RetailTechExec Blog

Headlines seem to perpetuate the notion of a retail apocalypse, where stores lay barren and shopping malls are decaying relics of a time before Amazon. But to paraphrase Mark Twain, reports of retail’s death are greatly exaggerated. What’s really happening isn’t the end of retail — its retail’s logical transformation, driven by changing consumer values, increased shopper expectations, economic polarization, changing demographics, innovative technology and the resulting advent of more efficient and engaging business models. Those that have a vision to see “what happens next” stand the greatest chance of benefiting from any new “world order” — while those that are stuck in the prior status quo languish and are often casualties of change. Such is the state of retail today.

A SHIFTING STORE LANDSCAPE

Stores will remain relevant if retailers elevate service, experience and engagement. We know the retail landscape is still “over-stored” by traditional brands with outdated organizational design and a legacy infrastructure in support of the old way of doing business. Many of these brands are financially fragile, sitting on a time bomb of declining sales and excessive debt loads. Changing consumer behavior will not be kind to these merchants. According to Coresight Research, over 9,000 stores closed in 2019 as overleveraged retailers attempted to right-size their businesses to address normative shifts in shopper behavior. 

“Over the last few years, 70% of retailers have responded to the shift to online by offering the immediacy of click-and-collect.”

Emerging digital brands are well positioned to take advantage of the shift, starting with an agile mindset and a customer-first, digital-first philosophy. Designed to flexibly address customer needs and trends, these highly engaged direct brands are rapidly expanding, with innovative physical spaces and immersive customer-centric digital experiences that are redefining the face of retail. Declining traditional brands should be learning from these data-driven growth companies. Based on current plans, JLL Real Estate estimates at least 850 new D2C stores over the next five years, which may underestimate actual growth plans. Casper alone is planning a 200-store expansion. Kearney predicts the equilibrium point in the retail real estate sector won’t happen until 2025. 

REDEFINING THE PURPOSE OF STORES

In 2020 and beyond, retailers will rethink the purpose of their stores in the context of new customer expectations. Over the last few years, 70% of retailers have responded to the shift to online by offering the immediacy of click-and-collect — essentially turning their stores into local fulfillment centers. 

While BOPIS is a cornerstone of omnichannel retail and will continue to grow, tomorrow’s physical environments must induce shoppers through interactive experiences and a host of new services — leveraging the store beyond the product and exploiting opportunities when consumers are in the store. Education, discovery and community are at the center of these new service offerings. 

At the other extreme, retailers will continue to experiment with inventory-less stores and “try-on shops” that incorporate digital, high-touch personalization and clienteling/appointment selling and events in their sales process. A recent JRNI report indicated that 54% of consumers are interested in scheduling appointments with in-store staff, and these interactions result in 3X-10X increases in basket size. Examples of new formats are Nordstrom Local, SHOWFIELDS and a number of bespoke apparel retailers. 

Tommorow’s physical environments must induce shoppers through interactive experiences and a host of new services.”

‘ME-CENTRIC’ ENGAGEMENT

Creating a vision for what happens next requires an understanding of what customers value and expect from the brands they shop. Here are the top eight imperatives that customers say they would like to see next, and what we can hopefully expect to see in-store in the year ahead: 

• Make it easy! Fast, efficient, frictionless and flexible. A unified view of inventory and customer, OMS and ease of payment. Make it happen on my device and yours! 
• Tell me what I want to know but don’t abuse my data! Provide transparency into orders and delivery, share the truth about products, and use my data only to enhance my experience. 
• Make it mine! Express my individuality and identity through your brand and products. Give me customized, personalized and unique offerings. 
• Engage me in fun, memorable experiences! Create novel and innovative “phygital” journeys using AR, VR and interactive technologies. Make the exploration fun!
• Let me drive! But be there when I need help! Don’t be intrusive but incorporate the best concepts from online and enable in the store. Bring self-serve, wayfinding, digital display and content, outfit building and support to stores via my device and yours. 
• Know my “Shopper DNA” and what it takes to make me happy! Learn from every interaction and use AI to curate products and offer clienteling-like experiences that wow me! 
• I’m social, I’m digital, I’m always on…you should be too! Be a pervasive presence (D2C) on digital platforms and make engaging and transacting part of their normal daily experience. 
• Let me become part a community of wildly passionate advocates! Create experiences and formats that connect people and immerse them in the brand narrative. Leverage social channels and allow customers to have a voice!

Retailers that successfully navigate the tumultuous decade ahead will incorporate these imperatives into their long-term vision of what happens next, and build adaptive organizations that meet the constantly evolving expectations of their loyal customers.

2017 Retail Recap

Retail doom and gloom dominated the headlines in 2017 as the press declared retail dead! Undoubtedly, we are in the midst of a seismic shift in consumer shopping habits, driven in part by changing tastes, economic influences, over supply, and the impact of “always-on” digital commerce. While reduced footfall has resulted in some notable retail casualties, retail is not dead yet. However, if trends continue, we can expect the number and size of retail stores to shrink dramatically while tomorrow’s leaders navigate a daunting transformation to their formats, engagement points, business models, and underlying technologies.

As a longtime observer of retail, I’ve noticed that historically “when times were good, retailers didn’t think they needed to invest in new innovative approaches and when times were bad, they couldn’t afford it.” Until recently, retailers were reticent to invest in innovation, but in 2017 that all changed. Digital enablement is transforming virtually every aspect of consumers’ day-to-day activities and shoppers expect merchants to make their shopping experience convenient, entertaining, and to deliver extraordinary value. Most retail CEOs now realize that surviving in an era of technological change requires that malls, stores, business models, experiences, and organizational structures be redefined to exploit new digital opportunities. 

In 2017, many legacy retailers watched customer-centric digitally native brands like Bonobos, Warby Parker, Casper, Interior Define and others and are now experimenting with creative “digitally-infused” retail formats. These innovative retailers have learned how to engage, excite, and educate shoppers before, during and after the visit. Last year we saw retailers testing better personalized communication and curation, elevating the level of service and advice, streamlining payment, and exploring other technology-enabled practices that improve customer experience and help to maintain top of mind relevance. Finally, in 2017 we saw what could be a major inflection point for retail; conversational commerce, driven by Amazon and Google in-home devices.  

In the year ahead, we’ll likely see high-service direct-to-consumer formats expanding with small “flagships” that curate and educate while traditional multi-brand merchants close stores. Retail leaders will be hyper-focused on brand engagement and customer journeys, leading to the kinds of shopping experiences and discovery opportunities that motivate customers to visit. In 2018, we’ll also see new retail entry points as connected vehicles, IoT and conversational commerce devices expand retail’s footprint well beyond the store.

Here are a few key trends and capabilities we’ll see in 2018:

Bridging Online with Digitally Enabled Retail Stores

Expect to see new omni-channel strategies and technologies as retailers acknowledge that blending digital consumer engagement with the physical store is the best way to address evolving needs and desires of their customers. We can expect to see retailers continue to explore ways to “follow the cookie”, tracking online behavior and making those insights and preferences actionable to associates with mobile engagement and clienteling tools. In some formats, retailers will directly engage with consumers either on their devices, or through digital display walls in the store.  Another area of continued growth in 2018 is built on extending the reach of human communication, particularly when consumers aren’t in store. Retailers are deploying chat tools in their ecommerce sites to allow consumers to engage directly with in-store staff, in hopes of providing advice and curating products/outfits to help drive conversion. 

As brands try to intersect with “digital native” lifestyles, we should expect to see exciting new “pop-up” concepts and smaller store footprints, where retailers display a representative assortment of products in an immersive lifestyle brand experience. These formats allow retailers to control their brand narrative while gaining direct consumer feedback, and are enhanced with video, self-directed curation, and social sharing technologies. While in its infancy, we should also see more AR and VR projects as retailers explore, creating a “digital layer” in their physical store environment. All of these technologies and initiatives share a common desire to engage customers at each stage of their shopping journey and to provide relevant personalized communication.  

Curation & Personalization

With an infinite amount of online choice, consumers demand relevant, personally curated shopping experiences, whether in-store, online, or by subscription. If Spotify, Netflix, StitchFix and Amazon can know what they want, shouldn’t all merchants? In recent years, retailers have invested in building actionable back-end data repositories with a single view of the customer, inclusive of all available data “signals”. In 2018 we’ll see them leverage that investment with AI and predictive technologies, analyzing implicit and explicit data, and moving from segmented targeting to true “record level” personalized interaction, regardless of channel.  

Pervasive Connected Commerce:

As the “physical boundaries” of commerce dissolve, in 2018 we’ll enter the age of “Pervasive Connected Commerce”. In a new retail paradigm where connectivity is ever present and payment credentials are stored in the cloud, consumers will seamlessly interact with a host of “gateway” devices for digital and physical commerce. Amazon Alexa and Google Home are the early leaders in this area and are simplifying shopping for common household purchases in ways we didn’t imagine a few years ago. Similarly, we’ll see an uptick in smart appliances like refrigerators and printers, infused with IoT or Internet of Things capabilities that sense “inventory levels” and automatically replenish without human intervention. One of the more exciting connected commerce initiatives for 2018 is GM’s connected car initiative. Connected Car enables riders to engage with an in-dash marketplace containing localized offers from restaurants and retailers, with order ahead & pay ahead capabilities; integrated with the consumer’s mobile loyalty apps and personal preferences.  GM expects their retailer connected technology to be available in a few million cars in 2018.  

There will undoubtedly be retail winners and losers in the months and years ahead, but those that thrive will do so by building innovative business models on a foundation of technologies that meet customer-centric demands of a digitally-enabled store experiences.  

Retail is undergoing a customer-driven transformation and the pace of innovation is accelerating geometrically. This has technologists and retailers struggling with the same basic question: “With the explosion of promising new digital technologies and the shifting behaviors of omni-channel consumers, how do I know which technology investments will provide real immediate value?”

Every year the retail industry proclaims the next big thing — promising a new technology that will help retailers compete in an ever more challenging omni-commerce arena. Unfortunately, many retailers don’t have a clear picture on what is actually happening inside their businesses or what investments would insure a successful future. The complexity of changing customer demand and decreasing store traffic, online competition, BOPUS, DOM, showrooming and excessive returns are wreaking havoc with traditional operational and merchandising decisions. Simply put, “true north” is illusive and many are hopelessly guessing at what to do next. In an attempt to “stay afloat” retailers are testing myriad social, proximity-based, mobile, loyalty, clienteling, digital marketing, IoT or CRM solutions.  However they are seldom the result of charting a well-defined customer engagement strategy.

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

First: Understand the Customer

Retail has always been about people and relationships. Engage customers, solve their problems and take responsibility for their satisfaction throughout the entire “want-it, buy-it, and use-it experience”. Finding ways to create that satisfaction and delivering satisfying customer journeys is the foundation of a well- executed customer strategy. Success comes from knowing your customer and thoughtfully differentiating your service and assortment in ways that meet their individual desires. Every retailer has it’s own unique DNA and accordingly must have its own way of expressing itself in the lives of its customers.

After years of working with some of the world’s most successful customer-centric retailers, I’ve identified over 150 retail best practices, proven to differentiate the customer experience and drive significant incremental profitability. While it may sound heretical, it’s really not about the technology… it’s about the people! We recommend that retailers reflect deeply on what customers hope to experience from their brand and then select a half dozen practices/initiatives that drive customer satisfaction throughout each step of those potential customer journeys. Find the “easy wins” first and build upon those with future customer journey initiatives. Create a culture of extraordinary customer service and realize increased loyalty and revenue.

Second: Analyze the Math

Consider how any new initiative is likely to impact corporate KPI’s. Retail math is pretty simple. Revenue = (Traffic) x (Conversion) x (Average Transaction Value). 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. Even small changes in any one will result in significant shifts in profit. The goal is to identify which practices will drive each of these factors. Analyze and identify how the solution is going to move these metrics and consider the investment based on those projected results. We strongly suggest building out more sophisticated Business Impact Models that consider all of the potential levers a solution may impact and using that model to measure potential and realized business benefit. Remember, just because your competitors are jumping onto the latest tech trend, doesn’t mean it fits your customer strategy or the KPI’s that matter most to your business.

Third: Test and Innovate with Technology

Select or build solutions with functionality that supports the desired practices and strive for minimal “friction” in adoption. Use agile methodologies to innovate and test new ideas that are consistent with the unique customer journeys you’ve prioritized. For example, if you are trying to drive appointment sales, consider the detailed workflows of customer communication, online scheduling, task assignment and other client-centric functions. Inducing a sales associate to use a new tool can be a formidable task if there is conflict with established norms. Getting staff involvement early is critical to solution implementation success. Be clear on which behaviors you are trying to influence and bring multiple disciplines together in gathering business and technical requirements. As for consumers, most won’t try new technologies (or download a retail app) unless there is immediate perceived value in doing so. If in-store mobile engagement is central to your strategy, consider how the interaction of staff can improve the customer experience through shared digital experiences. Always build or buy technologies that are intuitive and designed from the user point of view.

Disruption often leads to opportunity and retail is no exception. Plotting a course for what comes next requires a clear vision, a solid financial analysis and the application of innovative technologies. As one CEO told me, “managing business requires setting a well-reasoned course, with the right crew and vessel… then carefully steering around the rocks.”

If 2014 to 2016 can be defined by the dawn of omni-channel retailing, 2017 may well be the year of the “curated customer experience.”

Always-on always-connected mobile technology is fundamentally transforming the way consumers purchase goods and services. However, with instant access to nearly infinite online and in-store options, consumers are fast becoming overwhelmed. As Barry Schwartz stated in The Paradox of Choice: “The fact that some choice is good doesn’t necessarily mean that more choice is better.” Striving to eliminate “noise” to make better choices, consumers are opting out of digital email programs in growing numbers and limiting irrelevant, burdensome digital messages. Traditional online search also falls short and the “browsing process” is often tedious and unproductive.

So, what do the time-starved consumers of 2017 want? Simply put, they want the retailers and brands they trust to intimately understand their needs and expertly solve their “problems.” They want to see limited but carefully curated options delivered in a relevant personal context, enabling great choices. And they want to be engaged consistently across all channels. They want a personally curated customer experience!

This experience is as important in-store as with any digital channel and is made possible by impressive technology advances over the last several years. To facilitate better customer-centric engagement, retailers are investing in big-data predictive analytics platforms, merchandise optimization tools, personalized offer and messaging platforms, next-generation e-Commerce and unified commerce engines, mobile POS and in-store clienteling tools, omnichannel order management and associate-to-customer mobile messaging capabilities. But stitching together these technologies is only part of the curated customer solution. Retailers must explore new ways to add value in this emerging omni-commerce landscape and redefine their vision of what it means to be a retailer.   

ONLINE AND MOBILE CURATED ENGAGEMENT

In 2017 we’ll see new ways to engage with online content. New “visual search” apps are leveraging big-data and cognitive computing platforms to predict which products best meet a consumer’s needs and lifestyle. These apps incorporate implicit “demand signals” gleaned from browsing/swiping behavior and match it with explicit preferences captured in a consumer app. The result is a shopping experience displaying highly relevant but limited choices that meet articulated needs. Developing the “taxonomy” for product and consumer attributes tied to sophisticated learning algorithms is still in its infancy, but these solutions are now achieving traction in apparel and furniture categories.  

ONLINE MEETS CLIENTELING AND IN-STORE CURATION

Clienteling is not new, but in 2017 we’ll see retailers seize the opportunity related to Omni-channel engagement and cognitive computing within their mobile clienteling initiatives. In some categories 70% of transactions are influenced by the online channel. Consumers are increasingly buying or reserving product online with the intent of picking up or trying on in-store.

Many retailers are experiencing a significant decrease in traffic so they are looking to more engaging personalized experiences to improve store relevancy. As traffic decreases, conversion and ATV must increase. Leading retailers are arming associates with mobile multi-dimensional customer, transaction and product tools that leverage predictive analytics to improve performance metrics. Deeper customer insights, captured online or in-store, feed automated curated recommendations and communication workflows. These same mobile clienteling tools prompt associates to periodically communicate with their best customers. By sharing personalized curated suggestions, associates inspire customers with ideas and new reasons to visit.

Originally Published in Retail TouchPoints 2017 Outlook Guide – January 2017 – For more information visit www.clientricity.net or [email protected]

I was recently interviewed by Fortune for an article exploring ways that enterprises are getting closer to their customers by leveraging technology. In retail, we are seeing an explosion of new Mobile, Social and BI/Analytic capabilities being deployed in the hands of store associates,  managers and marketers, striving to provide more value to their customers. To read the entire article, click here.

Here are a few excerpts from the article:

“That’s the value proposition for most retail enterprises other than the big-box retailers, which compete on the depth and breadth of their inventory, and on being a low-cost provider, says Bryan Amaral, head of Atlanta-based retail-industry consultancy Clientricity. “Know the customer, know your product, be relevant, and solve what they are looking for. You need sales associates who are savvy. Most retailers have to provide a higher level of engagement, or they won’t survive,” he says.

Amaral has spent his career advising retailers on how to use technology to shepherd customers from an entry point with a brand to a completed transaction (including returns). He believes that retailers need to take absolute responsibility for their customers’ satisfaction throughout the entire want-it, buy-it, use-it experience. He says it’s instructive for companies planning ahead to look back at the history of retailer customer interactions.

It’s “back to the future in many ways,” he says. In the early days, the neighborhood retailer knew his customers by name, knew what they wanted and knew how to merchandise accordingly. In the late 1970s and early ’80s, there was a lot of consolidation in retail, creating department-store mega-retailers. The bar code came along, making it a lot easier for a retailer to understand product movements, he recalls. Companies could more closely monitor what customers desired and plan inventory assortment and replenishment more effectively. Amaral calls this the Ivory Tower approach. “Neighborhood retailing was on the way out,” he says, “and the thought was that sales could be controlled back at HQ from the dashboard. Better merchandising, promotion, and the designer revolution, all had the vendors taking a role of driving traffic into stores. If you had the right brands, underlying transaction and merchandising systems could well manage your stores.”

But back then, the axiom retail enterprises relied on – location, location, location – came into question with the beginning of what would eventually become online commerce, he says. And with digital, retailers could reach a customer in any geography. As commerce shifted toward the latest technology, and a universe of products became one click away, “it became clear that to survive, certain segments of retailing just couldn’t commoditize. They needed to do a better job of servicing customers. Retailers began to realize that store sales clerks needed to become ‘knowledge workers,’ and begin to really understand customers’ needs to give them a reason to walk into a store. You had to provide this value. And by the early 2000s, the cast was set and the customer experience had become king.” For the past 10 years, Amaral says, customer expectations have become increasingly demanding and the pace of retail transformation has been accelerating to meet that value proposition.

Going forward, he says, companies need to ask: “How do I make sure that I am an integral part of a customer’s decision-making process? How do I become the ‘destination of choice’ when a customer wants a product in my category?” Amaral says that in the end, it’s going to come down to how effectively an enterprise can use technology to demonstrate a commitment to the best interests of the customer, not the enterprise.

“It’s no longer about owning a portfolio of products and finding customers who want them. Now, it’s about having a portfolio of customers and looking for high-value products and services that meet their needs.”

‘Clientelling’ is an example: A sales associate with a deep, deep knowledge of a department store’s stock and individual preferences takes the initiative to call a customer who has a store credit card and a history of, say, cosmetics transactions there, to alert the customer to a terrific new skin-care product or in-store service. The customer may or may not be interested in the new product or service, but the store-initiated contact can lead to other sales and a deeper, more profitable relationship between the store/associate and the customer. “Customers expect sales associates to have complete visibility into all the inventory throughout your enterprise, including the warehouse. It’s all about empowering the sales associate,” he says. Furthermore, Amaral says, stores should recognize the way in which Big Data and online engagement combine to fit into a wider sales philosophy.

“The majority of transactions are in some way influenced by online. It’s part of the buying journey. Customers start their search for a product online, get an idea of the possibilities, and look at product reviews. They then go into a store thinking they can find what they need. And when they go in, you have up-sell opportunities to really build that ticket by getting to know more and more about the customer. But it starts by adopting their perspective.”

Mobile technology should make the process easier, Amaral says. “Five years from now, there will be a lot more personalization,” he says. “Enterprises will collect more information, know better what to do with it, be more efficient storing it and analyzing it, and modeling around it. Take beacon and other types of location-based technology. A store can know you are nearby, or in a specific department, and they know about other people just like you, what you and they have bought, what you’ve clicked on their website,” and they can then tailor a proactive mobile message appropriately.

Go out at least 10 years from now, Amaral says, “every sales associate will have a mobile device in hand, will know their customer, offering a higher level of service, all tying back to the technology infrastructure. Operating systems may eventually be so context-aware that they will only show us the stuff we really need to know; our mobile device will be able to personalize the experience for us.” He continues: “The logical extension of today’s personalization trends is mass-customization of the products we buy. We are already starting to see new uses of technology in fitting rooms. Imagine that a customer goes into one and just interacts directly with the technology in there.

“Customers expect sales associates to have complete visibility into all the inventory throughout your enterprise, including the warehouse. It’s all about empowering the sales associate.” Bryan Amaral, head of retail-industry consultancy Clientricity

Today, retailers are experimenting with devices on the wall that can give product recommendations and look up alternatives and coordinate recommendations. By pressing a button, an associate is alerted to retrieve those items and bring them to the customer. But eventually, consumers will see and try on new clothes virtually, using various physical gestures to interact with the technology. The logical end game? Get it made and delivered to the customer in just a few days.”

Hello and welcome to my blog. Over the last three years, technology has transformed commerce in ways we wouldn’t have imagined a decade ago…for consumers, retailers and vendors alike. This has kept those of us in the retail technology advisory business very busy. I thought I would take a few minutes to visit and update a post I shared back in 2012. This blog and it’s parent site Clientricity.net is a great place to find thoughful posts on how retailers can better engage, influence and inspire their best customers.

So, lets start with the basic premise that delivering a customer-centric retail strategy is essential for keeping customer, gaining market share and enhancing profitability.

At the center of that strategy is the realization that the disruptive forces of technology have changed retail as we knew it and that the consumer is in charge – ably armed with social, local and mobile technologies. Savvy retailers are finally starting to master their new reality, cutting through the hype and deploying the best new customer-facing and associate-facing solutions, supported by enhanced business practices. It is pretty clear that everyone from the world’s most prestigious department and specialty stores to big box electronic giants, has some flavor of customer centricity on it’s mind. Customer centricity puts the customer at the nexus of retail strategy and it is the logical evolution of retail resulting from years of depersonalized store formats and inattention to customer satisfaction. Retailers have finally realized that they can no longer simply depend upon cost cutting and optimization of their supply chain to provide sustainable competitive advantage. Instead, industry leading retailers are implementing strategies and tactics that improve top line sales, increase associate productivity, while delivering a better customer experience built on a relevant dialogue with their customers.

Today’s connected consumers expect the brands they shop to intimately understand their needs and to be served consistently across all channels (e.g. in­-store, online, social media, kiosks and consumer mobile applications). They want their Omni-Channel shopping experience to be personalized, relevant, convenient and enjoyable. They are demanding more from the stores they patronize, because they have access to more information than ever before and use mobile devices and the web to learn, shop and communicate in new ways. Furthermore, the recent recession has taught them new budget discipline, making consumers less willing to compromise and more likely to defect to another retailer if an associate provides better service or more options.

Retailers need to change to succeed in this new reality. To keep customers and gain market share, they need to connect people, insight and customer relationships in new, innovative ways. Retailers need to use all the touch points available to them to learn and understand more about their customers’ distinct needs, wants and desires. Doing so will enable retailers to deliver customers a personalized differentiated experience and new forms of communication through the consumer’s preferred channel. If they are going to execute successfully on this new agenda, retailers will need to integrate the entire retail operation, enterprise to store with a comprehensive solution. that addresses three key objectives:

• Increase customer insight and brand communication using data analysis, business intelligence tools and multi-channel marketing with a sophisticated personal offer capabilities.

• Empower associates to personalize the experience and build relationships with customers using a combination of outreach tools (call, text, email, etc.) and in-store clienteling and loyalty tools. Extend that capability beyond the store using consumer facing mobile applications and online personalization technology.

• Provide management with real-time access to key performance and behavioral data in order to improve their decision making, assortment and business building activities.

Successfully deploying a thoughtful, disciplined and repeatable customer centric strategy can be a challenge, but if executed well, will reward a retailer with virtually immediate sales lift and improved customer lifetime value.

What is Customer Centricity?

Like so many catch phrases today, the term customer centricity is often misused, and has become the rally cry for any decision or activity that impacts the customer. In an attempt to differentiate their businesses, few retailers grasp the fundamental operational and cultural shift necessary to achieve real enterprise-wide customer centricity. Customer centric retailing requires the traditional retail model to be turned on its head. Instead of executing strategies against a portfolio of products to induce customers to buy ̶ true customer-centric retailers focus on a portfolio of loyal customers and provide products and services that meet their distinct individual needs. During the boom-boom days of retail, it was a field of dreams — ‘if we hang it they will come.’ Today, that simply does not work. A winning customer-centric strategy requires the development of enterprise-wide practices focused around taking absolute responsibility for a customers satisfaction throughout the entire want it, buy it, use it experience.

It is however important to note that customer intimacy and truly personalized communication can’t be accomplished without knowing their communication channel preference and having access to extensive customer knowledge and product feature information. Fitted with the right tools and insight, retailers have was is needed to build relationships that bring together individually articulated customer preferences, lifestyle information and product knowledge to create high-value solutions for their customers.

Unfortunately most retailers are reactive and tend to think in terms of point solutions and quick fix solutions. Most have never developed the required all­-encompassing customer engagement methodology that will ultimately align the corporate and marketing vision with in-store execution of those best practices that improve customer service. Most often retail store-level employees ̶ those who are most directly engaged with customers ̶ are isolated. They don’t have the customer and product information they need nor do they have the operational sales support tools required to meet ever demanding customer expectations. The result is unpredictable service levels, unrepeatable customer experiences, dissatisfied customers and diminished store performance.

A Technology-based Customer Infrastructure

Underlying any customer-centric initiative is some type of customer-focused technology platform. At its center, is data that provides a 360-degree view of the customer. This multi-dimensional customer, transaction and product repository may be aggregated (or accessed in real time) from numerous existing enterprise data sources including POS transaction systems, product inventory, merchandising and e-commerce. Once the master data is available, business intelligence and campaign management tools at HQ and clienteling, loyalty and product recommendation tools at store-level, transforms this underlying data into actionable knowledge.

Using workflow tools and mobile applications, customer preference and lifestyle information is collected during each customer interaction, improving customer insight and increasing responsiveness to ever more personalized and relevant corporate and store level communication. Leaders are investing in sophisticated enterprise-wide solutions, enabling management to access loyalty, marketing and campaign management tools to analyze and segment data. Armed with these, marketers can identify new multi-channel sales campaigns and deliver personalized offers directly to customers or prompt associates to take specific actions with those individuals.

There will always be many technical considerations to make this technology infrastructure a reality but this is one of Clientricity’s key areas of competency. The underlying infrastructure must be secure, easily integrated and flexible enough to meet the constantly-changing needs of the retailer and consumer. In-store solutions must be highly intuitive, responsive and transportable on existing hardware as diverse as PC/POS terminals, kiosks, mobile tablets, phones and PDAs. Finally, the technology must have extensible multi-channel architecture, allowing retailers to meet their consumer needs online or via a customer’s own smart phone.

The Retail Customer Centricity Playbook

The overarching objective of customer centricity is to create a value proposition that is unique and not easily repeated. Given with the right strategy, tactics and customer engagement tools, retailers can now gain a 360­-degree view of their customers. More importantly they can build a learning relationship based on individual preferences that cannot be easily replicated by other retailers. What follows is a list of things that retailers should think about.

• DEFINE: Start by defining institutionalizing your organizations operational best practices. The goal is to ensure consistency across the brand, whether it is an in­-store and online experience. Think about the customer journey and optimize for maximum value.

• UNDERSTAND: Use tools to analyze and segment your customers’ buying behavior. Within the data, look for opportunities to create personalized value propositions and promotions targeted to specific customers using favored channels. Leverage structured enterprise data and unstructured “Big-Data” to enhance the efficacy of the analysis. Deploy real-time dashboards and reporting tools that are accessible throughout the organization.

• TAKE ACTION: Deploy technology such as clienteling, loyalty and assisted selling tools to sales associate with easy to use POS, PC, and handheld tablets and other mobile devices. Invest in effective change management to transform the organization and teach your team how to use the customer profile data, preferences, lifestyle information and transaction history during client interaction. Provide all users with access to key product information. Approximate what the perfect sales associate would do with information and express those workflows through intelligent self-service technologies and smart phone apps. Be sure to synchronize all activities across all channels in order to generate increase traffic, conversion and average transaction size

The disruptive impact of technological change will continue to make retail ever more competitive. Brand differentiation and relevant customer communication and improved services levels across all touchpoints are the natural defense to that competition. Implementing a customer centricity solution that incorporates clienteling, loyalty and campaign management solutions ensures a seamless, interactive environment where customers can shop over multiple sales channels delighted by associates empowered to deliver an extraordinary customer experience.

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]