
The prospect of competing with powerhouses such as Amazon can be daunting and certainly isn’t a well-paved path to success. However, knowing its customers and implementing a few key (rather than many) strategies well to ensure an optimal experience every time could be enough for those struggling with where to start.