Yearly Archives: 2011

It seems that lately, my conversations with both retailers and retail industry technologists arrive at the same basic question. “With the explosion of hot new technologies, which of these will really provide value?” Obviously retailers are concerned about the disruptive consumer-based apps that are about to dramatically impact their businesses — but for most retailers, the decision on which social, local, mobile, loyalty, clienteling, digital marketing or CRM solution to pursue is seldom guided by a well-defined customer engagement strategy.

So, how does a retailer cut through the noise? My recommendation: start by going back to the basics…

First: Retail is about people. Knowing people, solving their problems and taking responsibility for their satisfaction throughout the entire want-it, buy-it, and use-it experience. Finding ways to create that satisfaction and delivering engaging customer journeys is the foundation of a well- executed customer strategy. It’s about knowing who you want to be and what will differentiate your business. I’ve identified over 150 retail best practices that can differentiate your customer experience and drive profitability. While it may sound heretical, it’s not about the technology… it’s about the people! Start by selecting a half dozen best practices/initiatives that matter most to your customers and have the greatest likelihood of improving the business. Find the “easy wins” and build upon those with future initiatives.

Second:  Consider how any new initiative is likely to impact corporate KPI’s. Retail math is pretty simple. Revenue = (Traffic) x(Conversion) x (Transaction size). While everyone knows that these KPI’s determine the health of a retail business, it is amazing to me how often technology decisions aren’t first run through these KPI filters. Any online or store-level solution is likely going to affect one or more of these metrics. Analyze and identify how the solution is going to move the metrics and consider the investment based on those projected results. Just because everyone else is jumping onto the latest hot trend, doesn’t mean it fits your customer strategy or the KPI’s that matter most to your business.

Third: Select/build solutions with functionality that maps to the desired practices and strive for little or no “friction” in adoption. Inducing a sales associate to use a new tool can be a formidable task if there is even the slightest mismatch with established workflows. Most consumers won’t try new technologies or download a retail app unless there is immediate perceived value in doing so. Be clear on which behaviors you trying to influence and bring multiple disciplines together in gathering requirements. Always build or buy technologies that are intuitive and designed from the user point of view.

With the customer in mind, I would like to share a recent article written by Will Roche of Microsoft. Mr. Roche has spent his career working with some of the worlds largest retailers and technology vendors. I think Will really understands the intersection of technology and “people-centric” issues. With his permission, I have included it below.

Enjoy!

Bryan

The Business of People…

Guest Post by Will Roche – Retail Solutions Executive, Microsoft Dynamics

It is interesting how we use words like customer and consumer to refer to people who purchase goods and services from our companies. I recently heard the term “B to P” vs “B to C” which really caught my attention. The quest to have a closer more relevant relationship with people who purchase goods and services from us is about understanding human behavior. I can see how retailers are chasing the hype of social networking, mobility and such things as clienteling to get ahead of competition not really understanding the core drivers. At the core people generally behave on fairly predictable terms so it is important to understand what levers you have as a retailer to drive these behaviors and to whom you choose to do it with.

I use this example often when I talk about observing customer centric initiatives (maybe it should be people centric?)with retailers. I have a grocery store close by which a number of years back spent a lot of money re-inventing themselves as a high end food competitor. One big problem was they thought they could automate service and bypass employee costs via automation. As I walk into this store I am immediately presented with the option of joining their “loyalty card” program via a nice looking kiosk. I walk by as I am not interested in spending my time typing on a computer. As I enter the start of my shopping experience with my shopping cart I am immediately presented with a wall of  “personal shopper” devices that I can use if I had a “loyalty card” and the desire to figure out what they were for?

Entering the fresh produce area there is a large flat screen with someone talking which I can’t quite understand and frankly not interested in hearing. As I choose some fresh produce I see that I have the opportunity to weigh and print out a label which can be scanned at the checkout. Interesting, why would I want to do that I ask myself?

As I go through the store I see additional attempts to add value such as touch screen devices on certain isles to locate a product I could not find. Usually it was out of order or when usable difficult and frustrating to navigate.  To cut to the chase of this experience, when I went to finally checkout I was forced to go through a self-checkout because there was only one lane open for full service and it was full? I am not sure whether the thought was how to improve service or just cut costs for employee’s, but in either case I dreaded going to this store even though they did a reasonably good job merchandising their products and providing the products I wanted. I actually would drive a few miles out of my way not to go there. Consequently I never really saw any traffic at this store and they are no longer a brand in business.

Morale of this story is to understand what real value means to the people you want to serve!

Technology is a wonderful thing and provides many improvements to our lives and even how we purchase things. Understand though that technology is a tool and as retailers you need to first understand and know who your customers are and what makes them tick as it pertains to your offerings. So before running off and buying some expensive new gadget for your stores, think hard about how it will help drive your core mission and value proposition. You should never waiver from this; it is easy to get caught up in the latest “shiny thing”. However as a person that has spent over thirty years in technology for retailers I do have some insight that I would like to share.

The first is data. You cannot know your customers without data. Not being a local corner store and with constant turnover of employees you cannot depend on (for the most part) long established personal relationships to drive value if you are a typical chain retailer. Data about your customers and more importantly what you do with this data is critical to the development of relevant relationships with the people you serve. Most everything in this world fits into Pareto’s Principle – The 80-20 Rule. Twenty percent of your customers will or should statistically provide 80% of your profit. So your first mission is to understand who these people are and manically treat them special. How do I know how to treat them special? Part of that is what makes you unique and is required for you to be in business, the other is to have predictive analytic tools that can help you sort and model out signal indicators helping to pinpoint those human behaviors you wish to influence with that twenty percent. This is the real “secret sauce” and you need to really look hard at the many options you have as a retailer in this area. Many companies want to sell you large complex storage eating monsters, you don’t need that! What you need is a comprehensive solution that acts as an engine using this data in many ways and channels to better serve the people you have chosen to have a relevant relationship with. This engine is typically called CRM. CRM is the repository and delivery mechanism of customer information which allows you to operate real time with your customers providing consistent and relevant experiences.

Let me use this example. You have a Facebook page with many people signed up. You know certain affinities about those chosen twenty percent on your Facebook site. You could for example make an offer on Facebook to one of these special people creating a coupon on their  phone for redemption at their favorite store. When they arrive the sales associate using their clienteling application connects with the phone offer pulling up all the data on this customer along with the coupon to really create a “I know you” experience. This engagement should be a well thought out sales process and executed consistently throughout your organization. By the way, executed well friends of this person will see on Facebook (if he/she elects) that they bought this item and had a great experience. Make sense?

There are many business processes and technology tools including, emails, events and texting that also are part of this comprehensive system, but one fact needs to happen. You need to increase the frequency of visitation and dollars spent per visitation by that twenty percent or all of this is money for technology is down the proverbial toilet. If done well making sure you have metrics and a feedback loop to your process you can then expand to a new frontier, the 70-30 rule.

Will can be reached at [email protected]

With 2-D Barcodes

I am sure you have noticed the accelerating pervasiveness of QR Codes in magazines, billboards, TV, T-shirts and of course retail.  It’s being touted as the “virtual bridge” between the physical world and the internet, but too often in the US, execution does more to disenfranchise customers than engage them.

Let me explain. Many large retailers and the vendors that supply them (think bigger boxes) are starting to label their products with 2-D codes in hopes of converting smartphone wielding customers at the point of decision. Unfortunately, in the US at least,  the user experience is seldom worth the effort because scan results can be slow and generally lead the user to a smaller, harder to read version of the vendors existing website. What a loss of opportunity!

 In Asia, QR codes have been the rage for a couple of years and the experience is becoming more  enticing and innovative. One study claims that 90% of all Japanese consumers have “shot a code” in the past year.

In Korea, Tesco wanted to become the #1 retailer without opening more stores. This is a market with hard-working time-starved, commuting  consumers who dread shopping. So, Tesco created life-like retail environment on the walls of the subway stations, where commuters could “shop” by scanning  codes of pictured items and have them  delivered that same day.

Following this campaign, online sales increased dramatically (Nov 2010 to Jan 2011). Through this campaign, 10,287 consumers visited the online Tesco (recently renamed Homeplus) mall using smartphones. The number of new registered members rose by 76%, and online sales increased 130%. Currently, Homeplus has become No.1 in online market and is a very close 2nd offline.

By comparison, US adoption is slower. A ComScore study released last month said that 6% of US mobile shoppers scanned a QR code in June of 2011.  These users tend to be relatively affluent, under 45 years old and more often than not, male.  I’ve attached Comscore’s results to the left. Most surprisingly, a total of 64% of users claimed to have scanned inside a retail or grocery store. That 9.2M people scanning retail codes in a single month… not a bad start.

  (Click to Enlarge)

What will it take for QR codes to reach critical mass? Real consumer value! Using the technology in creative ways that make the consumer want to interact with the brand and learn more about complex product offerings. I saw Mick McCormick, EVP of Global Sales & Marketing for Columbia Sportswear speak at last weeks Shop.org 2011 Summit. McCormick demonstrated a few QR code-driven videos that were improving in-store conversion on technical  apparel by as much 500%!  Based upon that kind of  sales improvement, they have plans on using QR codes across all of their product lines.

During the presentation, one apparel vendor expressed frustration with retailer hessitancy in allowing coded tags within their stores. McCormick’s advice was clear – deliver relevant content that drives the retailer’s objectives (e.g. conversion) and avoid redirecting consumers to vendor landing pages.  For retailers, the brand experience is everything. Redirection to potentially thousands of vendor sites undermines that objective.

ClickGenie, a mobile QR startup in North Carolina has an interesting approach to managing this problem. They have developed a hosted solution that simplifies the content management from disparate vendors. This is accomplished by customizing a number of pre-approve templates that are branded to match the retailer’s desired user experience. Vendors simply upload content and the environment is controlled and branded by the solution, using generally available smartphone QR readers.  Additionally, the solution enables other retail-specific workflows like consumer wish lists, product recommendations and real-time offers.

See the recent Apparel article or scan the QR code below to learn more about ClikGenie.

The mobile revolution is in it’s infancy and in the not too distant future all of us will be using new technologies like mobile NFC  and QR to learn more about the products we buy and hopefully, to simplify our lives.

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Posted Date: 8/19/2011

ClikGenie Video

Leverage the QR Craze to Engage Shoppers

By  George Hoffman

Apparel retailers and brand owners looking to open a mobile channel for virtually unrestricted customer engagement on the selling floor and beyond, need search no further than QR (quick response) bar codes and their own imaginative merchandising practices. The increasingly ubiquitous checkerboard-like bar codes have become a staple at such big box venues as Home Depot, Lowe’s and Best Buy where they enable smartphone delivery of information on retail products ranging from potted plants to high-def TVs.

Apparel businesses are likely close behind, and those that launch early will gain a competitive advantage, especially with the young, tech-savvy demographic so coveted by clothing retailers. In 2011, the smart play for apparel retailers and brands is to set business objectives for QR bar codes and develop merchandising strategies to achieve them.

Opening the door to two-way engagement  

If you’re like most retailers, chances are good that increasing interaction with customers will rank high among your QR business objectives. According to a recent Forrester Research Study, 66 percent of retailers stated their number one objective for investing in mobile technology was to increase customer engagement.

But QR codes alone will not create an engaging customer experience. It’s how you employ the technology that will determine its success. The opportunities to engage in-store shoppers via QR codes are limited only by a retailer’s or brand’s creativity. The code opens a two-way channel that can accommodate video, chat, text, images and virtually any other type of messaging. Providing additional product information is one obvious potential QR use. Helping shoppers to accessorize is another.

In each case, imaginative merchandising will be key to increasing sales…

Click Here to Read the Full Article.

George Hoffman is president of ClikGenie, Inc., a QR merchandising solutions firm based in Charlotte, N.C. Reach him at [email protected]

Posted Date: 8/19/2011

By  George Hoffman

• Consider which products should be tagged. Does the product lend itself to accessory suggestions or other crossselling opportunities? Does the consumer spend a thoughtful period considering the purchase of this product? Does the customer usually require more information about this product?
• Start small. Select a group of 10-15 items and implement in one pilot store.
• Educate your shoppers and associates on the technology and how to use it.
• Incentivize shoppers to try it out.
• Survey shoppers to find out what they like and don’t like with the technology.
• Measure everything, especially sales, total scans and scans per item.

While I don’t pretend to be a social coupon expert, I have been a troubled observer of this growing phenomenon for some time. As Rocky Agrawal said in Monday’s widely circulated post, the model simply does not make sense. http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/

There are all types of economic reasons why this model is poised to fail, but that is not what troubles me most. I am most concerned about the long term “destruction of value” that this tactic promotes.  Let me explain. Jack decides to buy Jill something nice for Mothers Day, perhaps a $75 massage.  Miraculously, ping,  a $17 Swedish massage coupon appears on his iPhone.  Its an incredible deal so  he buys it, gives it to Jill, and everybody is happy…right?

Well, not really…  First, the spa probably wasn’t doing well in the first place, which explains why it was so desperate to “buy” a customer.  Now the spa is so overwhelmed that it was almost impossible for Jill to get an appointment. A month later she finally has her massage, from a service provider who has been losing $30 on every customer since Mothers Day! Maybe the quality of the spa’s service hasn’t degraded yet, but customers are tipping less and I am willing to bet that it won’t be the kind of extraordinary experience that builds long-lasting loyalty.  Maybe Jill comes back, maybe she doesn’t… but neither she nor Jack will pay anything close to $75 for her next massage. Furthermore, those loyal customers that have been gladly paying full price are now feeling cheated.  Apparently, it was worth less! Eventually this retailer, and others like it,  complete their death spiral and go out of business.

In some ways the “irrational exuberance” of social couponing was predictable, much like the dot com and real estate bubbles. Consumers and investors get excited by opportunities where the cost to value equation is dramatically in their favor. But, long term, that imbalance is simply not sustainable. No retailer can lose money on every customer but hope to make it up in volume. That is simply mortgaging the future. Eventually it has to collapse.

But the collapse doesn’t hurt just that retailer. It hurts all of us. The pervasiveness of deeply discounted couponing is changing consumers perception of value and driving down margin for many reputable retailers in competitive categories. It’s very similar to the dynamics of the current real estate market. Why would a buyer pay “retail” for my home when my neighbor or his banker is willing to sell a comparable product at a distressed sale price? Ultimately, value is destroyed because a few ill performing merchants are willing to canabalize themselves in a futile effort to survive another month or two.

Retail excellence and corresponding financial success comes from delivering real value not the lowest cost. Retailers need to identify those products, services, activities, behaviours and customer experiences that differentiate them from their competitors in a way that supersedes price.  Create a learning relationship with your customers, become the destination of choice in the category… and you’ll have customers for life!

I was recently speaking with a good friend and former client at two well known Italian luxury brands. We got onto the topic of the roles and responsbilities of a luxury CIO and how it differed from the traditional high-street retailer.  Having worked the luxury segment in IT and CRM for many years, she had some very interesting stories to share. Luxury  is simply different, perhaps more so than many of my readers realize. So, at the end of our conversastion I asked her if she would like to share her perspective as an IT executive on the inside, supporting  two of the worlds most demanding retail brands, catering to the difficult to reach, “rich and famous” customer.

The article that follows highlights some of the considerations that luxury retailers must incorporate into their Clienteling and CRM strategy.

Demystifying the Luxury Customer

     In my years working as a VP of Information Systems within luxury fashion retail I have often been at the center of CRM vendor intrigue.  The luxury client is a customer few understand and fewer still know how to reach.  They can’t be induced by traditional retailing techniques. Loyalty cards, promotional savings, free gifts are simply ignored, or worse, damage the brand. This leaves most  marketers wondering, “How do you reach this client?”  My answer is emphatically — by building a Customer Centric organization.   By effectively and creatively utilizing BI and CRM analytical tools in conjunction with consistent clienteling activities, with an enterprise-wide customer centric philosophy, a luxury retailer can begin to connect and build loyalty with their client.

     The key to reaching the luxury client is to really know them, their lifestyle and shopping behavior.  However,  success is based on how you use that information and how relevant the channel and messaging.  Every customer has a unique value equation that must come into balance before they buy.  The mass market customer  generally buys based on “need” and is motivated by savings and incremental offers.  The luxury client buys because of “want” and is willing to pay a premium for an experience.

     Let’s take a minute to examine the lifestyle of the luxury client.  We already know their income bracket is high, but what else do we know?  They are social, aware of their status, often busy (perhaps too busy to even shop during regular hours), uncompromising and specific with style, they value quality and service over quantity, are event or experience driven, and value trust at the hands of experts.  Knowing these “soft” characteristics and combining them with “hard” purchase behavior provides the retailer with the data to personalize, influence and delight their customers.  Armed with this customer knowledge and the analytical detail provided by CRM and BI tools, the purveyor of luxury products can sustain a relevant profitable relationship with their exclusive clientele.

     Let’s look further.  As I mentioned, they are social and event driven. So, why not create social shopping events like an invite a friend (new shopper) luncheon or a charity fashion show (forgive me, I am in luxury fashion). These are fabulous ways to bring in existing clients and add their closest friends to your roster of customers.   While a sale will not necessarily cause the luxury client to shop, selecting pieces that their trusted associate believes is “just right for them”  is often irresistible.  In home shopping and approval shipments to top customers has been proven to build exceptional loyalty.  Since a luxury client is looking for a shopping experience built on convenience and trust, the relationship you build with them must be one that welcomes them in to your company’s “family”.  Their associate becomes their friend, their confidant who knows them and knows what is best for them.  This level of customer intimacy requires capturing and leveraging information at every customer touch point and making that knowledge accessible to all constituents across the organization.

     A great place to start is to ask questions and LISTEN to their story.  Know your local social event calendar and know their personal interests and events.  Knowledge is power particularly in luxury.  Think out of the box when analyzing their shopping behavior and look for the patterns that will guide your next move.  Every decision your luxury client makes tells you something about who they are.  Every piece of information, from how often they shop, with whom they choose to shop, what pieces they buy, to when they buy helps you create a picture of “your client”.  Build and continually revise your client “profile” to remain current with an ever changing world and how our world affects your client.  The foundation for approaching luxury clientele is the same as it is for all customers.  It is your response to the data you uncover that is different.  The key success factor is to gain a deep understanding of whom your client is and what they value.  Analyze your successes and failures and always be willing to adjust your strategy to connect with an ever changing clientele culture.

     The author, Genine Fargnoli is the former VP of IS  and Director of CRM at Georgio Armani. She previously worked in Program Managment for  Gucci Group NYC. She can be reached at [email protected]

Welcome and thanks for visiting my new blogspot. I’ve created this site to share and connect with all my friends and colleagues in the retail industry. Many of you know me as the Founder & CEO of Retaligent Solutions and may have been wondering where I have been for the last couple of months. There have been quite a few changes at Retaligent and I hope to be sharing some of that story with you in a future post.

Anyway, I believe this site will be a great way to complile and tweet interesting content that I come across every day. It also provides a venue to share my personal thoughts and my expertise that comes from being a 30 year retail veteran with 20+ years of developing and marketing innovative technology solutions for retailers. I hope you will find some of the posts valuable and I welcome your comments and perspectives. Take a moment to sign up and I will send you a periodic compilation of the “best of the best” related to the topics above.

While customer centricity is getting a lot of attention at the moment, I’ve been deploying customer centric solutions and consulting services since the early 1990’s. I thought you might enjoy seeing some of the videos, white papers, brochures, newsletters,  editorials, and articles that I’ve authored and that have been published about my work over the years. You will see that the concepts behind great retailing haven’t changed too much– we just have more mature and accessible technology that ensures that multi-channel best practices can be executed consistently.  Take a look at some of this content and see where it might help you in understanding and redefining the new retail reality.

Again, let me thank you for taking the time to visit and if you think I can help you in any way, I’d enjoy hearing from you.

Best regards,

Bryan

[email protected]